2 SIGNIFICANT ACCOUNTING POLICIES
a Basis of Preparation
These financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in
India ('Indian GAAP') to comply with the Accounting Standards specified under Section 133 of the Companies Act,
2013, as applicable. The financial statements have been prepared under the historical cost convention on accrual
basis, except for certain financial instruments which are measured at fair value.
b Property, Plant and Equipment
Property, Plant and Equipment are stated at cost, less accumulated depreciation / amortisation. Costs include all
expenses incurred to bring the asset to its present location and condition.
Property, Plant and Equipment exclude computers and other assets individually costing Rs. 5000 or less which are not
capitalised except when they are part of a larger capital investment programme.
c Depreciation and amortization
Depreciation has been provided on the Fixed Asset on the SLM/WDV method and in accordance with the useful life of
the Asset as prescribed under Schedule II of the Companies Act, 2013.
The useful life of the Assets has been taken as below;
d Impairment of assets
At each balance sheet date, the management reviews the carrying amounts of its assets included in each cash generating
unit to determine whether there is any indication that those assets were impaired. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of impairment. Recoverable amount is the
higher of an asset's net selling price and value in use. In assessing value in use, the estimated future cash flows
expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax
discount rate that reflects the current market assessments of time value of money and the risks specific to the
asset. Reversal of impairment loss is recognised as income in the statement of profit and loss.
e Investment
Long-term investments and current maturities of long-term investments are stated at cost, less provision for other
than temporary diminution in value. Current investments, except for current maturities of long-term investments,
comprising investments in mutual funds, government securities and bonds are stated at the lower of cost and fair
value.
f Inventories
Raw materials are carried at the lower of cost and net realisable value. Cost is determined on a weighted average
basis. Purchased goods-in-transit are carried at cost. Work-in-progress is carried at the lower of cost and net
realisable value. Stores and spare parts are carried at lower of cost and net realisable value. Finished goods produced or
purchased by the Company are carried at lower of cost and net realisable value. Cost includes direct material and labour
cost and a proportion of manufacturing overheads.
g Cash and cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amount of
cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from
the date of purchase, to be cash equivalents.
h Revenue recognition
Revenue from the sale of equipment are recognised upon delivery, which is when title passes to the customer.
Revenue is reported net of discounts.
Dividend is recorded when the right to receive payment is established. Interest income is recognised on time
proportion basis taking into account the amount outstanding and the rate applicable.
i Employee Benefits
Post-employment benefit plans
Contributions to defined contribution retirement benefit schemes are recognised as expense when employees have
rendered services entitling them to such benefits.
For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with
actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in
the statement of profit and loss for the period in which they occur. Past service cost is recognised immediately to the extent
that the benefits are already vested, or amortised on a straight-line basis over the average period until the benefits become
vested.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit
obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any
asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions
to the scheme.
Other employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered
by employees is recognised during the period when the employee renders the service. These benefits include compensated
absences such as paid annual leave, overseas social security contributions and performance incentives.
Compensated absences which are not expected to occur within twelve months after the end of the period in which
the employee renders the related services are recognised as an actuarially determined liability at the present value of
the defined benefit obligation at the balance sheet date.
j Foreign currency transactions
Income and expense in foreign currencies are converted at exchange rates prevailing on the date of the transaction.
Foreign currency monetary assets and liabilities other than net investments in non-integral foreign operations are translated
at the exchange rate prevailing on the balance sheet date and exchange gains and losses are recognised in the statement
of profit and loss. Exchange difference arising on a monetary item that, in substance, forms part of an enterprise's net
investments in a non-integral foreign operation are accumulated in a foreign currency translation reserve.
k Taxation
Current income tax expense comprises taxes on income from operations in India and in foreign jurisdictions. Income
taxpayable in India is determined in accordance with the provisions of the Income Tax Act, 1961. Tax expense
relating to foreign operations is determined in accordance with tax laws applicable in countries where such operations are
domiciled.
Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which gives rise to future economic benefits
in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence
that the Company will pay normal income tax after the tax holiday period. Accordingly, MAT is recognised as an asset in
the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated
with it will fructify.
Deferred tax expense or benefit is recognised on timing differences being the difference between taxable income and
accounting income that originate in one period and is likely to reverse in one or more subsequent periods. Deferred
tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively
enacted by the balance sheet date.
Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance
tax paid and income tax provision arising in the same tax jurisdiction for relevant tax paying units and where the Company
is able to and intends to settle the asset and liability on a net basis.
The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these
relate to taxes on income levied by the same governing taxation laws.
l Earnings Per Shares
Basic earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the period. Diluted earning per share is
computed by taking into account the weighted average number of equity shares outstanding during the period and
the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity
shares into equity shares.
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