2. Material Accounting Policies
2.1 Basis of Preparation
Compliance with IND-AS
The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section
133 of the Companies Act, 2013 ("Act”) read with Companies (Indian Accounting Standards) Rules, 2015; and as amended
and the presentation requirements of Division II of Schedule III of the Companies Act, 2013, to the above standalone
financial statements prepared as per Indian GAAP.
The financial statements have been prepared using the significant accounting policies and measurement bases
summarized as below. These accounting policies have been applied consistently over all the periods presented in these
financial statements.
Historical Cost Conversion
The Standalone Financial Statements have been prepared on a historical cost basis, except
Ý Certain financial assets and financial liabilities measured at fair value.
Ý Defined benefit plans where plan assets measured at fair value.
Ý Investments in equity instruments, other than investments in subsidiary & associates, measured at fair value
through profit & loss account (FVTPL)
Rounding of Amounts
All amounts in these Standalone Financial Statements, except per share amounts and unless as stated otherwise, have
been rounded off to two decimal places and have been presented in Lakh.
Presentation Currency
The company's presentation and functional currency is Indian rupees.
2.2 Use of Judgment and Estimates
In preparing these Standalone Financial Statements, the Company's management ('the Management”) has made
judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised prospectively.
Judgments
Information about judgments made in applying accounting policies that have the most significant effects on the
amounts recognised in the Standalone Financial Statements is included in the following notes:
i) Determining the amount of Impairment loss
ii) Determining the amount of expected credit loss on financial assets (including trade receivables)
iii) Identification of performance obligation in revenue recognition
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material
adjustment is included in the following notes:
(i) Estimate of useful life used for the purposes of depreciation and amortisation on property plant and equipment,
investment properties and intangible assets.
(ii) Valuation of inventories
(iii) Revenue recognition and provision for onerous contracts.
(iv) Recognition of deferred tax assets: availability of future taxable profit against which tax losses carried forward can
be used
(v) Measurement of defined benefit obligations; key actuarial assumption
(vi) Impairment of financial and non-financial assets
(vii) Recognition and measurement of provisions and contingencies; key assumptions about the likelihood and
magnitude of an outflow of resources
(viii) Determination of incremental borrowing rate for leases
Operating cycle
Based on the nature of products and the time between the acquisition of assets for processing and their realisation
in cash and cash equivalent and for classification of assets and liabilities into current and non-current it has been
considered as 12 months.
2.3 Property Plant and Equipment:
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses,
if any. The cost of an item of property, plant and equipment comprises its purchase price and non-refundable purchase
taxes, any directly attributable costs of bringing the asset to its working condition for its intended use and estimated
costs of dismantling and removing the item and restoring the item and restoring the site on which it is located.
Subsequent expenditure related to an item of property, plant and equipment is capitalised only if it is probable that
future economic benefits associated with the item will flow to the Company and the cost can be reliably measured.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in statement of profit and loss.
Depreciation
Depreciation is provided on a written down value method based on their estimated useful lives as prescribed in
Schedule II of the Companies Act.
For certain items of Property, Plant and Equipment, the Company depreciates over estimated useful life which are
different from the useful lives prescribed under Schedule II to the Companies Act, 2013 which is based upon technical
assessment and management estimate. The management believes that these estimated useful lives are realistic and
reflect fair approximation of the period over which the assets are likely to be used.
The estimated useful lives and residual values are reviewed at the end of each reporting period, with the effect of any
change in estimate accounted for on a prospective basis.
Depreciation on property, plant and equipment which are added / disposed of during the year, is provided on pro-rata
basis with reference to the date of addition / deletion.
Derecognition
The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future
economic benefits are expected from its use or disposal. The consequential gain or loss is measured as the difference
between the net disposal proceeds and the carrying amount of the item and is recognized in the statement of profit
and loss.
2.4 Intangible Assets
Recognition and Measurement
Intangible assets acquired separately are measured on initial recognition at cost. Subsequently, intangible assets are
carried at cost less accumulated amortisation and accumulated impairment losses, if any.
Amortisation
Intangible assets with finite useful lives are amortised on a systematic basis over their estimated useful lives in a
manner that reflects the pattern in which the asset's future economic benefits are expected to be consumed. Where
such a pattern cannot be determined reliably, the straight-line method is used. The Company amortises its intangible
assets over an estimated useful life of five years.
The amortisation method, useful lives and residual values are reviewed at the end of each reporting period and adjusted
prospectively, where appropriate, in accordance with Ind AS 8.
Intangible Assets with Indefinite Useful Lives
An intangible asset is regarded as having an indefinite useful life when, based on an assessment of all relevant factors,
there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the
Company. Such intangible assets are not amortised but are tested for impairment annually, and whenever there is an
indication that the asset may be impaired, in accordance with Ind AS 36, Impairment of Assets.
The assessment of an indefinite useful life is reviewed at each reporting date. If events or changes in circumstances
indicate that the useful life is no longer indefinite, the asset is prospectively amortised over its revised estimated useful
life, and the change is accounted for as a change in an accounting estimate in accordance with Ind AS 8.
2.5 Investment Property
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition,
investment properties are stated at cost less accumulated depreciation and accumulated impairment loss if any.
Depreciation is recognised using the written down value method so as to write off the cost of the investment property
less their residual value over their useful lives specified in schedule II to the Companies Act, 2013, or in the case of
assets where the useful life was determined by technical evaluation, over the useful life so determined. Depreciation
method is reviewed at each financial year end to reflect the expected pattern of consumption of the future benefit
embodied in the investment property. The estimated useful life and residual values are also reviewed at each financial
year end and the effect of any change in the estimates of useful life/residual value is accounted on prospective basis.
Investment properties are derecognised either when they have been disposed off and no future economic benefit is
expected from their disposal.
The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss
in the period of derecognition.
2.6 Business Combination
Business Combinations are accounted for using the acquisition method as prescribed in Ind AS 103 Business
Combinations of accounting, except for common control transactions which are accounted using the pooling of interest
method that is accounted at carrying values.
The cost of an acquisition is measured at the fair value of the assets transferred, equity instruments issued, and
liabilities assumed at their acquisition date i.e. the date on which control is acquired. Contingent consideration to
be transferred is recognized at fair value and included as part of cost of acquisition. Transaction-related costs are
expensed in the period in which the costs are incurred.
Goodwill arising on business combination is initially measured at cost, being the excess of the aggregate of the
consideration transferred and the amount recognized for non-controlling interests, and any previous interest held, over
the fair value of net identifiable assets acquired and liabilities assumed.
2.7 Impairment of Non-Financial Assets
Non-financial assets other than inventories and deferred tax assets are reviewed at each Balance Sheet date to determine
whether there is any indication of impairment. If any such indication exists, or when annual impairment testing for an
asset is required, the Company estimates the asset's recoverable amount. The recoverable amount is higher of the
assets or Cash-Generating Units (CGU's) fair value less costs of disposal and its 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 group of assets. When the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount.
2.8 Leases
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.
As a lessee
(A) Lease Liability
At the commencement date, the Company measures the lease liability at the present value of the lease payments
that are not paid at that date. The lease payments shall be discounted using incremental borrowing rate.
(B) Right-of-use assets
Initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments
made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives.
Subsequent measurement
(A) Lease Liability
Company measures the lease liability by (a) increasing the carrying amount to reflect interest on the lease liability;
(b) reducing the carrying amount to reflect the lease payments made; and (c) remeasuring the carrying amount to
reflect any reassessment or lease modifications.
(B) Right-of-use assets
Subsequently measured at cost less accumulated depreciation and impairment losses. Right-of-use assets are
depreciated from the commencement date on a straight line basis over the shorter of the lease term and useful
life of the under lying asset.
Short term lease:
Short term lease is that, at the commencement date, has a lease term of 12 months or less. A lease that contains a
purchase option is not a short-term lease. If the company elected to apply short term lease, the lessee shall recognize
the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or
another systematic basis. The lessee shall apply another systematic basis if that basis is more representative of the
pattern of the lessee's benefit.
As a lessor
Leases for which the company is a lessor is classified as a finance or 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.
Lease income is recognized in the statement of profit and loss on straight line basis over the lease term.
2.9 Investment in subsidiaries
The Company has elected to recognize its investments in Subsidiary Company at Cost in accordance with the option
available in Ind AS 27 'Separate Financial Statements'.
2.10 Inventories
Ý Inventories are measured at the lower of cost and net realisable value. The cost of inventories includes expenditure
incurred in acquiring the inventories, and other costs incurred in bringing them to their present location
and condition.
Ý Net realisable value is the estimated selling price in the ordinary course of business, less the estimated selling
expenses.
2.11 Revenue Recognition
Sale of Products
Revenue is recognised upon transfer of control of promised Products to customers in an amount that reflects the
consideration which the Company expects to receive in exchange for those Products.
Revenue from the sale of Products is recognised at the point in time when control is transferred to the customer, which
generally coincides with the delivery of Products to customers, based on contracts with the customers. Export sales are
recognized on the issuance of Bill of Lading/ Airway bill by the carrier.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, price
concessions, incentives, and returns, if any, as specified in the contracts with the customers.
Revenue excludes taxes collected from customers on behalf of the government. Accruals for discounts/incentives and
returns are estimated (using the most likely method) based on accumulated experience and underlying schemes and
agreements with customers.
Dividend income
Dividend income is accounted for when the right to receive the same is established, which is generally when shareholders
approve the dividend.
Interest income
Interest income is recognized using the effective interest rate (EIR) method.
Insurance Claims
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that
the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
Other Income
Other income is accounted for on accrual basis except where the receipt of income is uncertain in which case it is
accounted for on receipt basis.
2.12 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 present
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) Post Employee benefits
Defined Contribution Plan
Defined contribution plans are Provident Fund, Employee State Insurance Scheme and Pension Scheme for all
applicable employees.
Recognition and measurement of defined contribution plans:
The company recognises contribution payable to a defined contribution plan as an expense in the Statement of
Profit and Loss when the employees render services
Defined-benefit plans
For defined benefit retirement plans, the cost of providing benefits is determined using the Projected Unit Credit
Method, with actuarial valuation being carried out at each balance sheet date. Remeasurement, comprising
actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets
(excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognized in other
comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive
income is reflected immediately in retained earnings and is not reclassified to statement of profit and loss. Past
service cost is recognized as an expense when the plan amendment or curtailment occurs or when any related
restructuring costs or termination benefits are recognized, whichever is earlier. The service cost, net interest
on the net defined benefit liability/ (asset) is treated as a net expense within employment cost. The retirement
benefit obligation recognized in the balance sheet represents the present value of the defined-benefit obligation
as reduced by the fair value plan assets.
2.13 Foreign Currency Transactions
Monetary Items
Transactions in foreign currencies are initially recorded at their respective exchange rates at the date the transaction
first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at exchange rates prevailing on the
reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in Statement of Profit and
Loss either as profit or loss on foreign currency transaction and translation or as borrowing costs to the extent regarded
as an adjustment to borrowing costs.
Non - Monetary items
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rates at the dates of the initial transactions.
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