1. Material Accounting Policies
This Note provides a list of the Material Accounting Policies adopted in the preparation of these financial statements. These policies
have been consistently applied to all the years presented, unless otherwise stated. These financial statements are the separate
financial statements of the Company.
1.1 Compliance with Ind AS
The standalone financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section
133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of
the Act and generally accepted accounting practices in India.
1.2 Historical Cost Convention
These standalone financial statements have been prepared on a historical cost basis, except for the following:
(a) Certain financial assets and liabilities (including derivative instruments) that is measured at fair value; (Refer note 6)
(b) Defined benefit plans - plan assets measured at fair value. (Refer note 16)
1.3 Revenue Recognition
Sale of goods
At contract inception, Company assess the goods or services promised in a contract with a customer and identify as a performance
obligation each promise to transfer to the customer. Revenue is recognised upon transfer of control of promised products or services
to customers in an amount of the transaction price that is allocated to that performance obligation and that reflects the consideration
which the Company expects to receive in exchange for those products or services.
The Company considers the terms of the contract and its customary business practices to determine the transaction price. The transaction
price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to
a customer net of returns, excluding amounts collected on behalf of third parties (for example, taxes).
With respect to sale of products revenue is recognised at a point in time when the performance obligation is satisfied and the customer
obtains the control of goods or services. There is no significant financing components involved on contract with customers. Invoices are
usually payable within the credit period as agreed with respective customers.
The Company recognises revenue only when it is probable that it will collect the consideration to which it will be entitled in exchange for
the goods or services that will be transferred to the customer.
Royalty Income
The Company recognises revenue for a sales based royalty only when the sales are made by the licensee.
1.4 Property, plant and equipment
All items of property, plant and equipment are stated at cost less accumulated depreciation, impairment loss, if any. Cost includes
expenditure that is directly attributable to the acquisition of these items.
The cost of any item of PPE shall be recognised as an asset if an only if it is probable that future economic benefit associated with
the item will flow to the company and the cost of the item can be measured reliably.
Subsequent costs are included in the asset's carrying amount or recognised 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. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All repairs and
maintenance are charged to statement of profit and loss during the reporting period in which they are incurred.
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values on the basis of useful
lives prescribed in Schedule II to the Companies Act, 2013, which are also supported by technical evaluation. Item of Property,
plant and equipment for which related actual cost do not exceed D5,000 are fully depreciated in the year of purchase. In respect
of the following assets, useful lives different from Schedule II have been considered on the basis of technical evaluation, as
under:-
• Motor Vehicles: 5 years
• Mobile Phones: 2 years
• Office Equipments: 3-5 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. The gains/losses are recognised in the
statement of profit or loss.
Transition to Ind AS
The cost property, plant and equipment at 1 April 2016, the company's date of transition to Ind AS, was determined with reference
to its carrying value recognised as per the previous GAAP (deemed cost), as at the date of transition to Ind AS.
1.5 Investment Property
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is
classified as Investment Property. Investment Property is measured at its cost, including related transaction costs and where
applicable borrowing costs less depreciation and impairment, if any. Subsequent expenditure is capitalised to the asset's carrying
amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the
cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an
investment property is replaced, the carrying amount of the replaced part is derecognised.
Depreciation on building is provided over its useful life using straight line method.
Useful life considered for calculation of depreciation for assets class are as follows-
Non-Factory Building 60 years
The fair values of investment property is disclosed in the notes. Fair value is determined by an independent valuer who holds
a recognised and relevant professional qualification and has recent experience in the location and category of the investment
property being valued.
Rental Income from investment property is recognised as income in profit or loss on a straight-line basis over the term of the
lease except where the rentals are structured to increase in line with expected general inflation.
Transition to Ind AS
The cost of investment property at 1 April 2016, the company's date of transition to Ind AS, was determined with reference to its
carrying value recognised as per the previous GAAP (deemed cost), as at the date of transition to Ind AS
1.6 Intangible Assets
Intangible assets (Computer Software) have a finite useful life and are stated at cost less accumulated amortisation, impairment
loss, if any.
Computer Software for internal use which is primarily acquired from third party vendors is capitalised. Subsequent costs
associated with maintaining such software are recognised as expense as incurred. Cost of Software includes license fees and
cost of implementation/system integration services where applicable.
Transition to Ind AS
The cost Intangible assets at 1 April 2016, the company's date of transition to Ind AS, was determined with reference to its carrying
value recognised as per the previous GAAP (deemed cost), as at the date of transition to Ind AS.
Amortisation methods and periods
The Company amortises intangible assets with a finite useful life using the straight-line method over the following periods:
• Computer software 5 Years
1.7 Impairment of non-financial assets
The Company's non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is
estimated.
For impairment testing, assets that do not generate independent cash inflows are combined together into cash-generating units
(CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash
inflows of other assets or CGUs.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in
use is based on the estimated future cash flows, 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 CGU (or the asset).
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment
losses are recognised in the statement of profit and loss. Impairment loss recognised in respect of a CGU is allocated first to reduce
the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets of the CGU
(or Group of CGUs) on a pro rata basis.
In respect of other assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting
date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been
a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset's
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if
no impairment loss had been recognised.
1.8 Leasesi. The Company as a lessee
The Company assesses whether a contract contains a lease as per the requirements of Ind AS 116 "Leases" at inception of a contract.
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period in exchange
for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses
whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from
use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
To classify each lease, the company makes an overall assessment of whether the lease transfers substantially all of the risks and
rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating
lease. As part of this assessment, the company considers certain indicators such as whether the lease is for the major part of the
economic life of the asset.
Lease payments included in the measurement of the lease liability comprise the following:
• fixed payments, including in-substance fixed payments;
• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
• amounts expected to be payable under a residual value guarantee; and
• the exercise price under a purchase option that the company is reasonably certain to exercise, lease payments in an optional
renewal period if the company is reasonably certain to exercise an extension option, and penalties for early termination of a
lease unless the company is reasonably certain not to terminate early.
The Company recognizes a right-of-use asset ("ROU") and a lease liability at the lease commencement date, except for leases with
a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company
recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and
lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle
and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives
received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to
the end of the lease term, unless the lease transfers ownership of the underlying asset to the Company by the end of the lease
term or the cost of the right-of-use asset reflects that the Company will exercise a purchase option. In that case the right-of-use
asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property
and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the incremental borrowing rate obtained from various external financing sources. Lease liabilities are remeasured
with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise
an extension or a termination option.
ii. The Company as a lessor
When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.
Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is
classified as a finance lease. All other leases are classified as operating leases.
For operating leases, rental income is recognized on a straight basis over the term of the relevant lease.
1.9 Investment in subsidiaries, joint ventures and associates
Investment in subsidiaries, joint ventures and associates are stated at cost less provision for impairment loss, if any. Investments
are tested for impairment wherever event or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised in the statement of profit and loss for the amount by which the carrying amount of investments
exceed its recoverable amount.
1.10 Financial Instruments1.10.1 Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial
liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL),
transaction costs that are directly attributable to its acquisition or issue.
On initial recognition, a financial asset is classified as measured at
• amortised cost;
• Fair Value through Other Comprehensive income (FVOCI) - equity investment; or
• Fair Value through profit and loss (FVTPL)
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the company changes its
business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
• The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
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 FVOCI - equity investment). This election is made on an investment
by investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes
all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise
meets the requirements to be measured at amortised cost or at FVOCI or at FVTPL if doing so eliminates or significantly reduces
an accounting mismatch that would otherwise arise
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as
held- for- trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair
value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently
measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised
in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
1.10.3. Derecognition
Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the
rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial
asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does
not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all
of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially
different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying
amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.
1.10.4. Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company
currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset
and settle the liability simultaneously.
1.10.5. Impairment of financial instruments
The Company recognises loss allowances using the expected credit loss (ECL) model for the financial assets measured at amortised cost.
Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all
other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant
increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or
reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognized
as an impairment gain or loss in profit or loss.
1.11 Borrowing Cost
Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they
are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs are directly attributable
to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalised
as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.
1.12 Foreign Currency Translation(a) Functional and presentation currency
Items included in the standalone financial statements of the Company are measured using the currency of the primary economic
environment in which the Company operates ('the functional currency'). The standalone financial statements are presented in Indian
rupee (D), which is the Company's functional and presentation currency. All amounts have been rounded-off to the nearest lakhs unless
otherwise indicated.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. At
the year end, monetary assets and liabilities denominated in foreign currencies are restated at the year end exchange rates. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translations of monetary assets and liabilities
denominated in foreign currencies at year end exchange rates are generally recognised in the statement of profit or loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within
finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other
income/other expense.
1.13 Employee Benefits(i) Short-term employee benefits
Short -term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid, if the Company has a legal or constructive obligation to pay this amount as
a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
(ii) Defined Benefit Plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company's net obligation in respect
of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned
in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When
the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits
available in the form of any future refunds from the plan or reductions in future contributions to the plan ("the asset ceiling"). In order
to calculate the present value of economic benefits, consideration is given to any minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding
interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. The Company determines the net interest
expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined
benefit obligation at the beginning of the annual period to the then net defined benefit liability (asset), taking into account any changes
in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and
other expenses related to defined benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service ('past
service cost' or 'past service gain') or the gain or loss on curtailment is recognised immediately in profit or loss. The Company recognises
gains and losses on the settlement of a defined benefit plan when the settlement occurs.
(iii) Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity
and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions towards
Government administered provident fund scheme. Obligations for contributions to defined contribution plans are recognised as an
employee benefit expense in profit or loss in the periods during which the related services are rendered by employees.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
(iv) Other long term employee benefit obligations
The Company's net obligation in respect of long-term employee benefits other than post-employment benefits is the amount of future
benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine
its present value, and the fair value of any related assets is deducted. The obligation is measured on the basis of an annual independent
actuarial valuation using the projected unit credit method. Remeasurement gains or losses are recognised in profit or loss in the period
in which they arise.
1.14 Income Tax
Income tax comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination
or to an item recognised directly in equity or in other comprehensive income.
(i) Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax
payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be
paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted
or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and
it is intended to realise the asset and settle the liability on a net basis or simultaneously.
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax
losses and tax credits.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be
used. The existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, in case of a history
of recent losses, the company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary difference or
there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised.
Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised/ reduced to the extent that it
is probable/ no longer probable respectively that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled,
based on the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at
the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate
to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current
tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
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