3.4 Material Accounting Policies Information
a) Current and non-current classification
All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle
and other criteria set out in the Division II of Schedule III to
the Companies Act, 2013. Based on the nature of products
and the time between acquisition of assets for processing
and their realisation in cash and cash equivalents, the
Company has ascertained its operating cycle as 12 months
for the purpose of current and non-current classification of
assets and liabilities.
An asset is treated as current when:
- It is expected to be realised or intended to be sold or
consumed in normal operating cycle,
- It is held primarily for the purpose of trading,
- It is expected to be realised within 12 months after the
reporting period; or
- It is cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at least
twelve months after the reporting period.
The Company classifies all other assets as non-current.
A liability is treated as current when:
- It is expected to be settled in normal operating cycle,
- It is held primarily for the purpose of trading,
- It is due to be settled within twelve months after the
reporting period; or
- There is no unconditional right to defer the settlement
of the liability for at least 12 months after the reporting
period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non¬
current assets and liabilities respectively.
b) Property Plant and Equipment and Depreciation/
Amortisation
A. Items of Property, plant and equipment including
Capital-work in-progress are stated at cost, net
of accumulated depreciation and accumulated
impairment losses, if any. Cost comprises the purchase
price and any attributable cost of bringing the asset
to its working condition for its intended use. Such
cost includes the cost of replacing part of the plant
and equipment and borrowing costs for long term
construction projects if the recognition criteria are
met. Subsequent expenditure related to an item of
fixed asset is added to its book value only if it increases
the future benefits from the existing asset beyond its
previously assessed standard of performance. When
significant parts of plant and equipment are required
to be replaced at intervals, the Company depreciates
them separately based on their specific useful lives. All
other repair and maintenance costs are recognized in
statement of profit or loss as incurred. On transition
to INDAS for the first time, the Company adopted the
deemed cost approach mentioned in INDAS 101 -
First time adoption in respect of its Property, Plant and
Equipment.
B. Depreciation is provided on written down value based
on useful life of the assets as prescribed in Schedule II
to the Companies Act, 2013. Depreciation on additions
to assets or on sale/disposal of assets is calculated
pro-rata from the month of such addition, or upto the
month of such sale/disposal, as the case may be.
The residual values, useful lives and methods of
depreciation of property plant equipment are reviewed
at each financial year and adjusted prospectively, if
appropriate.
c) Investments
i) Other Investment
On initial recognition of an equity investment that is not
held for trading, the Company may irrevocably elect to
present subsequent changes in the investment's fair value
in OCI (designated as FVTOCI - equity investment). This
election is made on an investment-by-investment basis.
Equity investments at FVTOCI are subsequently measured
at fair value through OCI. Dividends are recognised
as income in profit or loss unless the dividend clearly
represents a recovery of part of the cost of the investment.
Other net gains and losses are recognised in OCI and are
not reclassified to profit or loss.
Investments other than the above are classified as FVTPL
and are subsequently measured at fair value. The net gains
d) Inventories
All inventories are stated at lower of 'Cost and Net
Realizable Value':
i. Stores and spares, packing materials and raw materials
are valued at lower of cost and net realisable value and
for this purpose, cost is determined on First in First
Out (FIFO) basis. Cost includes cost of purchase and
other costs incurred in bringing the inventories to their
present location and condition. However, the aforesaid
items are not valued below cost if the finished products
in which they are to be incorporated are expected to be
sold at or above cost.
ii. Finished products and Work in Progress are valued
at lower of cost and net realisable value and for
this purpose. Cost of finished goods and work in
progress includes direct materials, direct labour and an
appropriate proportion of variable and fixed overhead
expenditure, the latter being allocated on the basis of
normal operating capacity.
iii. Traded goods are valued at lower of cost and net
realizable value. Cost is determined on a weighted
average basis.
Net realisable value is the estimated selling price in the
ordinary course of business, less estimated remaining costs
of completion and the estimated costs necessary to make
the sale.
e) Cash and Cash Equivalents
Cash and cash equivalent in the balance sheet comprise cash
at banks and on hand and short-term deposits with an original
maturity of three months or less, which are subject to an
insignificant risk of changes in value. For the purpose of the
statement of cash flows, cash and cash equivalents consist
of cash and short-term deposits, as defined above, net of
outstanding bank overdrafts, if any as they are considered an
integral part of the Company's cash management.
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