1.2 Material accounting policies
Property Plant & Equipment
Property, Plant and Equipment are carried at acquisition
cost, net of accumulated depreciation and accumulated
impairment losses, if any. Subsequent expenditures
related to an item of tangible asset are added to its book
value if due to such expenditure it is probable that future
economic benefits will arise to the company. Gains
or Losses arising from disposal of tangible assets are
recognized in the Statement of Profit and Loss.
Property, plant and equipment not ready for the intended
use on the date of balance sheet are disclosed as “Capital
work-in-progress”. Capital work in progress is stated at
cost, net of accumulated impairment loss, if any.
Depreciation
Depreciation on tangible assets has been provided using
straight line method over its useful life (once asset is
available for intended use) which is in compliance with
schedule II of Companies Act, 2013.
Depreciation method, useful lives and residual values
are reviewed at each financial year end and adjusted, if
appropriate.
Depreciation for the year is recognised in the Statement of
Profit and Loss.
Intangible Assets
Intangible assets are recognised only when it is probable
that the future economic benefits that are attributable
to the assets will flow to the Company and the cost of
such assets can be measured reliably. Intangible assets
are stated at cost less accumulated amortisation and
impairment loss, if any. All costs relating to the acquisition
are capitalised.
Intangible assets are amortised in the Statement of Profit
or Loss over their estimated useful lives, from the date
that they are available for use based on the expected
pattern of consumption of economic benefits of the asset.
Amortisation
Amortisation of Intangible Assets has been provided using
straight line method over its useful life as per Schedule II
of the Companies Act, 2013.
Intangible Assets not ready for the intended use on the
date of balance sheet are disclosed as “Intangible
Assets Under Development”. Intangible Assets Under
Development is stated at cost, net of accumulated
impairment loss, if any.
Amortisation method and useful lives are reviewed at each
reporting date. If the useful life of an asset is estimated
to be significantly different from previous estimates,
the amortisation period is changed accordingly. If there
has been a significant change in the expected pattern
of economic benefits from the asset, the amortisation
method is changed to reflect the changed pattern.
Leases
As per 116- Lease, the determination of whether an
arrangement is (or contains) a lease is based on the
substance of the arrangement at the inception of the
lease. The arrangement is, or contains, a lease if fulfilment
of the arrangement is dependent on the use of a specific
asset or assets and the arrangement conveys a right to
use the asset or assets, even if that right is not explicitly
specified in an arrangement.
Where the Company is the lessee
Finance leases are capitalised at the commencement
of the lease at the inception date fair value of the leased
property or, if lower, at the present value of the minimum
lease payments. Lease payments are apportioned
between finance charges and reduction of the lease
liability so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are
recognised in finance costs in the statement of profit and
loss, unless they are directly attributable to qualifying
assets, in which case they are capitalized in accordance
with the Company’s general policy on the borrowing
costs. Contingent rentals are recognised as expenses in
the periods in which they are incurred.
A leased asset is depreciated over the useful life of the
asset. However, if there is no reasonable certainty that the
Company will obtain ownership by the end of the lease
term, the asset is depreciated over the shorter of the
estimated useful life of the asset and the lease term.
Leases in which a significant portion of the risks and
rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under
operating leases are charged to the Statement of Profit
and Loss on a straight-line basis over the period of the
lease unless the payments are structured to increase in
line with expected general inflation to compensate for the
lessor’s expected inflationary cost increases.
Where the Company is the lessor
Leases in which the Company does not transfer
substantially all the risks and rewards of ownership of an
asset are classified as operating leases. Rental income
from operating lease is recognised on a straight-line basis
over the term of the relevant lease. Initial direct costs
incurred in negotiating and arranging an operating lease
are added to the carrying amount of the leased asset and
recognised over the lease term on the same basis as rental
income. Contingent rents are recognised as revenue in
the period in which they are earned unless the receipts
are structured to increase in line with expected general
inflation to compensate for the expected inflationary
cost increases.
Leases are classified as finance leases when substantially
all of the risks and rewards of ownership transfer from
the Company to the lessee. Amounts due from lessees
under finance leases are recorded as receivables at the
Company’s net investment in the leases. Finance lease
income is allocated to accounting periods so as to reflect
a constant periodic rate of return on the net investment
outstanding in respect of the lease.
Investments Property
I nvestment property is property held either to earn
rental income or for capital appreciation or for both,
but not for sale in the ordinary course of business, use
in the production or supply of goods or services or for
administrative purposes. Upon initial recognition, an
investment property is measured at cost. Subsequent to
initial recognition, investment property is measured at
cost less accumulated depreciation and accumulated
impairment losses, if any.
Any gain or loss on disposal of an investment property is
recognised in statement of profit and loss.
Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews
the carrying amounts of its tangible and intangible
assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any
such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of
the impairment loss (if any). When it is not possible to
estimate the recoverable amount of an individual asset,
the Company estimates the recoverable amount of the
cash generating unit to which the asset belongs. When
a reasonable and consistent basis of allocation can
be identified, corporate assets are also allocated to
individual cash-generating units, or otherwise they are
allocated to the smallest Company of cash-generating
units for which a reasonable and consistent allocation
basis can be identified.
Recoverable amount is the higher of fair value less costs
of disposal and value in use. In assessing value in use,
the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of money
and the risk specific to the asset for which the estimates of
future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is
reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the
carrying amount of the asset (or a cash-generating unit)
is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been
determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognised immediately
in profit or loss.
Revenue Recognition
Revenue is recognised upon transfer of control of
promised goods or services to customers in an amount
that reflects the consideration the Company expects to
receive in exchange for those goods or services.
Sale of Goods
Revenue from the sale of products is recognised at the
point in time when control is transferred to the customer.
Revenue is measured based on the transaction price,
which is the consideration, net of customer incentives,
discounts, variable considerations, payments made
to customers, other similar charges, as specified in
the contract with the customer. Additionally, revenue
excludes taxes collected from customers, which are
subsequently remitted to governmental authorities.
Other Operating Income
Other operating income includes realized and unrealized
gains from derivative financial instruments. These
instruments are used to manage risks from fluctuations
in gold and silver prices. The company uses commodity
futures and options to hedge its raw material costs.
Changes in the fair value of these derivatives are recorded
directly in other operating income.
Other Income
Interest Income
Interest income from a financial asset is recognised when
it is probable that the economic benefits will flow to the
Company and the amount of income can be measured
reliably. Interest income is accrued on time basis, by
reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that exactly
discounts estimated future cash receipts through the
expected life of the financial asset to that asset’s net
carrying amount on initial recognition.
Inventories
Inventories which comprise of raw materials,
finished goods, stock in trade and packing materials.
Inventories which comprise raw materials, finished goods,
stock-in-trade and packing materials are carried at the
lower of cost or net realizable value. Cost is determined
on weighted average basis.
Cost of inventories comprises all costs of purchase and,
other duties and taxes (other than those subsequently
recoverable from tax authorities), costs of conversion and
all other costs incurred in bringing the inventory to their
present location and condition. In respect of purchase
of goods at prices that are yet to be fixed at the year end,
adjustments to the provisional amounts are recognised
based on the year-end closing gold rate.
Gold received under Gold Metal Loan arrangements with
banks and gold lease arrangements with other parties,
where the Company has an obligation to return equivalent
quantity and quality of gold, is recognised as inventory
with a corresponding liability at the prevailing gold price
on the date of receipt.
Such inventory is subsequently valued in accordance
with the Company’s inventory valuation policy. The
corresponding liability is subsequently measured in
accordance with the contractual terms and applicable
requirements of Ind AS 109. Changes arising from
movements in gold prices, where applicable, are
recognised in the Statement of Profit and Loss.
Charges payable under Gold Metal Loan and gold lease
arrangements are recognised as finance/lease expenses
over the relevant period.
Packing Material and Consumables are valued at
Cost on FIFO Basis.
Net realizable value is the estimated selling price in
the ordinary course of business, less the estimated
completion cost and the estimated cost necessary to
make the sale.
Foreign Currency Transactions
Transaction denominated in foreign currencies are
normally recorded at exchange rate prevailing on the
date of transactions. Exchange differences arising on
foreign currency transaction settled during the period are
recognised in the statement of Profit and Loss except in
case where they relate to acquisition of fixed assets, are
adjusted with the carrying cost of such assets.
Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated into
functional currency at the exchange rates at the reporting
date. The resultant exchange differences are recognized
in the Statement of Profit and Loss.
Retirement and other Employee Benefits
Defined contribution plan
• The Company’s employees are covered under state
governed provident fund scheme and employees’
state insurance scheme which are in nature of
Defined Contribution Plan.
• The contribution paid/payable under the schemes
are recognised during the period in which the
employee renders the related service. The
Company’s contributions to Employees PF and ESI
are charged to statement of profit and loss.
Defined Benefit Plans:
• Employee gratuity fund scheme is the defined
benefit plan. Provision for gratuity has been made
in the accounts in respect of employees who have
completed required number of years of service as on
date of balance sheet based on Actuarial Valuation
Report obtained from Actuarial Consultant using
Projected Unit Credit Method. Gratuity is paid at the
time of retirement of employees.
• Short Term Employee Benefits like leave benefit, if
any, are paid along with salary and wages as and
when accrued, bonus to employees are charged
to profit and loss account on the basis of actual
payment on year to year basis.
Borrowing Cost
Borrowing costs consist of interest and other costs
(including exchange differences to the extent regarded
as an adjustment to the interest costs) incurred in
connection with the borrowing of funds.
Borrowing costs directly attributable to the acquisition
or construction of an asset, as defined in 23, that
necessarily takes a substantial period of time to get ready
for its intended use are capitalized as a part of the cost of
such assets. All other borrowing costs are recognized as
an expense in the period in which they are incurred.
Income Taxes
Income tax expense comprises current tax and deferred
tax. It is recognised in the Statement of profit and loss
except to the extent that it relates to an item recognized
directly in equity or in other comprehensive income.
Current tax
The Income tax expense or credit for the period is the tax
payable on the current period’s taxable income based
on the applicable income tax rate adjusted by changes
in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses. Income
tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively
enacted at the reporting date in India. Current income
tax relating to items recognised outside the Statement
of Profit and Loss is recognised outside the Statement
of Profit and Loss (either in OCI or in equity). Current tax
items are recognised in correlation to the underlying
transaction either in OCI or directly in equity. The
management periodically evaluates positions taken in
tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes
provisions, where appropriate, on the basis of amounts
expected to be paid to the tax authorities.
Deferred tax
Deferred tax is provided using the liability method on
temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial
reporting purposes at the reporting date. Deferred
tax liabilities are recognised for all taxable temporary
differences, except: When the deferred tax liability
arises from the initial recognition of goodwill or an
asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss.”
Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are
recognised to the extent that it is probable that taxable
profit will be available against which the deductible
temporary differences and the carry forward of unused
tax credits and unused tax losses can be utilised, except
when the deferred tax asset relating to the deductible
temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred tax asset
to be utilised. Unrecognised deferred tax assets are re¬
assessed at each reporting date, and are recognised to
the extent that it has become probable that future taxable
profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the year when the asset
is realised or the liability is settled, based on tax rates (and
tax laws) that have been enacted or substantively enacted
at the reporting date. Deferred tax assets and deferred
tax liabilities are offset, if a legally enforceable right exists
to set off current tax assets against current tax liabilities
and the deferred taxes relate to the same taxable entity
and the same taxation authority. Current tax and deferred
tax relating to items recognised outside the Statement
of Profit and Loss is recognised outside the Statement
of Profit and Loss (either in OCI or in equity). Deferred
tax items are recognised in correlation to the underlying
transaction either in OCI or directly in equity.
Earnings per Share
Basic earnings per share are calculated by dividing the net
profit for the year attributable to equity shareholders by
the weighted average number of equity shares outstanding
during the year. The weighted average number of equity
shares outstanding during the period and for all periods
presented is adjusted for events, such as bonus shares,
other than the conversion of potential equity shares that
have changed the number of equities shares outstanding,
without a corresponding change in resources. For the
purpose of calculating diluted earnings per share, the net
profit for the period attributable to equity shareholders
and the weighted average number of shares outstanding
during the year is adjusted for the effects of all dilutive.
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