2.1 Basis of preparation
The Standalone financial statements ("financial statements") have been prepared to comply in all material
aspects with the Indian Accounting Standard (Ind AS) notified under section 133 of the Companies Act, 2013,
read together with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and as amended by the
Ministry of Corporate Affairs (‘MCA’) from time to time.
The financial statements have been prepared under historical cost convention on accrual and going concern
basis, except for the certain financial instruments which have been measured at fair value as required by
relevant Ind ASs.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially
adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in
use.
All the amounts included in the financial statements are reported in Crores of Indian Rupees, and are rounded
to the nearest Crores except per share data and unless stated otherwise.
The Financial statements have been prepared in accordance with Indian Accounting Standards to the extent
possible and requirements of all Ind AS have not been complied with in totality.
2.2 Use of Estimates & Basis of Measurement
IND AS enjoins management to make estimates and assumptions related to financial statements that affect
reported amount of assets, liabilities, revenue, expenses and contingent liabilities pertaining to the year. Actual
result may differ from such estimates. Any revision in accounting estimates is recognized prospectively in the
period of change and material revision, including its impact on financial statements, is reported in the notes to
accounts in the year of incorporation of revision.
The financial statements have been prepared under the historical cost convention on the accrual basis, except
for certain financial instruments and provisions which are measured at fair value at the end of each reporting
period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
2.3 Recognition of Income and Expenses
Revenue is measured at the fair value of the consideration received or receivable, taking into account the
contractually defined terms of payment net of returns and allowances, trade discounts, volume rebates and
taxes or duties collected on behalf of the government
Revenue towards satisfaction of performance obligation is measured at the amount of transaction price (i.e. net
of variable consideration) allocated to the performance obligation. The transaction price of goods sold and
services rendered is net of variable consideration on account of various discounts/schemes/ damages
incurred/offered by the company as a part of contract.
Company recognizes revenue from sale of goods when significant risks and rewards of ownership in the goods
are transferred to the buyer as per the terms of the contract, which coincides with the delivery of goods.
Interest Income from debt instruments is recognized using the effective interest rate (EIR). EIR is the rate that
exactly discounts the estimated future cash flows over the expected life of financial instrument, to the gross
carrying amount of the financial assets or to the amortized cost of the financial liability.
Dividend income is recognized when the Company’s right to receive payment is established on or before the
Balance Sheet date (Provided that it is probable that the economic benefit will flow to the Company).
Export sales are accounted on the basis of date of bill of lading.
Interest income on investment in fixed deposit is recognized on time proportion basis at the contractual rate.
Other incomes have been recognized on accrual basis in financial statements except for cash flow information.
2.4 Property, Plant and Equipment
An item of Property, Plant and Equipment (PPE) is recognized as an asset, if and only if, it is probable that the
future economic benefits associated with the item will flow to the Company and its cost can be measured
reliably. PPE are initially recognized at cost. The initial cost of PPE comprises its purchase price (including non¬
refundable duties and taxes but excluding any trade discounts and rebates), and any directly attributable cost
of bringing the asset to its working condition and location for its intended use.
Subsequent to initial recognition, PPE are stated at cost less accumulated depreciation and any impairment
losses. When significant parts of property, plant and equipment are required to be replaced in regular intervals,
the Company recognizes such parts as separate component of assets. When an item of PPE is replaced, then its
carrying amount is de-recognized from the balance sheet and cost of the new item of PPE is recognized. Further,
in case the replaced part was not being depreciated separately, the cost of the replacement is used as an
indication to determine the cost of the replaced part at the time it was acquired.
The expenditures that are incurred after the item of PPE has been put to use, such as repairs and maintenance,
are normally charged to the statement of profit and loss in the period in which such costs are incurred.
PPE / intangible assets are depreciated /amortised over their estimated useful lives, after taking into account
estimated residual value. Management reviews the estimated useful lives and residual values of the assets
annually in order to determine the amount of depreciation to be recorded during any reporting period. The
useful lives and residual values are based on the Company's historical experience with similar assets and take
into account anticipated technological changes. The depreciation /amortisation for future periods are revised
if there are significant changes from previous estimates.
Any gain or loss on disposal/impairment of an item of property, plant and equipment is recognised in Statement
of profit and loss.
Depreciation is provided on straight line method, at the rates determined based on the economic useful lives of
assets estimated by the management; or at the rates prescribed under Schedule II of the Companies Act, 2013,
whichever is higher. Accordingly, the Company has used the following rates: -
2.5 Investment Property
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by
the Company, is classified as Investment Property. Investment Property is measured initially at its cost,
including transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalized to
the asset's carrying amount only when it is probable that future economic benefits associated with the
expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and
maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying
amount of the replaced part is derecognized. Investment Properties (except freehold land) are depreciated
using the straight-line method over their estimated useful lives.
2.6 Intangible Assets
Intangible Assets with finite useful lives acquired by the Company are measured at cost less accumulated
amortization and accumulated impairment losses. Amortization is charged on a straight-line basis over the
estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each
annual reporting period, with the effect of any changes in the estimate being accounted for on a prospective
basis. On transition to Ind AS, the Company has elected to continue with the carrying value of all of intangible
assets recognized as at April 01, 2016 measured as per the previous GAAP and use that carrying value as the
deemed cost of intangible assets.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
2.7 Goodwill
No self-generated goodwill is recognized. Goodwill arises during the course of acquisition of an entity in terms
of accounting treatment provided in IND AS-103 dealing with 'Business Combination’. Goodwill represents the
excess of consideration money over the fair value of net assets of the entity under acquisition. Such goodwill is
construed to have indefinite life and as such is not subject to annual amortization but annual test of impairment
under IND AS - 36. Any shortfall in consideration money vis-a-vis fair value of net assets on account of bargain
purchase is recognized in OCI at acquisition point and subsequently transferred to capital reserve.
2.8 Impairment of Non- Financial Assets
Intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for
impairment or more frequently if events or changes in circumstances indicate that they might be impaired.
Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognized for the amount by which the asset"s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs
of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows which are largely independent of the cash inflows from
other assets or groups of assets (cash-generating units). Non-financial assets that suffered impairment are
reviewed for possible reversal of the impairment at the end of each reporting period.
An asset is considered as impaired when at the date of Balance Sheet, there are indications of impairment and
the carrying amount of the asset, or where applicable, the cash generating unit to which the asset belongs,
exceeds its recoverable amount (i.e. the higher of the net asset selling price and value in use) .The carrying
amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in the
statement of profit and loss. The impairment loss recognized in the prior accounting period is reversed if there
has been a change in the estimate of recoverable amount. Post impairment, depreciation is provided on the
revised carrying value of the impaired asset over its remaining useful life.
2.9 Government Subsidy / Grant
Government Grant is recognized only when there is a reasonable assurance that the entity will comply with
the conditions attaching to them and the grants will be received.
a] Subsidy related to assets is recognized as deferred income which is recognized in the statement of profit
& loss on systematic basis over the useful life of the assets. Purchase of assets and receipts of related
grants are separately disclosed in statement of cash flow.
b) Grants related to income are treated as other income in statement of profit & loss subject to due
disclosure about the nature of grant.
2.10 Financial Instrument
a) Financial Assets
Initial Recognition and Measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded
at fair value through profit or loss, transaction costs that are attributable to the acquisition of the
financial asset.
Financial assets are classified, at initial recognition, as financial assets measured at fair value or as
financial assets measured at amortized cost.
Subsequent Measurement
For purpose of subsequent measurement financial assets are classified in two broad categories: -
L Financial Assets at fair value
11. Financial assets at amortized cost
Where assets are measured at fair value, gains and losses are either recognized entirely in the statement
of profit and loss, or recognized in other comprehensive income. A financial asset that meets the
following two conditions is measured at amortized cost.
i. Business Model Test: The objective of the company's business model is to hold the financial asset
to collect the contractual cash flows.
11. Cash flow characteristics test: The contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payment of principal and interest on the principal amount
outstanding.
A financial asset that meets the following two conditions is measured at fair value through OCI:-
1. Business Model Test: The financial asset is held within a business model whose objective is
achieved by both collecting contractual cash flows and selling financial assets.
11. Cash flow characteristics test: The contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payment of principal and interest on the principal amount
outstanding.
All other financial assets are measured at fair value through profit and loss.
All equity investments are measured at fair value in the balance sheet, with value changes recognized in
the statement of profit and loss, except for those equity investments for which the entity has elected
irrevocable option to present value changes in OCI.
Investment in Associates, Joint Venture and Subsidiaries
The company has accounted for its investment in subsidiaries, associates and joint venture at cost
Impairment
The Company assesses on a forward-looking basis the expected credit losses associated with its assets
carried at amortized cost and debt instrument carried at FVTOCI. The impairment methodology applied
depends on whether there has been a significant increase in credit risk since initial recognition. If credit
risk has not increased significantly, twelve-month ECL is used to provide for impairment loss, otherwise
lifetime ECL is used.
However, only in case of trade receivables, the Company applies the simplified approach which requires
expected lifetime losses to be recognized from initial recognition of the receivables.
b) Financial Liabilities
All financial liabilities are initially recognized at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
Financial liabilities are classified as measured at amortized cost or fair value through profit and loss
(FVTPL]. A financial liability is classified as FVTPL if it is classified as held for trading or it is a derivative or
is designated as such on initial recognition. Financial Liabilities at FVTPL are measured at fair value and net
gain or losses, including any interest expense, are recognized in statement of profit and loss. Other financial
liabilities are subsequently measured at amortized cost using the effective interest method. Interest
expense and foreign exchange gains and losses are recognised in statement of profit and loss. Any gain or
loss on de-recognition is also recognized in statement of profit and loss.
2.11 Fair Value Measurement
The Company measures certain financial instruments 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:
1. In the principal market for the asset or liability, or
11. 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.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximizingthe use of relevant observable inputs and minimizing 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] prices for identical assets or liabilities in active markets
Level 2: Significant inputs to the fair value measurement are directly or indirecdy observable
Level 3: Significant inputs to the fair value measurement are 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 categorization
(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each
reporting period.
F or the purpose of fair value disclosures, the Company has determined classes of assets & liabilities on the basis
of the nature, characteristics and die risks of the asset or liability and the level of the fair value hierarchy as
explained above.
2.12 Lease assets
The determination of whether an arrangement is a lease is based on whether fulfillment of the arrangement is
dependent on the use of a specific asset and the arrangement conveys a right to use the asset, even if that right
is not explicitly specified in an arrangement
Leases where the lessor transfers substantially all the risks and rewards of ownership of the leased asset are
classified as finance lease and other leases are classified as operating lease.
Operating lease receipts / payments are recognized as an income / expense on a straight-line basis over the
lease term.
Contingent rents are recognized as income / expense in the period in which they are earned/ incurred.
2.13 Inventory
a) Basis of valuation
Inventories are valued at lower of cost and net realizable value after providing cost of obsolescence, if any.
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 The comparison of cost and net realizable value is made on an item-by-item basis.
b) Method of valuation
Raw materials and consumables has been determined by using FIFO cost method and comprises all cost of
purchase, freight costs, customs duty (wherever paid) taxes (other than those subsequently recoverable
from Tax Authorities) and all other cost incurred in bringing the inventory to their present location and
condition. The cost is determined using the FIFO method.
Work in progress include direct and indirect materials, direct and indirect labour and other manufacturing
overheads incurred in bringing them to their respective present location and condition.
Finished goods includes direct and indirect materials, direct and indirect labour and other manufacturing
overheads incurred in bringing them to their respective present location and condition. Cost is determined on
moving cost basis.
2.14 Employee benefits
The Company's employee benefits mainly include wages, salaries, bonuses, contribution to plans, defined
benefit plans, compensated absences, deferred compensation and share-based payments. The employee
benefits are recognized in the year in which the associated services are rendered by the Company employees.
Defined contribution plans
The contributions to defined contribution plans are recognized in profit or loss as and when the services are
rendered by employees. The Company has no further obligations under these plans beyond its periodic
contributions.
Provident Fund and Employees' State Insurance Schemes
All employees of the Company are entitled to receive benefits under the Provident Fund, which is a defined
contribution plan. Both the employee and the employer make monthly contributions to the plan at a
predetermined rate (presently 12%) of the employees' basic salary. The contributions are made to the fund
administered and managed by the Government of India. In addition, some employees of the Company are
covered under the employees’ state insurance schemes, which are also defined contribution schemes
recognized and administered by the Government of India.
Defined benefit plans
In accordance with the local laws and regulations, all the employees in India are entitled for the Gratuity plan.
The said plan requires a lump-sum payment to eligible employees (meeting the required vesting service
condition) at retirement or termination of employment, based on a pre- defined formula.
The Company provides for the liability towards the said plans on the basis of actuarial valuation carried out
quarterly as at the reporting date, by an independent qualified actuary using the proj ected-unit-credit method.
The obligation towards the said benefits is recognized in the balance sheet, at the present value of the defined
benefit obligations less the fair value of plan assets (being the funded portion). The present value of the said
obligation is determined by discounting the estimated future cash outflows, using interest rates of government
bonds.
The interest income / (expense) are calculated by applying the above mentioned discount rate to the plan
assets and defined benefit obligations liability. The net interest income / (expense) on the net defined benefit
liability is recognized in the statement of profit and loss. However, the related re-measurements of the net
defined benefit liability are recognized directly in the other comprehensive income in the period in which they
arise. The said re-measurements comprise of actuarial gains and losses (arising from experience adjustments
and changes in actuarial assumptions), the return on plan assets (excluding interest). Re-measurements are
not re- classified to the statement of profit and loss in any of the subsequent periods.
Other long-term employee benefits
The employees of the Company are entitled to compensated absences as well as other long-term benefits.
Compensated absences benefit comprises of encashment and availment of leave balances that were earned by
the employees over the period of past employment.
The Company provides for the liability towards the said benefit on the basis of actuarial valuation carried out
quarterly as at die reporting date, by an independent qualified actuary using the proj ected-unit-credit method.
The related re-measurements are recognized in the statement of profit and loss in the period in which they
arise.
2.15 Tax Expenses
Income Tax expense comprises of current tax and deferred tax charge or credit Provision for current tax is
made with reference to taxable income computed for the financial year for which the financial statements are
prepared by applying the tax rates as applicable.
Current Tax
The current tax is calculated on the basis of the tax rates, laws and regulations, which have been enacted or
substantively enacted as at the reporting date in the respective countries where the Company operates and
generate taxable income. The payment made in excess / (shortfall) of the respective Company's income tax
obligation for the period are recognized in the Balance Sheet as current income tax assets / liabilities.
Deferred Tax
Deferred tax is provided using the Balance Sheet approach on temporary differences at the reporting date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose at
reporting date. Deferred income tax assets and liabilities are measured using tax rates and tax laws that have
been enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset
to be utilized.
Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that
it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Current and deferred tax is recognized in statement of profit or loss, except to the extentthat it relates to items
recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other
comprehensive income or directly in equity, respectively.
Minimum Alternate Tax
Minimum Alternate Tax credit is recognized as an asset only when and to the extent there is convincing evidence
that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance
Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer
convincing evidence to the effect that the Company will pay normal income tax during the specified period.
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