2 Material accounting policies
Material accounting policies adopted by the company are as under:
2.1 Basis of Preparation of Financial Statements
(a) Statement of Compliance with Ind AS
The financial statements comply in all material aspects with Indian Accounting Standards (IndAS) notified under
section 133 of the Companies Act, 2013 (the Act) read with Companies (Indian Accounting Standards) Rules,
2015 and other relevant provisions of the Act.
Accounting policies have been consistently applied to all the years presented except where a newly issued
accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the
accounting policy in use.
The financial statements have been prepared on a historical cost basis, except for the following:
* Certain financial assets and liabilities is measured at fair value;
* defined benefit plans - plan assets measured at fair value;
(b) All assets and liabilities have been classified as current or non-current as per the Company’s operating cycle
and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of services and
the time between the rendering of service and their realization in cash and cash equivalents, the Company has
ascertained its operating cycle as twelve months for the purpose of current and noncurrent classification of
assets and liabilities.
(c) Use of estimates
The preparation of financial statements in conformity with Ind AS requires the Management to make estimate
and assumptions that affect the reported amount of assets and liabilities as at the Balance Sheet date, reported
amount of revenue and expenses for the year and disclosures of contingent liabilities as at the Balance Sheet
date. The estimates and assumptions used in the accompanying financial statements are based upon the
Management's evaluation of the relevant facts and circumstances as at the date of the financial statements.
Actual results could differ from these estimates. Estimates and underlying assumptions are reviewed on a
periodic basis. Revisions to accounting estimates, if any, are recognized in the year in which the estimates are
revised and in any future years affected. Refer Note 3 for detailed discussion on estimates and judgments.
(d) Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is also the Company’s functional
currency. All amounts have been rounded-off to the nearest Lakhs, unless otherwise indicated.
2.2 Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that
is directly attributable to the acquisition of the items. Cost of property, plant and equipment comprises its purchase
price net of any discounts and rebates, any import duties and other taxes (other than those subsequently recovered
from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other
incidental expenses, decommissioning costs, if any, and interest on borrowings attributable to it up to the date it is
ready for its intended use. Cost of property, plant and equipment that are not yet ready for their intended use at the
balance sheet date are shown under capital work-in-progress.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the
item can be measured reliably. All other repairs and maintenance are charged to Statement of Profit and Loss during
the year in which they are incurred.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is
classified as capital advances under other non-current assets.
Depreciation methods, estimated useful lives
The Company depreciates Property, plant and equipments using the straight line method over their estimated useful
lives as prescribed under Schedule II to the Companies Act, 2013 as under:
* Leasehold Land are amortized over the lease period, which corresponds with the useful lives of the assets.
Depreciation on addition to property plant and equipment is provided on pro-rata basis from the date of acquisition.
Depreciation on sale/deduction from property plant and equipment is provided up to the date preceding the date of
sale, deduction as the case may be. Gains and losses on disposals are determined by comparing proceeds with
carrying amount. These are included in Statement of Profit and Loss under respective heads.
Depreciation methods, useful lives and residual values are reviewed periodically at each financial year end and
adjusted prospectively, as appropriate.
2.3 Intangible Assets
Intangible assets are stated at acquisition cost, net of accumulated amortization.
The Company amortized intangible assets over their estimated useful lives using the straight line method. The
estimated useful lives of intangible assets are as follows:
2.4 Foreign Currency Transactions
(a) Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment
in which the entity operates (‘the functional currency’). The financial statements are presented in Indian rupee
(INR), which is the Company’s functional and presentation currency.
(b) Transactions and balances
On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount
the exchange rate between the functional currency and the foreign currency at the date of the transaction. Gains/
Losses arising out of fluctuation in foreign exchange rate between the transaction date and settlement date are
recognised in the Statement of Profit and Loss.
All monetary assets and liabilities in foreign currencies are restated at the year end at the exchange rate
prevailing at the year end and the exchange differences are recognised in the Statement of Profit and Loss.
2.5 Fair value measurement
The Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption that
the transaction to sell the asset or transfer the liability takes place either:
? In the principal market for the asset or liability, or
? In the absence of a principal market, in the most advantageous market for the asset or liability accessible to the
Company.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of
unobservable inputs. The Company's management determines the policies and procedures for fair value measurement
such as investment made by company in mutual funds.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:
? Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
? Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable
? Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable
2.6 Revenue Recognition
Sale of products
Revenue from the sale of products is recognised when the Company satisfies the performance obligation by
transferring promised products to the customer. The revenue is measured based on transaction price, which is the
fair value of consideration received or receivable, and is net of discounts, allowances, returns and amounts collected
on behalf of third party.
Rendering of services
The Company primarily earns revenue from recoating / repairs of electrolytic products. Revenue from recoating /
repairs of electrolytic products is recognized in accordance with the terms of the contract with customers when the
identified performance obligation is completed. The revenue is measured based on transaction price, which is the fair
value of consideration received or receivable and amounts collected on behalf of third party.
Other Income
Interest Income is recognised on a basis of effective interest method as set out in Ind AS 109, Financial Instruments,
and where no significant uncertainty as to measurability or collectability exists.
Dividend from investment is recognised as income when right to receive is established.
2.7 Taxes
Tax expense for the year, comprising current tax and deferred tax, are included in the determination of the net profit
or loss for the year.
(a) Current income tax
Current tax assets and liabilities are measured at the amount expected to be recovered 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 year end date. Current tax assets and tax liabilities are offset where the entity has a legally enforceable
right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
(b) Deferred tax
Deferred income tax is provided in full, using the balance sheet approach, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in financial statements. Deferred
income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit
(tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially
enacted by the end of the year and are expected to apply when the related deferred income tax asset is realised
or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilize those temporary differences and losses.
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 assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority.
Current and deferred tax is recognized in Statement of Profit and Loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
2.8 Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
Raw materials are valued at lower of cost and net realizable value. Cost includes purchase price, (excluding those
subsequently recoverable by the enterprise from the concerned revenue authorities), freight inwards and other
expenditure incurred in bringing such inventories to their present location and condition. In determining the cost,
weighted average cost method is used.
Work in progress and manufactured finished goods are valued at the lower of cost and net realisable value. Cost
of work in progress and manufactured finished goods is determined on the weighted average basis and comprises
direct material, cost of conversion and other costs incurred in bringing these inventories to their present location and
condition.
Provision of obsolescence on inventories is considered on the basis of management’s estimate based on demand
and market of the inventories.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of
completion and the estimated costs necessary to make the sale.
The comparison of cost and net realizable value is made on item by item basis.
2.9 Impairment of non-financial assets
The Company assesses at each year end whether there is any objective evidence that a non financial asset or a
group of non financial assets is impaired. If any such indication exists, the Company estimates the asset's recoverable
amount and the amount of impairment loss.
An impairment loss is calculated as the difference between an asset’s carrying amount and recoverable amount.
Losses are recognized in Statement of Profit and Loss and reflected in an allowance account. When the Company
considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the
amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised, then the previously recognised impairment loss is reversed through Statement
of Profit and Loss.
The recoverable amount of an asset (as defined below) is the greater of its value in use and its fair value less costs to
sell. 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 risks specific to the asset.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates
cash in flows from continuing use that are largely independent of the cash inflows of other assets or groups of assets
(the “cash-generating unit”).
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