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ii) Summary of material accounting policies
a) Investments in subsidiaries
Investments in equity of subsidiaries and joint ventures are accounted at cost in accordance with Ind AS 27 "separate financial
statements".
b) Property, plant and equipment ('PPE'), capital work in progress and Right-of-use assets
i. Freehold land is carried at cost. Other property, plant and equipment are stated at original cost of acquisition/installation
(net of goods and services tax) less accumulated depreciation and impairment loss, if any. Cost includes cost of acquisition,
construction and installation, taxes, duties, freight and other incidental expenses that are directly attributable to bringing
the asset to its working condition for its intended use and estimated cost for decommissioning of an asset. Further, in
respect of accounting periods commencing on or after 7 December, 2006, exchange differences arising on reporting of
long-term foreign currency monetary items which are recognised in the financial statements till the period ending 31
March 2016 at rates different from those at which they were initially recorded during the period, or reported in the previous
financial statements are added to or deducted from the cost of the assets and depreciated over the balance life of the asset,
where these monetary items pertain to the acquisition of depreciable property, plant and equipment.
ii. Property, Plant and Equipment is recognised as per Para 7 of Ind AS - 16.
iii. 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.
iv. An item of material spare parts that meets the definition of PPE is recognised as PPE. The corresponding old spares are
de-capitalised on such date. The depreciation on such an item of spare part will begin when the asset is available for
use i.e., when it is in the location and condition necessary for it to be capable of operating in the manner intended by
management. In case of a spare part, as it may be readily available for use, it may be depreciated from the date of purchase
of the spare part.
v. Export Promotion Capital Goods scheme of government ('EPCG') relates to duties saved on import of PPE and related
spares. Under the scheme, the Company is required to export prescribed times of the duty saved on import of PPE and
related spares over a specified period of time. In case such commitments are not met, the Company would be required
to pay the duty saved along with interest to the regulatory authorities. Such grants/ benefits are initially recognized and
added to the cost of underlying property, plant and equipment where there is a reasonable certainty that the Company
will comply with all attached conditions.
vi. When a major repair is performed, its cost is recognised in the carrying amount of the Property, Plant and Equipment as
a replacement if the recognition criteria are satisfied. All other repairs and maintenance are charged to the statement of
profit and loss during the reporting period in which they are incurred.
vii. Capital work-in-progress comprises cost of property, plant and equipment and directly related expenses, net of accumulated
impairment losses, if any, that are not yet ready for their intended use at the reporting date.
viii. Pre-operating costs, being indirect in nature, are expensed to the statement of profit and loss as and when incurred.
ix. Right-of-use (ROU) assets are stated at cost, less accumulated depreciation and impairment loss, if any. The carrying amount
of ROU assets is adjusted for remeasurement of lease liability, if any, in future. Cost of ROU assets comprises the amount of
initial measurement of lease liability, lease payments made before the commencement date (net of incentives received), initial
direct costs and present value of estimated costs of dismantling and restoration, if any.
Depreciation on property, plant and equipment and right-of-use assets
i. Depreciation on property, plant and equipment is provided to the extent of depreciable amount on straight-line method
over the useful life of asset as specified in Part-C of Schedule II to the Companies Act, 2013. Components having value
significant to the total cost of the asset and life different from that of the main asset are depreciated over its useful life.
Depreciation is charged on pro-rata basis for asset purchased / disposed off during the year with reference to the date
of addition / disposal. Depreciation on the following assets is provided considering a shorter useful life as compared to
Schedule II useful life, based on technical evaluation (internal and/or external) in view of possible technology obsolescence
and product life cycle implications etc.
ii. rou assets are depreciated on straight line basis from the commencement date to the end or useful lire or asset or lease
term whichever is earlier.
iii. Leasehold improvements are amortised over the normal period of lease or useful lives, whichever is lower.
:) Intangible assets and intangible assets under development
i. Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the assets
will flow to the Company and the cost of the asset can be measured reliably.
ii. Intangible assets acquired separately are measured at cost on initial recognition. The cost of intangible assets acquired in a
business combination is their fair value at the date of acquisition. Following initial recognition, Intangible assets are carried
at cost of acquisition less accumulated amortisation and accumulated impairment losses, if any. Intangible assets with
finite lives are amortised on a straight-line basis over the useful economic life and assessed for impairment whenever there
is an indication that the intangible asset may be impaired. The amortisation expense on intangible assets with finite lives is
recognised in the statement of profit and loss.
v. Intangible under development (IUD) comprises of direct cost, related incidental expenses and attributable borrowing cost,
if any, on intangible assets which are not ready for their intended use. IUD usually pertain to a product development project
which has reached a defined milestone according to an established project management model and its technological and
economic feasibility is viable. Expenditure on research activities is recognised in statement of profit and loss as incurred.
d) Impairment of non-financial assets
The carrying amounts of non-financial assets are reviewed at each balance sheet date if there is any indication of impairment
based on internal/external factors. An asset or cash generating unit's (CGU) is treated as impaired when the carrying amount
exceeds its recoverable value and accordingly is written down to its recoverable amount. The recoverable amount is the greater
of the asset's net selling price and value in use. Recoverable amount is determined for an individual asset, unless the asset
does not generate cash inflows that are largely independent of those from other assets or groups of assets. In assessing value
in use, the estimated future cash flows are discounted to the present value using a pre-tax discount rate that reflects current
market assessment of the time value of money and risks specific to the assets. The Company bases its impairment calculation
on detailed budgets and forecast calculations, which are prepared separately for each of the Company's CGUs to which the
individual assets are allocated.
Goodwill with indefinite useful life is tested for impairment annually and when circumstances indicate that the carrying value
may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs)
to which it relates.
An impairment loss is charged to the statement of profit and loss in the year in which an asset is identified as impaired. After
impairment, depreciation/amortisation is provided on the revised carrying amount of the asset over its remaining useful life. An
impairment loss in respect of goodwill is not subsequently reversed. In respect of other assets, the impairment loss recognized
in prior accounting periods is reversed by crediting the statement of profit and loss if there has been a change in the estimate of
recoverable amount.
e) Borrowing costs
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of
such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Ancillary
costs incurred in connection with the arrangement of borrowings are amortised over the tenure of such borrowings. All other
borrowing costs are charged to the statement of profit and loss as finance costs. Borrowing costs also include exchange
differences to the extent regarded as an adjustment to the borrowing costs under Ind AS 23.
f) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity.
A. Financial assets
a. Initial recognition
Financial assets (unless it is a trade receivable without a significant financing component) are recognised initially at
fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Purchases or
sales of financial assets that require delivery of assets within a time frame established by regulation or convention in
the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to
purchase or sell the asset. A trade receivable without a significant financing component is initially measured at the
transaction price.
b. Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
1. Financial assets at amortised cost
2. Financial assets at fair value
Where assets are measured at fair value, gains and losses are either recognized in the statement of profit and loss (i.e.
fair value through profit and loss) (FVTPL), or recognized in other comprehensive income (i.e. fair value through other
comprehensive income) (FVTOCI)
Financial Assets at Amortised Cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business
model with an objective to hold these assets in order 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 (SPPI)
on the principal amount outstanding. Interest income from these financial assets is included in finance income using
the effective interest rate ("EIR") method. Impairment gains or losses arising on these assets are recognised in the
Statement of Profit and Loss.
Financial Assets Measured at Fair Value
Financial assets are measured at fair value through Other Comprehensive Income ('OCT) if these financial assets are
held within a business model with an objective to hold these assets in order to collect contractual cash flows or to
sell these financial assets 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. Movements in the carrying
amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign
exchange gains and losses which are recognised in the Statement of Profit and Loss.
I n respect of equity investments (other than for investment in subsidiaries and associates) which are not held for
trading, the Company has made an irrevocable election to present subsequent changes in the fair value of such
instruments in OCI. Such an election is made by the Company on an instrument by instrument basis at the time of
transition for existing equity instruments/ initial recognition for new equity instruments.
Financial asset not measured at amortised cost or at fair value through OCI is carried at FVTPL.
c. Impairment of Financial Assets
I n accordance with Ind AS 109, the Company applies the expected credit loss ("ECL") model for measurement and
recognition of impairment loss on financial assets and credit risk exposures.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that
whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased
significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly,
lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer
a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss
allowance based on 12-month ECL.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract
and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. Lifetime
ECL are the expected credit losses resulting from all possible default events over the expected life of a financial
instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible
within 12 months after the reporting date.
The Company follows 'simplified approach' for recognition of impairment loss allowance on trade receivables and
on any contractual right to receive financial asset that result from transactions within the scope of Ind AS 115.
Simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment
loss allowance based on lifetime ECL at each reporting date, right from its initial recognition.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the
Statement of Profit and Loss.
d. De-recognition of financial assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire,
or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
I f the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to
control the transferred asset, the Company recognizes its retained interest in the assets and an associated liability for
amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company
continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
B. Equity Instruments and Financial Liabilities
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial liability and an equity instrument.
a. Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of
its liabilities. Equity instruments which are issued for cash are recorded at the proceeds received, net of direct issue costs.
Equity instruments which are issued for consideration other than cash are recorded at fair value of the equity instrument.
b. Financial liabilities
Initial recognition
Financial liabilities are classified, at initial recognition, as financial liabilities at FVTPL, loans and borrowings and payables
as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below
FINANCIAL LIABILITIES AT FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial
recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of
repurchasing in the near term.
Gains or losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse
the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms
of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction
costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of
the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less
cumulative amortisation. Amortisation is recognised as finance income in the Statement of Profit and Loss.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR
method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings
is recognised over the term of the borrowings in the Statement of Profit and Loss.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss.
Where the terms of a financial liability is re-negotiated and the Company issues equity instruments to a creditor to
extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in the Statement of Profit and Loss;
measured as a difference between the carrying amount of the financial liability and the fair value of equity instrument
issued.
De-recognition of financial liabilities
Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or expired.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the
terms of an existing liability are substantially modified, such an exchange or modification is treated as de-recognition of
the original liability and recognition of a new liability. The difference in the respective carrying amounts is recognised in the
Statement of Profit and Loss.
C. Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet if there is a currently
enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis to realise the
assets and settle the liabilities simultaneously.
i) Employee benefits
i) Short-term benefits
Short-term employee benefits are recognized as an expense at the undiscounted amount in the statement of profit
and loss for the year in which the related services are rendered. Expenses on non-accumulating compensated
absences is recognised in the period in which the absences occur.
ii) Defined benefit plans
a) Post-employment and other long-term employee benefits are recognized as an expense in the statement of
profit and loss for the year in which the employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial valuation techniques.
b) Re-measurement of the net defined benefit liability, which comprises of 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 other comprehensive income in the period in which they occur.
iii) Defined contribution plans
Payments to defined contribution retirement benefit schemes are charged to the statement of profit and loss of
the year when the contribution to the respective funds are due. There are no other obligations other than the
contribution payable to the fund.
iv) Leave entitlement and compensated absences
Accumulated leave which is expected to be utilised within next twelve months, is treated as short-term employee
benefit. Leave entitlement are provided based on an actuarial valuation, similar to that of gratuity benefit. Re¬
measurement, comprising of actuarial gains and losses, in respect of leave entitlement are recognised in the
Statement of Profit and Loss in the period in which they occur. The obligations are presented as current liabilities in
the balance sheet since the Company does not have an unconditional right to defer settlement for at least twelve
months after the reporting period, regardless of when the actual settlement is expected to occur.
j) Share based payments
Equity settled share based compensation benefits are provided to employees under the various Employee Stock Option
Schemes. The fair value of options granted under the Employee Stock Option Scheme is recognised as an employee benefits
expense with a corresponding increase in equity as "Share options outstanding account". The total amount to be recognised is
determined by reference to the fair value of the options granted:
1) including any market performance conditions (e.g., the entity's share price)
2) excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales growth targets
and remaining an employee of the entity over a specified time period), and
3) i ncluding the impact of any non-vesting conditions (e.g. the requirement for employees holdings shares for a specific
period of time).
The total expenses are amortised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied.
At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on
the service and non-market performance vesting conditions. It recognises the impact of the revision to original estimates,
if any, in the statement of profit and loss, with a corresponding adjustment to equity. In case vested options forfeited or
expires unexercised, the related balance standing to the credit of the "Share options outstanding account" is transferred to
"Retained earnings".
In case of equity settled share based payments to employees of subsidiaries, in the standalone financial statements, the
Company recognises the impact in the investment in the subsidiaries.
k) Revenue recognition
Revenue from contract with customers
Revenue from contracts with customers is recognised using five set model stated in Ind AS 115.
• Identify the contract(s) with a customer;
• Identify the separate performance obligations in the contract;
• Determine the transaction price;
• Allocate the transaction price to the separate performance obligations; and
• Recognize revenue when (or as) each performance obligation is satisfied.
Applying these five steps, revenue from the contract is recognised when control of the goods or services is transferred to
the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for
those goods or services.
Revenue from sale of goods
Revenue from sale of goods is recognised at the point in time when control of the goods is transferred to the customer in
accordance with the terms of the contract. The control of the goods is transferred upon delivery to the customers either
at factory gate of the Company or specific location of the customer or when the goods are handed over to the freight
carrier, as per the terms of the contract. In case of exports, the control is generally deemed to be transferred when the
goods are shipped. Revenue is recognised when there is no continuing management involvement with the goods, and
the amount can be measured reliably. Certain contracts permit the customer to return an item. Generally returned goods
are exchanged only for new goods i.e. no cash refunds are offered. Revenue is measured at the transaction value of the
consideration received or receivable net of returns, trade discounts, volume rebates and goods and services tax.
Revenue from royalty income
Royalty income received under the licensing agreements is recognised over the period during which the underlying sales
are recognised as per the terms of agreement.
Revenue from service charges
Revenue from services are recognized over period of time on performance of obligation as per the terms of the agreement,
for which input method is used to measure the progress. The Company determines the input method on the basis of direct
measurements of the value of the services transferred to the customer till date relative to the remaining services promised
under the agreement. However, revenue from services comprising of development of art work and such other services,
involving single performance obligation, are recognised at a point in time.
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received
consideration from the customer. If a customer pays consideration before the Company transfers goods or services to the
customer, a contract liability is recognised. Contract liabilities are recognised as revenue when the Company performs
under the contract.
Other items
a. Export incentives / benefits are accounted on accrual basis when the conditions precedent are met and there is no
significant uncertainty about the collectability.
b. Dividend income is recognised when the right to receive the payment is established by the balance sheet date.
l) Government grants
i. Grants from the government are recognised at their fair value where there is a reasonable assurance that
such grant will be received and the compliance with the condition attached therewith will be met.
ii. Government grants relating to income are deferred and recognised in the statement of profit and loss
over the period necessary to match them with the costs that they are intended to compensate and
presented within other income.
iii. Government grants related to acquisition of assets including EPCG are credited to the statement of profit
and loss over the useful lives of qualifying assets or other systematic basis representative of the pattern
of fulfilment of obligations associated with the grant received. Such grants are presented within other
income. Grants received less amounts credited to the statement of profit and loss at the reporting date
are included in the balance sheet as deferred government grants.
m) Inventories
i. Inventories include raw materials, packing material, stores and spares, finished goods and work-in-progress, and are valued
at lower of cost and estimated net realisable value.
ii. Cost are assigned to items of inventory on the basis of moving average cost method.
iii. Cost of inventory comprises all costs of purchase, costs of conversion and other costs including overheads incurred in
bringing the inventory to the present location and condition.
iv. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and
the estimated costs necessary to make the sale.
v. The net realisable value of work-in-progress is determined with reference to the selling prices of related finished goods.
Raw materials and other supplies held for use in the production of finished products are not written down below cost
except in cases when a decline in the price of materials indicates that the cost of the finished products shall exceed the net
realisable value.
vi. Inventory related rebate is recognised when it is probable that the Company will receive it and is treated as an adjustment
to the cost of inventory.
n) Foreign currency transactions
i. The functional currency of the Company is Indian Rupee (Rs. or INR) which is also the presentation currency. All other
currencies are accounted for as foreign currency.
ii. Transactions denominated in foreign currencies are initially recorded in the functional currency at the exchange rate
prevailing at the date of transaction.
iii. Monetary items denominated in foreign currencies at the year-end are restated at the closing rates. Non-monetary items
which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the
date of transaction.
iv. Exchange differences, in respect of accounting periods commencing on or after 7 December 2006, arising on reporting
of long-term foreign currency monetary items which are recognised in the financial statements till the period ending 31
March 2016 at rates different from those at which they were initially recorded or reported in previous financial statements,
in so far as they relate to the acquisition of a depreciable capital asset, are added to or deducted from the cost of the asset
and are depreciated over the balance life of the asset.
v. Exchange gains or losses arising on settlement or on restatement are recognised in the statement of profit and loss.
ii) Summary of material accounting policies
a) Investments in subsidiaries
Investments in equity of subsidiaries and joint ventures are accounted at cost in accordance with Ind AS 27 "separate financial
statements".
b) Property, plant and equipment ('PPE'), capital work in progress and Right-of-use assets
i. Freehold land is carried at cost. Other property, plant and equipment are stated at original cost of acquisition/installation
(net of goods and services tax) less accumulated depreciation and impairment loss, if any. Cost includes cost of acquisition,
construction and installation, taxes, duties, freight and other incidental expenses that are directly attributable to bringing
the asset to its working condition for its intended use and estimated cost for decommissioning of an asset. Further, in
respect of accounting periods commencing on or after 7 December, 2006, exchange differences arising on reporting of
long-term foreign currency monetary items which are recognised in the financial statements till the period ending 31
March 2016 at rates different from those at which they were initially recorded during the period, or reported in the previous
financial statements are added to or deducted from the cost of the assets and depreciated over the balance life of the asset,
where these monetary items pertain to the acquisition of depreciable property, plant and equipment.
ii. Property, Plant and Equipment is recognised as per Para 7 of Ind AS - 16.
iii. 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.
iv. An item of material spare parts that meets the definition of PPE is recognised as PPE. The corresponding old spares are
de-capitalised on such date. The depreciation on such an item of spare part will begin when the asset is available for
use i.e., when it is in the location and condition necessary for it to be capable of operating in the manner intended by
management. In case of a spare part, as it may be readily available for use, it may be depreciated from the date of purchase
of the spare part.
v. Export Promotion Capital Goods scheme of government ('EPCG') relates to duties saved on import of PPE and related
spares. Under the scheme, the Company is required to export prescribed times of the duty saved on import of PPE and
related spares over a specified period of time. In case such commitments are not met, the Company would be required
to pay the duty saved along with interest to the regulatory authorities. Such grants/ benefits are initially recognized and
added to the cost of underlying property, plant and equipment where there is a reasonable certainty that the Company
will comply with all attached conditions.
vi. When a major repair is performed, its cost is recognised in the carrying amount of the Property, Plant and Equipment as
a replacement if the recognition criteria are satisfied. All other repairs and maintenance are charged to the statement of
profit and loss during the reporting period in which they are incurred.
vii. Capital work-in-progress comprises cost of property, plant and equipment and directly related expenses, net of accumulated
impairment losses, if any, that are not yet ready for their intended use at the reporting date.
viii. Pre-operating costs, being indirect in nature, are expensed to the statement of profit and loss as and when incurred.
ix. Right-of-use (ROU) assets are stated at cost, less accumulated depreciation and impairment loss, if any. The carrying amount
of ROU assets is adjusted for remeasurement of lease liability, if any, in future. Cost of ROU assets comprises the amount of
initial measurement of lease liability, lease payments made before the commencement date (net of incentives received), initial
direct costs and present value of estimated costs of dismantling and restoration, if any.
Depreciation on property, plant and equipment and right-of-use assets
i. Depreciation on property, plant and equipment is provided to the extent of depreciable amount on straight-line method
over the useful life of asset as specified in Part-C of Schedule II to the Companies Act, 2013. Components having value
significant to the total cost of the asset and life different from that of the main asset are depreciated over its useful life.
Depreciation is charged on pro-rata basis for asset purchased / disposed off during the year with reference to the date
of addition / disposal. Depreciation on the following assets is provided considering a shorter useful life as compared to
Schedule II useful life, based on technical evaluation (internal and/or external) in view of possible technology obsolescence
and product life cycle implications etc.
ii. rou assets are depreciated on straight line basis from the commencement date to the end or useful lire or asset or lease
term whichever is earlier.
iii. Leasehold improvements are amortised over the normal period of lease or useful lives, whichever is lower.
:) Intangible assets and intangible assets under development
i. Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the assets
will flow to the Company and the cost of the asset can be measured reliably.
ii. Intangible assets acquired separately are measured at cost on initial recognition. The cost of intangible assets acquired in a
business combination is their fair value at the date of acquisition. Following initial recognition, Intangible assets are carried
at cost of acquisition less accumulated amortisation and accumulated impairment losses, if any. Intangible assets with
finite lives are amortised on a straight-line basis over the useful economic life and assessed for impairment whenever there
is an indication that the intangible asset may be impaired. The amortisation expense on intangible assets with finite lives is
recognised in the statement of profit and loss.
v. Intangible under development (IUD) comprises of direct cost, related incidental expenses and attributable borrowing cost,
if any, on intangible assets which are not ready for their intended use. IUD usually pertain to a product development project
which has reached a defined milestone according to an established project management model and its technological and
economic feasibility is viable. Expenditure on research activities is recognised in statement of profit and loss as incurred.
d) Impairment of non-financial assets
The carrying amounts of non-financial assets are reviewed at each balance sheet date if there is any indication of impairment
based on internal/external factors. An asset or cash generating unit's (CGU) is treated as impaired when the carrying amount
exceeds its recoverable value and accordingly is written down to its recoverable amount. The recoverable amount is the greater
of the asset's net selling price and value in use. Recoverable amount is determined for an individual asset, unless the asset
does not generate cash inflows that are largely independent of those from other assets or groups of assets. In assessing value
in use, the estimated future cash flows are discounted to the present value using a pre-tax discount rate that reflects current
market assessment of the time value of money and risks specific to the assets. The Company bases its impairment calculation
on detailed budgets and forecast calculations, which are prepared separately for each of the Company's CGUs to which the
individual assets are allocated.
Goodwill with indefinite useful life is tested for impairment annually and when circumstances indicate that the carrying value
may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs)
to which it relates.
An impairment loss is charged to the statement of profit and loss in the year in which an asset is identified as impaired. After
impairment, depreciation/amortisation is provided on the revised carrying amount of the asset over its remaining useful life. An
impairment loss in respect of goodwill is not subsequently reversed. In respect of other assets, the impairment loss recognized
in prior accounting periods is reversed by crediting the statement of profit and loss if there has been a change in the estimate of
recoverable amount.
e) Borrowing costs
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of
such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Ancillary
costs incurred in connection with the arrangement of borrowings are amortised over the tenure of such borrowings. All other
borrowing costs are charged to the statement of profit and loss as finance costs. Borrowing costs also include exchange
differences to the extent regarded as an adjustment to the borrowing costs under Ind AS 23.
f) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity.
A. Financial assets
a. Initial recognition
Financial assets (unless it is a trade receivable without a significant financing component) are recognised initially at
fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Purchases or
sales of financial assets that require delivery of assets within a time frame established by regulation or convention in
the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to
purchase or sell the asset. A trade receivable without a significant financing component is initially measured at the
transaction price.
b. Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
1. Financial assets at amortised cost
2. Financial assets at fair value
Where assets are measured at fair value, gains and losses are either recognized in the statement of profit and loss (i.e.
fair value through profit and loss) (FVTPL), or recognized in other comprehensive income (i.e. fair value through other
comprehensive income) (FVTOCI)
Financial Assets at Amortised Cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business
model with an objective to hold these assets in order 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 (SPPI)
on the principal amount outstanding. Interest income from these financial assets is included in finance income using
the effective interest rate ("EIR") method. Impairment gains or losses arising on these assets are recognised in the
Statement of Profit and Loss.
Financial Assets Measured at Fair Value
Financial assets are measured at fair value through Other Comprehensive Income ('OCT) if these financial assets are
held within a business model with an objective to hold these assets in order to collect contractual cash flows or to
sell these financial assets 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. Movements in the carrying
amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign
exchange gains and losses which are recognised in the Statement of Profit and Loss.
I n respect of equity investments (other than for investment in subsidiaries and associates) which are not held for
trading, the Company has made an irrevocable election to present subsequent changes in the fair value of such
instruments in OCI. Such an election is made by the Company on an instrument by instrument basis at the time of
transition for existing equity instruments/ initial recognition for new equity instruments.
Financial asset not measured at amortised cost or at fair value through OCI is carried at FVTPL.
c. Impairment of Financial Assets
I n accordance with Ind AS 109, the Company applies the expected credit loss ("ECL") model for measurement and
recognition of impairment loss on financial assets and credit risk exposures.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that
whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased
significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly,
lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer
a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss
allowance based on 12-month ECL.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract
and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. Lifetime
ECL are the expected credit losses resulting from all possible default events over the expected life of a financial
instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible
within 12 months after the reporting date.
The Company follows 'simplified approach' for recognition of impairment loss allowance on trade receivables and
on any contractual right to receive financial asset that result from transactions within the scope of Ind AS 115.
Simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment
loss allowance based on lifetime ECL at each reporting date, right from its initial recognition.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the
Statement of Profit and Loss.
d. De-recognition of financial assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire,
or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
I f the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to
control the transferred asset, the Company recognizes its retained interest in the assets and an associated liability for
amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company
continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
B. Equity Instruments and Financial Liabilities
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial liability and an equity instrument.
a. Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of
its liabilities. Equity instruments which are issued for cash are recorded at the proceeds received, net of direct issue costs.
Equity instruments which are issued for consideration other than cash are recorded at fair value of the equity instrument.
b. Financial liabilities
Initial recognition
Financial liabilities are classified, at initial recognition, as financial liabilities at FVTPL, loans and borrowings and payables
as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below
FINANCIAL LIABILITIES AT FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial
recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of
repurchasing in the near term.
Gains or losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse
the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms
of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction
costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of
the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less
cumulative amortisation. Amortisation is recognised as finance income in the Statement of Profit and Loss.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR
method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings
is recognised over the term of the borrowings in the Statement of Profit and Loss.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss.
Where the terms of a financial liability is re-negotiated and the Company issues equity instruments to a creditor to
extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in the Statement of Profit and Loss;
measured as a difference between the carrying amount of the financial liability and the fair value of equity instrument
issued.
De-recognition of financial liabilities
Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or expired.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the
terms of an existing liability are substantially modified, such an exchange or modification is treated as de-recognition of
the original liability and recognition of a new liability. The difference in the respective carrying amounts is recognised in the
Statement of Profit and Loss.
C. Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet if there is a currently
enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis to realise the
assets and settle the liabilities simultaneously.
i) Employee benefits
i) Short-term benefits
Short-term employee benefits are recognized as an expense at the undiscounted amount in the statement of profit
and loss for the year in which the related services are rendered. Expenses on non-accumulating compensated
absences is recognised in the period in which the absences occur.
ii) Defined benefit plans
a) Post-employment and other long-term employee benefits are recognized as an expense in the statement of
profit and loss for the year in which the employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial valuation techniques.
b) Re-measurement of the net defined benefit liability, which comprises of 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 other comprehensive income in the period in which they occur.
iii) Defined contribution plans
Payments to defined contribution retirement benefit schemes are charged to the statement of profit and loss of
the year when the contribution to the respective funds are due. There are no other obligations other than the
contribution payable to the fund.
iv) Leave entitlement and compensated absences
Accumulated leave which is expected to be utilised within next twelve months, is treated as short-term employee
benefit. Leave entitlement are provided based on an actuarial valuation, similar to that of gratuity benefit. Re¬
measurement, comprising of actuarial gains and losses, in respect of leave entitlement are recognised in the
Statement of Profit and Loss in the period in which they occur. The obligations are presented as current liabilities in
the balance sheet since the Company does not have an unconditional right to defer settlement for at least twelve
months after the reporting period, regardless of when the actual settlement is expected to occur.
j) Share based payments
Equity settled share based compensation benefits are provided to employees under the various Employee Stock Option
Schemes. The fair value of options granted under the Employee Stock Option Scheme is recognised as an employee benefits
expense with a corresponding increase in equity as "Share options outstanding account". The total amount to be recognised is
determined by reference to the fair value of the options granted:
1) including any market performance conditions (e.g., the entity's share price)
2) excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales growth targets
and remaining an employee of the entity over a specified time period), and
3) i ncluding the impact of any non-vesting conditions (e.g. the requirement for employees holdings shares for a specific
period of time).
The total expenses are amortised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied.
At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on
the service and non-market performance vesting conditions. It recognises the impact of the revision to original estimates,
if any, in the statement of profit and loss, with a corresponding adjustment to equity. In case vested options forfeited or
expires unexercised, the related balance standing to the credit of the "Share options outstanding account" is transferred to
"Retained earnings".
In case of equity settled share based payments to employees of subsidiaries, in the standalone financial statements, the
Company recognises the impact in the investment in the subsidiaries.
k) Revenue recognition
Revenue from contract with customers
Revenue from contracts with customers is recognised using five set model stated in Ind AS 115.
• Identify the contract(s) with a customer;
• Identify the separate performance obligations in the contract;
• Determine the transaction price;
• Allocate the transaction price to the separate performance obligations; and
• Recognize revenue when (or as) each performance obligation is satisfied.
Applying these five steps, revenue from the contract is recognised when control of the goods or services is transferred to
the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for
those goods or services.
Revenue from sale of goods
Revenue from sale of goods is recognised at the point in time when control of the goods is transferred to the customer in
accordance with the terms of the contract. The control of the goods is transferred upon delivery to the customers either
at factory gate of the Company or specific location of the customer or when the goods are handed over to the freight
carrier, as per the terms of the contract. In case of exports, the control is generally deemed to be transferred when the
goods are shipped. Revenue is recognised when there is no continuing management involvement with the goods, and
the amount can be measured reliably. Certain contracts permit the customer to return an item. Generally returned goods
are exchanged only for new goods i.e. no cash refunds are offered. Revenue is measured at the transaction value of the
consideration received or receivable net of returns, trade discounts, volume rebates and goods and services tax.
Revenue from royalty income
Royalty income received under the licensing agreements is recognised over the period during which the underlying sales
are recognised as per the terms of agreement.
Revenue from service charges
Revenue from services are recognized over period of time on performance of obligation as per the terms of the agreement,
for which input method is used to measure the progress. The Company determines the input method on the basis of direct
measurements of the value of the services transferred to the customer till date relative to the remaining services promised
under the agreement. However, revenue from services comprising of development of art work and such other services,
involving single performance obligation, are recognised at a point in time.
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received
consideration from the customer. If a customer pays consideration before the Company transfers goods or services to the
customer, a contract liability is recognised. Contract liabilities are recognised as revenue when the Company performs
under the contract.
Other items
a. Export incentives / benefits are accounted on accrual basis when the conditions precedent are met and there is no
significant uncertainty about the collectability.
b. Dividend income is recognised when the right to receive the payment is established by the balance sheet date.
l) Government grants
i. Grants from the government are recognised at their fair value where there is a reasonable assurance that
such grant will be received and the compliance with the condition attached therewith will be met.
ii. Government grants relating to income are deferred and recognised in the statement of profit and loss
over the period necessary to match them with the costs that they are intended to compensate and
presented within other income.
iii. Government grants related to acquisition of assets including EPCG are credited to the statement of profit
and loss over the useful lives of qualifying assets or other systematic basis representative of the pattern
of fulfilment of obligations associated with the grant received. Such grants are presented within other
income. Grants received less amounts credited to the statement of profit and loss at the reporting date
are included in the balance sheet as deferred government grants.
m) Inventories
i. Inventories include raw materials, packing material, stores and spares, finished goods and work-in-progress, and are valued
at lower of cost and estimated net realisable value.
ii. Cost are assigned to items of inventory on the basis of moving average cost method.
iii. Cost of inventory comprises all costs of purchase, costs of conversion and other costs including overheads incurred in
bringing the inventory to the present location and condition.
iv. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and
the estimated costs necessary to make the sale.
v. The net realisable value of work-in-progress is determined with reference to the selling prices of related finished goods.
Raw materials and other supplies held for use in the production of finished products are not written down below cost
except in cases when a decline in the price of materials indicates that the cost of the finished products shall exceed the net
realisable value.
vi. Inventory related rebate is recognised when it is probable that the Company will receive it and is treated as an adjustment
to the cost of inventory.
n) Foreign currency transactions
i. The functional currency of the Company is Indian Rupee (Rs. or INR) which is also the presentation currency. All other
currencies are accounted for as foreign currency.
ii. Transactions denominated in foreign currencies are initially recorded in the functional currency at the exchange rate
prevailing at the date of transaction.
iii. Monetary items denominated in foreign currencies at the year-end are restated at the closing rates. Non-monetary items
which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the
date of transaction.
iv. Exchange differences, in respect of accounting periods commencing on or after 7 December 2006, arising on reporting
of long-term foreign currency monetary items which are recognised in the financial statements till the period ending 31
March 2016 at rates different from those at which they were initially recorded or reported in previous financial statements,
in so far as they relate to the acquisition of a depreciable capital asset, are added to or deducted from the cost of the asset
and are depreciated over the balance life of the asset.
v. Exchange gains or losses arising on settlement or on restatement are recognised in the statement of profit and loss.
o) Income taxes
i. The income tax expense or credit for the period is the tax payable on the current period's taxable income based on the
applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
and to unused tax losses.
ii. The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting
period.
iii. Deferred 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 the financial statements. However, deferred tax liabilities are not
recognised if they arise from the initial recognition of goodwill. Deferred 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 tax is determined using tax rates (and laws) that have
been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related
deferred tax asset is realised or the deferred tax liability is settled.
iv. 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 utilise those temporary differences and losses.
v. 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 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 realise the asset
and settle the liability simultaneously.
vi. Current and deferred tax is recognised in the 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.
p) Leases
The Company's lease assets consists of office premises, data and technology equipment and plant and machinery. The Company
assesses whether a contract contains a lease, 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 of time 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
Where the Company is a lessee
The Company determines the lease term as the non-cancellable period of a lease, together with periods covered by an option
to extend the lease, where the Company is reasonably certain to exercise that option.
At the date of commencement of the lease, the Company recognises a right of use asset and a corresponding lease liability for
all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) for all class
of assets and there is no intention to further renew the lease term and leases of low value assets in a single contact. For these
short-term and leases of low value assets, the Company recognises the lease payments as an operating expense on a straight¬
line basis over the term of the lease.
Lease liabilities is measured at the present value of lease payments to be made over the lease term. The lease payments include
fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The cost of the right of use
asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any
lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs
incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the
underlying asset or site on which it is located.
The right of use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses,
if any and adjusted for any remeasurement of the lease liability. The right of use assets is depreciated using the straight-line
method from the commencement date over the shorter of lease term or useful life of right of use asset. The estimated useful
lives of right of use assets are determined on the same basis as those of property, plant and equipment.
q) Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss (excluding other comprehensive income) for the year
attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted
average number of equity shares outstanding during the year is adjusted for events such as bonus issue, bonus element in a
right issue, share pending issuance, shares split and reserve share splits (consolidation of shares) that have changed the number
of equity shares outstanding, without a corresponding change in resources.
Equity shares that will be issued upon the conversion of mandatorily convertible instruments or on account of business
combination are included in the calculation of basic earnings per share from the date the contract is entered into or acquisition
date respectively.
For the purpose of calculating diluted earnings per share, the net profit or loss (excluding other comprehensive income) for the
year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted
for the effects of all dilutive potential equity shares.
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