C) Material accounting policies
A summary of the significant accounting policies applied in the
preparation of the financial statements are as given below.
These accounting policies have been applied consistently to all
periods presented in the financial statements.
1. Property, plant and equipment
1.1. Initial recognition and measurement
An item of property, plant and equipments recognized as an
asset if and only if 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.
Items of property, plant and equipment are initially
recognized at cost. Subsequent measurement is done at
cost less accumulated depreciation/amortization (other
than freehold land) and accumulated impairment losses.
Cost includes expenditure that is directly attributable to
bringing the asset to the location and condition, inclusive of
non-refundable taxes & duties, necessary for it to be capable
of operating in the manner intended by management.
When parts of an item of property, plant and equipment
have different useful lives, they are recognized
separately.
Items of spare parts, stand-by equipment and servicing
equipment which meet the definition of property, plant
and equipment are capitalized. Other spare parts are
carried as inventory and recognized in the statement of
profit and loss on consumption.
1.2. Subsequent costs
Subsequent expenditure is recognized as an increase in
the carrying amount of the asset when it is probable
that future economic benefits deriving from the cost
incurred will flow to the enterprise and the cost of the
item can be measured reliably.
The cost of replacing part of an item of property, plant
and equipment is recognized in the carrying amount of
the item if it is probable that the future economic
benefits embodied within the part will flow to the
Company and its cost can be measured reliably.
All other expenses on existing property, plant and
equipment, including day-to-day repair and
maintenance expenditure and cost of replacing parts,
are charged to profit and loss account for the period in
which such expense are incurred.
1.3. De-recognition
Property, plant and equipment is derecognized when
no future economic benefits are expected from their
use or upon their disposal. Gains and losses on de¬
recognition of an item of property, plant and
equipment are determined by comparing the proceeds
from disposal, if any, with the carrying amount of
property, plant and equipment, and are recognized in
the statement of profit and loss.
1.4. Depreciation/amortization
The depreciation on Property, Plant & Equipment has
been provided on the written down value Value
method as per the useful life prescribed in Schedule II to
the Companies Act, 2013. Depreciation on the
property, plant & equipment added / disposed off /
discarded during the year has been provided on pro
rata basis with reference to the date of addition /
disposition /discardation.
The residual values, useful lives and methods of
depreciation of Property, Plant and Equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.
. Capital work-in-progress
The cost of self-constructed assets includes the cost of
materials & direct labour, any other costs directly attributable
to bringing the assets to the location and condition necessary
for it to be capable of operating in the manner intended by
management and borrowing costs.
Expenses directly attributable to construction of property,
plant and equipment incurred till they are ready for their
intended use are identified and allocated on a systematic
basis on the cost of related assets.
Depreciation is not recorded on capital work-in-progress until
construction and installation is complete and the asset is
ready for its intended use.
3. Intangible assets
3.1. Initial recognition and measurement
An intangible asset is recognized if and only if it is probable
that the expected future economic benefits that are
attributable to the asset will flow to the company and the
cost of the asset can be measured reliably.
Intangible assets that are acquired by the Company, which
have finite useful lives, are recognized at cost. Subsequent
measurement is done at cost less accumulated amortization
and accumulated impairment losses. Cost includes any
directly attributable incidental expenses necessary to make
the assets ready for its intended use.
3.2. Subsequent costs
Subsequent expenditure is recognized as an increase in the
carrying amount of the asset when it is probable that future
economic benefits deriving from the cost incurred will flow to
the enterprise and the cost of the item can be measured
reliably.
3.3. De-recognition
An intangible asset is derecognized when no future
economic benefits are expected from their use or upon their
disposal. Gains & losses on de-recognition of an item of
intangible assets are determined by comparing the
proceeds from disposal, if any, with the carrying amount of
intangible assets and are recognized in the statement of
profit and loss.
3.4. Amortization
Intangible assets are amortised over a period of estimated
useful life as determined by the management.
4. Borrowing costs
Borrowing costs that are directly attributable to the
acquisition, construction or production of qualifying assets
are capitalized as part of cost of such asset until such time
the assets are substantially ready for their intended use.
Qualifying assets are assets which necessarily take
substantial period of time to get ready for their intended use
or sale.
Capitalization of borrowing costs ceases when
substantially all the activities necessary to prepare the
qualifying assets for their intended uses are complete.
Borrowing costs consist of (a) interest expense
calculated using the effective interest method as
described in Ind AS 109 - 'Financial Instruments' (b)
finance charges in respect of finance leases recognized
in accordance with Ind AS 116 - 'Leases' and (c)
exchange differences arising from foreign currency
borrowings to the extent that they are regarded as an
adjustment to interest costs. Income earned on
temporary investment of the borrowings pending their
expenditure on the qualifying assets is deducted from
the borrowing costs eligible for capitalization.
All other borrowing costs are recognized as an expense
in the year in which they are incurred.
5. Inventories
Raw materials, stores, work-in-progress and finished
goods are stated at the lower of cost and net realisable
value. Cost of raw materials and stores comprises cost
of purchases. Cost of work-in-progress and finished
goods comprises 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.
Costs of inventories also include all other costs incurred
in bringing the inventories to their present location and
condition. Inventories are valued on the basis of FIFO
method. Costs of purchased inventory are determined
after deducting rebates and discounts. Net realisable
value is the estimated selling price in the ordinary
course of business less the estimated costs of
completion and the estimated costs necessary to make
the sale.
6. Cash and cash equivalents
Cash and cash equivalents in the balance sheet
comprise cash at banks, cash on hand and short-term
deposits with an original maturity of twelve months or
less, which are subject to an insignificant risk of
changes in value.
7. Government grants
"Government grants are recognized only when its
reasonable certainty that economics benefit flow to the
entities and attached conditions will be compiled with
it. Government grants are recognized and shown in the
balance sheet as liability and income is accrued based
on the terms of schemes in the statement of profit and
loss over a phased manner in consideration with
scheme terms and related use of assets. Government
grants related to depreciable property, plant &
equipment is treated as deferred income which is
recognized in the Statement of Changes in Equity (SOCE) on
a systematic and rational basis over the useful life of the
asset i.e. such grants is allocated to income over the periods
and in the proportion in which depreciation on those assets
is charged."
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