1.3 MATERIAL ACCOUNTING POLICIES
a CURRENT AND NON-CURRENT CLASSIFICATION
The Company presents assets and liabilities in the balance
sheet based on current/ non-current classification. An
asset is treated as current when it is:
- Expected to be realised or intended to be sold or
consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after
the reporting period, or
- Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least
twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the
reporting period, or
- There is no unconditional right to defer the settlement
of the liability for at least twelve months after the
reporting period
- Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of
equity instruments do not affect its classification.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non¬
current assets and liabilities.
The operating cycle is the time between the acquisition
of assets for processing and their realisation in cash and
cash equivalents. Based on the nature of products and
the time between acquisition of assets for processing
and their realisation in cash and cash equivalents, the
Company has identified twelve months as its operating
cycle for the purpose of current / non-current classification
of assets and liabilities.
b REVENUE RECONGNITION
Revenue recognition under Ind AS 115
Under Ind AS 115, the Company recognized revenue
when (or as) a performance obligation was satisfied,
i.e. when 'control' of the goods underlying the particular
performance obligation were transferred to the customer.
Further, revenue from sale of goods is recognized based
on a 5-Step Methodology which is as follows:
Step 1 : Identify the contract(s) with a customer
Step 2 : Identify the performance obligation in contract
Step 3 : Determine the transaction price
Step 4 : Allocate the transaction price to the performance
obligations in the contract
Step 5 : Recognise revenue when (or as) the entity satisfies
a performance obligation
The Company has adopted Ind AS 115 using the cumulative
effect method whereby the effect of applying this standard
is recognised at the date of initial application.
The specific recognition criteria described below must
also be met before revenue is recognised.
Sale of products
Revenue from sale of goods is recognized at point in
time when control is transferred to the customer and it
is probable that consideration will be collected. Control
of goods is transferred upon the shipment of the goods
to the customer or when goods is made available
to the customer.
Revenue is measured based on the transaction price,
which is the consideration, adjusted for variable
consideration such as volume discounts, cash discounts
etc. as specified in the contract with the customer. The
Company collects Goods and Services Tax on behalf of
the government and therefore, these are not economic
benefits flowing to the Company. Hence, these are
excluded from the revenue.
Profit share revenues
The Company has certain marketing arrangements based
on a profit sharing model whereby Company sells its
products to the business partner on price based upon
agreements and is also entitled for profit share over and
above its sale price. Revenue from the sale of goods to the
partner is recognised upon delivery of products to them.
Whereas amount representing the profit share component
is recognised as revenue in the period which corresponds
to the ultimate sales of the products made by business
partners and only to the extent that it is highly probable
that a significant reversal will not occur.
Sales returns
The Company accounts for sales returns by recording an
allowance for sales returns concurrent with the recognition
of revenue at the time of product sale. This allowance
is based on the Company's estimate of expected sales
returns towards expiry, breakages and damages. The
estimate of sales returns is determined primarily by the
Company's historical experience of sales returns trends
with respect to the shelf life of various products.
Interest income
For all debt instruments measured at amortised cost,
interest income is recorded using the effective interest
rate (EIR) as set out in Ind AS 109. EIR is the rate that
exactly discounts the estimated future cash payments or
receipts over the expected life of the financial instrument
or a shorter period, where appropriate, to the gross
carrying amount of the financial asset or to the amortised
cost of a financial liability. When calculating the effective
interest rate, the Company estimates the expected cash
flows by considering all the contractual terms of the
financial instrument (for example, prepayment, extension,
call and similar options) but does not consider the
expected credit losses.
Dividends
Dividend income is recognised when the Company's right
to receive the payment is established, which is generally
when shareholders approve the dividend.
Rental income
Rental income, included under other income, is recognised
on a straight-line basis over the term of the lease except
where the rentals are structured to increase in line with
expected general inflation.
Export Incentive
Export incentives principally comprises of focus market
scheme, and other export incentive schemes. The benefits
under these incentive schemes are available based on
the guidelines formulated for respective schemes by the
government authorities. These incentives are recognised
as revenue on accrual basis to the extent it is probable
that realisation is certain.
PROPERTY, PLANT AND EQUIPMENT
The cost of an item of property, plant and equipment shall
be recognised as an asset if and only if it is probable
that future economic benefits associated with the
item will flow to the Company and cost of the item can
be measured reliably. The items of Property, plant and
equipment including capital work-in-progress are stated at
cost, net of accumulated depreciation (other than freehold
land) and accumulated impairment losses, if any. Cost
comprises the purchase price, taxes, duties, freight,and
any attributable cost of bringing the asset to its working
condition for its intended use. Such cost includes the
cost of replacing part of the plant and equipment and
borrowing costs for long-term construction projects if the
recognition criteria are met.
When significant parts of plant and equipment are
required to be replaced at regular intervals, the Company
depreciates them separately based on their specific
useful lives. All other repair and maintenance costs are
recognised in Statement of profit and loss as incurred. In
respect of additions to /deletions from the plant, property
and equipment, depreciation is provided on pro-rata
reference to the month of addition/deletion of the Assets.
Subsequent expenditures related to an item of Property,
plant and equipments is added to its book value, only if
it increases the future benefits from the existing asset
beyond its previously assessed standard of performance,
The cost of the item can be measured reliably. Incomes
and expenses related to the incidental operations not
necessary to bring the item to the location and the
condition necessary for it to be capable of operating in the
manner intended by Management are recognized in the
Statement of profit and loss.
Capital work-in-progress in respect of assets which
are not ready for their intended use are carried at cost,
comprising of direct costs, related incidental expenses
and attributable interest.
All identifiable revenue expenses including interest
incurred in respect of various projects / expansion, net
of income earned during the project development stage
prior to its intended use, are considered as pre-operative
expenses and disclosed under Capital work-in-progress.
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
Any gain or loss arising on disposal or retirement of an
item of property, plant and equipment is determined as
the difference between sales proceeds and the carrying
amount of the asset and is recognised in profit or loss.
Fully depreciated assets still in use are retained in
standalone financial Statements.
The residual values, useful life and depreciation method
are reviewed at each financial year-end to ensure that the
amount, method and period of depreciation are consistent
with previous estimates and the expected pattern of
consumption of the future economic benefits embodied in
the items of property, plant and equipment.
Depreciation method and estimated useful lives
Depreciation on the property, plant and equipment is
provided on straight line method.
The Company, based on technical assessment made by
technical expert and management estimate, depreciates
certain items of plant and equipment over estimated
useful lives which are different from the useful life
prescribed in Schedule II to the Companies Act, 2013. The
management believes these estimated useful lives are
realistic and reflect fair approximation of the period over
which the assets are likely to be used.
Impairment of assets
The carrying amounts of assets are reviewed at each
balance sheet date and if there is any indication of
impairment based on internal/ external factors. An
impairment loss is recognised whenever the carrying
amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset’s fair value
less costs of disposal and value in use. In assessing value
in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of
the money and risks specific to the assets. In determining
fair value less costs of disposal, recent market
transactions taken into account. If no such transactions
can be identified, an appropriate valuation model is used.
After recognition of impairment loss, the depreciation
charge for the asset is adjusted in future periods to allocate
the asset’s revised carrying amount, less its residual value
(if any), on straight line basis over its remaining useful life.
A previously recognised impairment loss is increased
or reversed depending on changes in circumstances.
However, the carrying value after reversal is not increased
e 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.
FINANCIAL ASSETS
The Company classifies financial assets as subsequently
measured at amortised cost, fair value through other
comprehensive income or fair value through profit or
loss, on the basis of its business model for managing
the financial assets and the contractual cash flow
characteristics of the financial asset.
Financial assets are not reclassified subsequent to their
initial recognition, except if and in the period the Company
changes its business model for managing financial assets.
Initial recognition and measurement
All financial assets except trade receivable without
significant financing component (not measured
beyond the carrying value that would have prevailed by
charging usual depreciation if there was no impairment.
d Intangible Assets
Other Intangible assets acquired separately are measured
on initial recognition at cost. Following initial recognition,
intangible assets with finite life are measured at cost
less any accumulated amortisation and accumulated
impairment losses. Internally generated intangibles,
excluding capitalised development costs, are not
capitalised and the related expenditure is reflected in the
Statement of profit and loss in the period in which the
expenditure is incurred.
The amortisation period and the amortisation method for
an intangible asset with a finite useful life are reviewed at
least at the end of each reporting period.
Gains or losses arising from de-recognition of an intangible
asset are measured as the difference between the net
disposal proceeds and the amount of the asset and are
recognised in the Statement of profit and loss when the
asset is de-recognised.
subsequently at fair value through profit or loss) are
recognised initially at fair value plus transaction costs
that are attributable to the acquisition of the financial
asset. A trade receivable without a significant financing
component is initially measured at the transaction price.
Financial assets: Business model assessment
The Company makes an assessment of the objective of
the business model in which a financial asset is held at
a portfolio level because this best reflects the way the
business is managed and information is provided to
management. The information considered includes:
• the stated policies and objectives for the portfolio
and the operation of those policies in practice. These
include whether management’s strategy focuses on
earning contractual interest income, maintaining a
particular interest rate profile, matching the duration
of the financial assets to the duration of any related
liabilities or expected cash outflows or realising cash
flows through the sale of the assets;
• how the performance of the portfolio is evaluated
and reported to the Company’s management;
• the risks that affect the performance of the business
model (and the financial assets held within that
business model) and how those risks are managed
how managers of the business are compensated
-e.g. whether compensation is based on the fair
value of the assets managed or the contractual cash
flows collected; and
• the frequency, volume and timing of sales of
financial assets in prior periods, the reasons for such
sales and expectations about future sales activity.
Transfers of financial assets to third parties in
transactions that do not qualify for derecognition
are not considered sales for this purpose, consistent
with the Company’s continuing recognition of the
assets. Financial assets that are held for trading or
are managed and whose performance is evaluated
on a fair value basis are measured at FVTPL.
Subsequent measurement
For purpose of subsequent measurements, financial
assets are classified in following categories:
(a) Debt instruments at amortised cost
A financial asset is subsequently measured at
amortised cost if it is held within a business model
whose objective is to hold the asset 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 on the principal amount outstanding.
After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method. Amortised cost
is calculated by taking into account any discount or
premium on acquisition and fees or costs that are
integral part of EIR. The EIR amortisation is included
in Other Income in the Statement of profit and loss.
(b) Debt instruments at fair value through other
comprehensive income
A financial asset is subsequently measured at fair
value through other comprehensive income if it is
held within a business model whose objective is
achieved by both collecting contractual cash flows
and selling 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.
Debt instruments included within the FVTOCI category
are measured initially as well as at each reporting date at
fair value. Fair value movements is recognised in the OCI.
However, the Company recognises any interest income
or impairment losses in the Statement of profit and loss.
On derecognition of the asset, cumulative gain or loss
previously recognised in OCI is reclassified from the OCI
to Statement of profit and loss.
(c) Debt instruments at fair value through profit or loss
A financial asset which is not classified in any of the
above categories are subsequently fair valued through
profit or loss. Debt instruments included within FVTPL
category are measured at fair value with all changes
recognised in the Statement of profit and loss.
Derivatives are initially measured at fair value.
Subsequent to the initial recognition, derivatives
are measured at fair value and changes therein
are recognised in Statement of profit and loss.
Derivatives are carried as financial assets when the
fair value is positive and as financial liabilities when
fair value is negative.
(d) Equity instruments
All equity investments in scope of Ind AS 109 are
measured at fair value. For all equity instruments,
the Company may make an irrevocable election to
present in other comprehensive income, subsequent
changes in the fair value. All fair value changes on
the instrument, excluding dividends, are recognised
in the OCI. There is no recycling of the amounts from
OCI to Statement of profit and loss, even on sale of
investment. However, the Company may transfer
the cumulative gain or loss within equity. The
Company has made such election on an instrument-
by-instrument basis. The classification is made on
initial recognition and is irrevocable.
Derecognition
A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is primarily derecognised when:
* The rights to receive cash flows from the asset
has expired, or
* The Company has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under a
'pass through’ arrangement; and either (a) the
Company has transferred substantially all the risks
and rewards of the asset, or (b) the Company has
neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred
control of the asset.
When the Company has transferred its rights to
receive cash flows from an asset or has entered into
a pass through arrangement, it evaluates if and to
what extent it has retained the risks and rewards
of ownership. When it has neither transferred nor
retained substantially all of the risks and rewards
of the asset, nor transferred control of the asset,
the Company continues to recognise the transferred
asset to the extent of the Company’s continuing
involvement. In that case, the Company also
recognises an associated liability. The transferred
asset and the associated liability are measured on a
basis that reflects the rights and obligations that the
Company has retained.
The continuing involvement that takes the form of a
guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset
and the maximum amount of consideration that the
Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies
expected credit loss (ECL) model for measurement
and recognition of impairment loss on the following
financial assets and credit risk exposure:
(a) Financial assets that are debt instruments, and
are measured at amortised cost e.g., loans,
debt securities, deposits, trade receivables
and bank balance ;
(b) Financial assets that are equity instruments
and are measured as at FVTOCI ;
(c) Trade receivables or any contractual right to
receive cash or another financial asset that
result from transactions that are within the
scope of trade receivables or contract assets.
The Company follows 'simplified approach’ for
recognition of impairment loss allowance on Trade
Receivables and Other Receivables.
The application of simplified approach does not
require the Company to track changes in credit risk.
Rather, it recognises impairment loss allowance
based on lifetime ECLs at each reporting date, right
from its initial recognition.
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.
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.
As a practical expedient, the Company uses a
provision matrix to determine impairment loss
allowance on portfolio of its trade receivables. The
provision matrix is based on its historically observed
default rates over the expected life of the trade
receivables and is adjusted for forward-looking
estimates. At every reporting date, the historical
observed default rates are updated and changes in
the forward-looking estimates are analysed.
ECL impairment loss allowance (or reversal)
recognised during the period is recognised as
income/ expense in the Statement of profit and
loss. This amount is reflected under the head 'other
expenses’ in the Statement of profit and loss. The
balance sheet presentation for various financial
instruments is described below:
Financial assets measured as at amortised cost,
contractual revenue receivables: ECL is presented
as an allowance, i.e., as an integral part of the
measurement of those assets in the balance sheet.
The allowance reduces the net carrying amount.
Until the asset meets write-off criteria, the Company
does not reduce impairment allowance from the
gross carrying amount.
Equity instruments measured at FVTOCI: Since
financial assets are already reflected at fair value,
impairment allowance is not further reduced from
its value. Rather, ECL amount is presented as
'accumulated impairment amount’ in the OCI.
For trade receivables only, the Company applies the
simplified approach permitted by Ind AS 109 financial
instruments, which requires expected lifetime
losses to be recognised from initial recognition of
the receivables.
Offsetting of 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.
FINANCIAL LIABILITIES
The Company classifies all financial liabilities as
subsequently measured at amortised cost or FVTPL.
Initial recognition and measurement
All financial liabilities are recognised initially at fair
value, in the case of loans and borrowings, payables,
net of directly attributable transaction costs.
The Company's financial liabilities include trade
and other payables and borrowings including
bank overdrafts.
Subsequent measurement
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or
loss include financial liabilities held for trading and
financial liabilities designated upon recognition as at
fair value through profit or loss. Financial liabilities
are classified as held for trading if they are incurred
for the purpose of repurchasing in the near term.
This category also includes derivative financial
instruments entered into by the Company that are not
designated as instruments in hedge relationships as
defined by Ind AS 109.
Gains or losses on liabilities held for trading are
recognised in the Statement of profit and loss.
Financial guarantee contracts
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.
Derecognition
A Financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expires. 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
the derecognition of the original liability and the
recognition of a new liability. The difference in the
respective carrying amounts is recognised in the
Statement of profit and loss.
f FAIR VALUE MEASUREMENT
The Company measures financial instruments, such
as, derivatives, mutual funds etc. at fair value at each
balance sheet date.
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability
takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most
advantageous market for the asset or liability
The principal or the most advantageous market must be
accessible by the Company.
The fair value of an asset or a liability is measured using
the assumptions that market participants would use
when pricing the asset or liability, assuming that market
participants act in their economic best interest.
The Company uses valuation techniques that are
appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the
use of relevant observable inputs and minimising the use
of unobservable inputs.
All assets and liabilities for which fair value is measured
or disclosed in the financial Statements are categorised
within the fair value hierarchy, described as follows, based
on the lowest level input that is significant to the fair value
measurement as a whole:
- Level 1 — Quoted (unadjusted) market prices in
active markets/ declared buyback NAV for identical
assets or liabilities
- Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is directly or indirectly observable
- Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognised in the
financial Statements on a recurring basis, the Company
determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the
fair value measurement as a whole) at the end of each
reporting period.
For the purpose of fair value disclosures, the Company
has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset
or liability and the level of the fair value hierarchy as
explained above.
This note summarises accounting policy for fair value.
Other fair value related disclosures are given in the
relevant notes.
g INVENTORIES
Raw materials and packing materials are valued at lower
of cost and net realisable value, cost of which includes
duties and taxes and is arrived at on weighted average
cost basis. Cost of imported raw materials and packing
materials lying in bonded warehouse includes customs
duty. However, materials and other items held for use in the
production of inventories are not written down below cost
if the finished products in which they will be incorporated
are expected to be sold at or above cost.
Finished products including traded goods and work-in¬
progress are valued at lower of cost and net realisable
value. Cost is arrived at on weighted average cost basis.
Cost of finished products and work-in-progress includes
material cost, labour, direct expenses, production
overheads and applicable taxes, where applicable.
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.The comparison of cost and net realisable value
is made on an item-by-item basis.
h FOREIGN CURRENCY TRANSLATION/ TRANSACTIONS
The financial Statements are presented in Indian
Rupees (INR) which is the Company's functional and
presentation currency.
Monetary assets and liabilities denominated in a foreign
currency outstanding at the year end are restated at the
year end exchange 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 the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated
in a foreign currency are reported using the exchange
rates that existed when the values were determined.
The derivative financial instruments such as forward
exchange contracts to hedge its risk associated with
foreign currency fluctuations are stated at fair value. Any
gains or losses arising from changes in fair value are
taken directly to Statement of Profit or Loss.
Exchange difference arising on the settlement of
monetary items at rates different from those at which
they were initially recorded during the year, or reported in
previous financial Statements, are recognised as income
or expense in the year in which they arise.
i GOVERNMENT GRANTS
Grants and subsidies from the government are recognised
when there is reasonable assurance that the grant/
subsidy will be received and all attaching conditions will
be complied with.
Government grants related to revenue is recognised on a
systematic basis in the Statement of profit and loss over
the periods necessary to match them with the related
costs which they are intended to compensate.
Government grants relating to specific fixed assets is
recognised as income in equal amounts over the expected
useful life of the related asset.
j EMPLOYEE BENEFITS
All employee benefits payable wholly within twelve months
rendering service are classified as short term employee
benefits. Benefits such as salaries, wages, short-term
compensated absences, performance incentives etc., and
the expected cost of bonus, exgratia are recognised during
the period in which the employee renders related service.
Defined contribution plans
Company’s contribution to recognised provident fund,
family pension fund and superannuation fund is defined
contribution plan and is charged to the Statement of
profit and loss on accrual basis. The Company recognises
contribution payable to the provident fund scheme as
an expenditure, when an employee renders the related
service. There are no other obligations other than the
contribution payable to the respective trusts.
The Company fully contributes all ascertained liabilities
to the FDC Limited Gratuity Trust (the Trust). Trustees
administer contributions made to the Trust and
contributions are invested as permitted by laws of India.
Defined benefit plans
The Company provides for gratuity, a defined benefit
retirement plan ('the Gratuity Plan’) covering eligible
employees. The Gratuity Plan provides a lump-sum
payment to vested employees at retirement, death,
incapacitation or termination of employment, of an
amount based on the respective employee’s salary and
the tenure of employment with the Company.
Contribution to gratuity fund is defined benefit obligation
and is provided for on the basis of an actuarial valuation
on projected unit credit method made at the end of each
financial year.
Remeasurement of the net defined liability, which
comprise actuarial gains and losses, the return on plan
assets (excluding interest income) are recognised in
other comprehensive income. Remeasurement are
not reclassified to the Statement of profit and loss in
subsequent periods. Net interest and other expenses
related to defined benefits plan are recognised in the
Statement of profit and loss.
When the benefits of a plan are changed or when a plan
is curtailed, the resulting change in benefit that relates to
past service ('past service cost’ or 'past service gain’) or
the gain or loss on curtailment is recognised immediately
in Statement of profit and Loss. The Company recognises
gains and losses on the settlement of a defined benefit
plan when the settlement occurs.
When the calculation results in a potential asset for the
Company, the recognised asset is limited to the present
value of economic benefits available in the form of any
future refunds from the plan or reductions in future
contribution to the plan. To calculate the present value
of economic benefits, consideration is given to any
applicable minimum funding requirements.
Other employee benefits
Short-term employee benefit obligations are measured on
an undiscounted basis and are expensed as the related
service is provided. The Company has other long-term
employee benefits in the nature of leave encashment. The
liability in respect of leave encashment is provided for on
the basis of an actuarial valuation on projected unit credit
method at the end of financial year.
RESEARCH AND DEVELOPMENT EXPENSES
Research costs are expensed as incurred. Development
expenditures on an individual project are recognised as an
other intangible asset when the Company can demonstrate
technical and commercial feasibility of making the asset
available for use.
Following initial recognition of the development
expenditure as an asset, the asset is carried at cost
less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins when
development is complete and the asset is available for use.
It is amortised over the period of expected future benefit.
Amortisation expense is recognised in the Statement of
profit and loss unless such expenditure forms part of
carrying value of another asset.
l INVESTMENTS IN SUBSIDIARIES
A subsidiary is an entity that is controlled by the Company.
The Company accounts for the investments in equity
shares of subsidiaries at cost in accordance with Ind AS
27- Separate Financial Statements.
m LEASE ACCOUNTING
Company as a lessee
The Company lease asset classes primarily consist of
leases for land and buildings. The Company assess
whether a contract contains a lease, at inception of
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 :
(1) the contract involves the use of an identified asset
(2) the Company has substantially all of the economic
benefits from use of the asset through the period
of the lease and
(3) the Company has the right to direct the
use of the asset.
At the date of commencement of the lease, the
Company recognizes a right-of-use asset ("ROU”) 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) and low value leases.
For these short term and low value leases, the Company
recognizes the lease payments as an operating expense
on a straight-line basis over the term of the lease.
Certain lease arrangements includes the options to extend
or terminate the lease before the end of the lease term.
ROU assets and lease liabilities includes these options
when it is reasonably certain that they will be exercised.
The right-of-use assets are 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. They are 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 underlying
asset. Right of use assets are evaluated for recoverability
whenever events or changes in circumstances indicate
that their carrying amounts may not be recoverable.
For the purpose of impairment testing, the recoverable
amount (i.e. the higher of the fair value less cost to sell
and the value-in-use) is determined on an individual asset
basis unless the asset does not generate cash flows that
are largely independent of those from other assets. In
such cases, the recoverable amount is determined for the
Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at
the present value of the future lease payments. The lease
payments are discounted using the generally accepted
interest rate. Lease liabilities are remeasured with a
corresponding adjustment to the related right of use asset
if the Company changes its assessment if whether it will
exercise an extension or a termination option.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments have
been classified as financing cash flows.
Company 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. For operating leases, rental income is recognized
on a straight line basis over the term of the relevant lease.
n EARNINGS PER SHARE
Basic earnings per share is computed by dividing the
net profit after tax attributable to equity shareholders
for the year 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 of bonus / rights issue, if any, that
have changed the number of equity shares outstanding,
without a corresponding change in resources.
Diluted earnings per share is computed by dividing the
net profit after tax attributable to equity shareholders for
the year by the weighted average number of equity shares
outstanding during the year as adjusted for the effects of
all dilutive potential equity shares, if any. Diluted earningss
per share reflects the potential dilution that could occur if
securities or other contracts to issue equity shares were
exercised or converted during the year.
o TAXATION
Income tax expense comprises current and
deferred income tax.
Current tax
Current tax expense is recognized in the Statement
of profit and loss, except when they relates to items
that are recognized in other comprehensive income or
directly in equity, in which case, the current tax is also
recognized in other comprehensive income or directly in
equity respectively. Current income tax for current and
prior periods is recognized at the amount expected to
be paid to or recovered from the tax authorities, using
the tax rates and tax laws that have been enacted by the
balance sheet date.
Current income tax assets and liabilities are measured
at the amount expected to be recovered from or paid
to the taxation authorities in accordance with the
Income-tax Act, 1961. The tax rates and tax laws used
to compute the amount are those that are enacted
or substantively enacted, at the reporting date.
Management periodically evaluates positions taken
in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation
and establishes provisions where appropriate."
Deferred tax
Deferred tax expense is recognized in the Statement
of profit and loss, except when they relates to items
that are recognized in other comprehensive income or
directly in equity, in which case, the deferred tax is also
recognized in other comprehensive income or directly in
equity respectively.
Deferred tax is provided using the balance sheet approach
on temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial
reporting purposes at the reporting date using the tax
rates and the tax laws enacted or substantively enacted
at the reporting date.
Deferred tax assets are recognised for carry forward of
unused tax credits and unused tax losses to the extent
that it is probable that taxable profit will be available
against which unused tax credits and unused tax losses
can be recognised. At each balance sheet date, the
Company reassesses unrecognised deferred tax assets
and are recognised to the extent that it is probable that
future taxable profit will be available for their realisation.
Current and deferred tax for the year
The effect of changes in tax rates on deferred income
tax assets and liabilities is recognized as income or
expense in the period that includes the enactment or the
substantive enactment date. A deferred income tax asset
is recognized to the extent that it is probable that future
taxable profit will be available against which the deductible
temporary differences and tax losses can be utilized.
The Company offsets current tax assets and current tax
liabilities, where it has a legally enforceable right to set
off the recognized amounts and where it intends either to
settle on a net basis, or to realize the asset and settle the
liability simultaneously.
Current and deferred tax are recognised in the Statement
of profit and loss, except when they relate to items that are
recognised in other comprehensive income or directly in
equity, in which case, the current and deferred tax are also
recognised in other comprehensive income or directly in
equity respectively.
Accruals for uncertain tax positions require management
to make judgements of potential exposures. Accruals
for uncertain tax positions are measured using either
the most likely amount or the expected value amount
depending on which method the entity expects to better
predict the resolution of the uncertainty. Tax benefits
are not recognized unless the management based upon
its interpretation of applicable laws and regulations and
the expectation of how the tax authority will resolve the
matter concludes that such benefits will be accepted by
the authorities. Once considered probable of not being
accepted, management reviews each material tax benefit
and reflects the effect of the uncertainty in determining
the related taxable amounts.
|