2. MATERIAL ACCOUNTING POLICIES2.1 Statement of compliance and basis of preparation
The Standalone Financial Statements have been prepared in accordance with the accounting principles generally accepted in India
including Indian Accounting Standards (Ind AS) prescribed under the section 133 of the Companies Act, 2013 read with rule 3
of the Companies (Indian Accounting Standards)Rules, 2015 (as amended from time to time) and presentation and disclosures
requirement of Division II of revised Schedule III of the Companies Act 2013, (Ind AS Compliant Schedule III), as applicable to
standalone financial statement.
The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently
to all the periods presented in the financial statements 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.
The financial statements are presented in Indian Rupee (INR) and all values are rounded to the nearest lacs (INR 00,000), except
when otherwise indicated.
The financial statements provide comparative information in respect of the previous period. In addition, the Company presents an
additional balance sheet at the beginning of the preceding period when there is a retrospective application of an accounting policy,
a retrospective restatement, or a reclassification of items in standalone financial statements.
2.2 Basis of measurement
The standalone financial statements have been prepared on the historical cost basis, except for:
(i) certain financial instruments that are measured at fair values at the end of each reporting period; and
(ii) defined benefit plan - plan assets that are measured at fair values at the end of each reporting period, as explained in the
accounting policies below.
a) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer liability in an orderly transaction between market
participants at the measurement date, regardless of whether that price is directly observable or estimated using another
valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics
of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability
at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined
on such a basis, except for leasing transactions that are within the scope of Ind AS 116, share based payment transactions that
are within the scope of Ind AS 102 and measurements that have some similarities to fair value but are not fair value, such as
net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to
which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement
in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either
directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
The Company has consistently applied accounting policies to all periods presented in these Standalone financial statements.
(b) Operating cycle and current/non-current classification
Based on the nature of products/activities of the Company and the normal time between acquisition of assets/liabilities and
their realization/settlement in cash and cash equivalents, the Company has determined its operating cycle as twelve months
for the purpose of classification of its assets and liabilities as current and non-current.
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
The terms of the 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.
(c) Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less
accumulated losses, if any.
For the purpose of impairment testing, goodwill is allocated to each of the Company's cash-generating units (or groups of
cash-generating units) that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there
is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying
amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to
the other assets of the unit prorata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill
is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the
profit or loss on disposal.
(d) Foreign currencies
The Company's Standalone financial statements are presented in INR, which is also the Company's functional currency.
Functional and presentation currency
Management has determined the currency of the primary economic environment in which the entity resides in and operates
as the functional currency. The functional currency of the Company is Indian Rupees (INR). The financial statements have
been presented in INR, as it best represents the operating business performance and underlying transactions.
Foreign currency transactions
In preparing the standalone financial statements of the Company, transactions in currencies other than the Company's
functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions.
At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates
prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are re-translated
at the rates prevailing at the date when the fair value was determined Non-monetary assets and non-monetary liabilities
denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of
the transaction. The related revenue and expense are recognized using the same exchange rate.
Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for exchange
differences on foreign currency borrowings relating to assets under construction for future productive use, which are included
in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings.
(e) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowing pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Borrowing Cost includes exchange differences arising from foreign currency borrowings to the extent they are regarded as an
adjustment to the finance cost.
(f) Employee Benefits
i) Defined contribution plans: The Company contributes towards state governed provident fund scheme, employee state
insurance scheme (ESIC) and labour welfare fund to all applicable employees and superannuation scheme for eligible
employees. The Company has no further payment obligations once the contributions have been paid. Hence payments
to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service
entitling them to the contributions.
ii) Defined benefit plan: The employees' gratuity fund scheme represents the defined benefit plan. The cost of providing
benefits is determined using projected unit credit method, with actuarial valuations being carried out at the end of each
annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of changes to the assets (if
applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a
charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised
in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past
service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the
discount rate at the beginning of the period to the net defined benefit liability or asset.
Defined benefit costs are categorised as follows:
i) service cost (including current service cost, past service cost, as well as gains and losses on curtailments and
settlements);
ii) net interest expenses or income; and
iii) remeasurement.
The Company presents the first two components of defined benefit costs in the statement of profit and loss in the line
item 'Employee benefits expense'. Curtailment gains and losses are accounted for as past service cost.
iii) Share-based payments:
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value
of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-
based transactions are set out in Note 60.
(a) Includes impact of market performance conditions (e.g. entity's share price)
(b) Excludes 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
(c) Excludes the impact of any non-vesting conditions (e.g. the requirement for employees to save or hold shares for a
specific period of time)
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Company's estimate of equity instruments that will eventually vest, with a
corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number
of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit
or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the “Share
options outstanding account”.
(iv) Short term and other long term employee benefits:
A liability is recognised for benefits accruing to employees in respect of wages, salaries and bonus in the period the related
service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service. Liabilities
recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits
expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long term employee benefits are actuarially measured at the present value of the
estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to
the reporting date.
(g) Treasury Shares
Treasury shares are the own equity instruments of the Company that are re-acquired by the Company. Treasury shares are
recognised at cost and the par value of treasury shares is reduced from equity share capital whereas the difference between
cost and par value is deducted from treasury shares held by ESOP trust under other equity. No gain or loss is recognised in
the statement of profit or loss on the purchase, sale, issue, or cancellation of the Company's own equity instruments. Any
difference between the carrying amount and the consideration, if reissued, is recognised in Securities premium. Treasury
shares are allotted towards exercise of share options.
(h) Income Taxes
Income Tax expense represents the sum of the tax currently payable and deferred tax.
i) Current tax:
Current tax is the amount of income taxes payable in respect of taxable profit for the year. Taxable profit differs from
'profit before tax' as reported in the Standalone statement of profit and loss because of items of income or expense
that are taxable or deductible in other years and items that are never taxable or deductible under the Income Tax Act,
1961. The current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the
reporting period.
Significant judgments are involved in determining the provision for income taxes including judgment on whether tax
positions are probable of being sustained in tax assessments. A tax assessment can involve complex issues, which can
only be resolved over extended time periods. The recognition of taxes that are subject to certain legal or economic limits
or uncertainties is assessed individually by management based on the specific facts and circumstances
ii) Deferred tax:
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit under the Income Tax Act, 1961.
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally
recognized for all the deductible temporary differences to the extent that it is probable that taxable profits will be
available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities
are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction
that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that
it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted
by the end of the reporting period. The measurement of deferred tax liabilities and assets reflect the tax consequences
that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle
the carrying amount of its assets and liabilities.
Minimum Alternate Tax ('MAT') credit is recognised as deferred tax asset only when and to the extent there is convincing
evidence that the Company will pay normal income tax during the period for which the MAT credit can be carried forward
for set-off against the normal tax liability. MAT credit recognised as an asset is reviewed at each balance sheet date and
written down to the extent the aforesaid convincing evidence no longer exists.
iii) Presentation of current and deferred tax:
Current and deferred tax are recognized in the 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.
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. In case of deferred tax assets and deferred tax liabilities, the same are offset if the Company has a legally
enforceable right to set off corresponding current tax assets against current tax liabilities and the deferred tax assets and
deferred tax liabilities relate to income taxes levied by the same tax authority on the Company.
(i) Revenue recognition
The company derives revenue primarily from sale of manufactured chemicals, bulk drugs. Enzymes, pharmaceutical
formulations, environmental solutions products and rental income and sale of investment property. Revenue from contracts
with customers is recognized when control of the goods or services are 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 towards
satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration)
allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable
consideration on account of various discounts offered by the company as part of the agreed contractual terms and excluding
taxes or duties collected on behalf of the government. No element of financing is deemed present as majority of sales are on
cash basis and credit sales are made with normal credit period consistent with market practice.
Sale of Goods/Investment Property:
The Company recognises revenue when it transfers control of a product or service to a customer. The control of goods is
transferred to the customer depending upon the incoterms or as agreed with customer or delivery basis. Control is considered
to be transferred to the customer:
- when the customer has ability to direct the use of such goods and obtain substantially all the benefits from it such as
following delivery,
- the customer has full discretion over the manner of distribution and price to sell the goods,
- the customer has the primary responsibility when selling the goods and bears the risks of obsolescence and loss in relation
to the goods.
Revenue received in connection with sale of goods is deferred and recognized over the period in which it satisfies the
performance obligation by transferring promised good or service to a customer.
Recognition of revenue from contractual projects
Revenue from contractual project is recognized over time, using an input method with reference to the stage of completion of
the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work
performed to date relative to the estimated total contract costs.
The Company recognizes revenue only when it can reasonably measure its progress in satisfying the performance obligation.
Until such time, the Company recognizes revenue to the extent of cost incurred, provided the Company expects to recover the
costs incurred towards satisfying the performance obligation.
When it is probable that total contract cots will exceed total contract revenue, the expected loss is recognized as an expense
immediately when such probability is determined.
Rental income from investment in property
Lease income from operating leases where the Company is a lessor is recognised as income on a straight-line basis over the
lease term. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of
the leased asset and recognised over the lease term on the same basis as rental income.
Rendering of services:
Revenue from services rendered is recognised pro-rata over the period of the contract as the underlying services are
performed.
Infrastructure support services, consists of maintenance of common area in the investment property and supply of essentials.
Revenue from such services are recognised in accordance with the terms of the agreement entered into with individual
lessees.
Transfer of Development Rights / Revenue from real-estate project:
The Company has entered a development arrangement (DA) with a developer for development of its land parcel currently held
as Investment property. Under such arrangement, the Company's performance obligation is to grant development rights over
land in exchange for an agreed share of constructed area in the developed project. Based on the terms of the arrangement
and in lieu of Expert Advisory Committee (EAC) Opinion issued on Revenue Recognition in a Joint Development Arrangement
under AS framework, the Company evaluates whether development agreement constitutes joint arrangement under Ind AS
111. The Company does not undertake construction activities and is not considered to be providing construction services to
the developer. Accordingly, the arrangement does not give rise to a performance obligation towards the developer under Ind
AS 115. Instead, the Company earns income through sale of its share of constructed units to third-party customers.
(a) Basis and Timing of Revenue Recognition - Revenue represents consideration from sale of the Company's share of
constructed units to third-party customers. Revenue is recognised in accordance with Ind AS 115 at point in time, when
control of the real estate unit is transferred to the customer which coincides with completion of the project determined
basis receipt of Occupancy Certificate, handover of the possession to the customer, and receipt of entire sale proceeds
and when other conditions are met.
(b) Measurement of Revenue - Revenue is measured based on the transaction price, which is the consideration, adjusted
for discounts and other credits, if any, as specified in the contract with the customer for or sale of the Company's share of
constructed units
(c) Advances from Customers - Amounts received from customers for sale of units prior to transfer of control are recognised
as contract liabilities (advances from customers) and recognised as revenue when the recognition criteria are met.
Interest and dividend:
Interest income from financial assets is recognised when it is probable that the economic benefits will flow to the Company
and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal
outstanding and the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial assets to that asset's net carrying amount on initial recognition.
Interest on income tax refund is recognised on receipt of refund order.
Dividend income is recognized when the Company's right to receive payment is established which is generally when
shareholders approve the dividend.
Export Incentives:
Duty free imports of raw materials under Advance License for imports as per the Import and Export Policy are matched with
the exports made against the said licenses and net benefit / obligation is accounted by making suitable adjustments in raw
material consumption.
The benefit under the Duty Drawback, Mercantile Export Incentive Scheme and other schemes as per the Import and Export
policy in respect of exports made under the said schemes is included as ‘Export Incentives' under the head “Other Operating
Revenue” in the standalone statement of profit and loss and is accounted in the year of export.
Scrap Sales:
Sale of scrap is recognised at the time of satisfaction of performance obligation i.e. upon transfer of control of products to the
customers which coincides with their delivery to customer.
Contract balances:
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company
performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a
contract asset is recognised for the earned consideration.
Trade receivables
A receivable is recognised if an amount of consideration is unconditional (i.e., only the passage of time is required before
payment of the consideration is due). Refer to accounting policies of financial assets in point (o) below.
Contract liabilities
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the
Company transfers the related goods or services. Contract liabilities are recognised as revenue when the Company performs
under the contract (i.e., transfers control of the related goods or services to the customer).
(j) Property, plant and equipment (PPE) including Capital work-in-progress (CWIP)
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated in balance sheet at
historical cost less accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure
that is directly attributable to the acquisition of the items. Specific borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to
complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial
period of time to get ready for their intended use or sale.
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. The carrying amount of any component accounted for as a separate asset is derecognised when replaced.
All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater
than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying
amount. These are included in profit or loss within other income/other expense, as appropriate.
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated using the straight-line method to allocate the cost of the assets, net of their residual values, over
their estimated useful lives as follows:
Depreciation is recognised so as to write off the cost of assets (other than freehold land and capital work-in-progress) less
their residual values on straight-line method over their useful lives as indicated in Part C of Schedule II of the Companies Act,
2013 and based on assessment / estimate made by management. Depreciation methods, useful lives and residual values are
reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Capital work in progress comprises cost of property, plant and equipment (including related expenses),that are not yet ready
for their intended use at the reporting date and it is carried at cost less accumulated impairment losses.
(k) Investment property
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under
construction for such purposes) and subsequent sale as and when required. Investment property is measured initially at its
cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the
asset's carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the
group and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
Investment properties are depreciated using the straight-line method to allocate the cost of assets over their estimated
useful lives. Investment properties generally have useful lives of 15-60 years. The useful lives have been determined based
on technical evaluation performed by the management's expert.
Transfers to, or from, investment property shall be made when, and only when, there is a change in use, evidenced by:
(a) commencement of owner-occupation, for a transfer from investment property to owner-occupied property
(b) commencement of development with a view to sale, for a transfer from investment property to inventories
(c) end of owner-occupation, for a transfer from owner-occupied property to investment property;
(d) commencement of an operating lease to another party, for a transfer from inventories to investment property
Sale of investment Property
An investment property is de-recognised upon disposal or when the investment property is permanently withdrawn from use
and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit
or loss in the period in which the property is derecognized and is recognized under revenue from operations.
Revenue pertaining to performance obligation pending as on the date of sale is deferred till the performance obligation is not
completed.
(l) Intangible assets
(a) Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and
accumulated impairment losses. The amortisation is recognised on a straight-line basis over their estimated useful lives.
The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any
changes in estimate being accounted for on a prospective basis.
An intangible asset is derecognised upon disposal or when no future economic benefits are expected to arise from use or
disposal. Any gain or loss arising from derecognition of an intangible assets, measured as the difference between the net
disposal proceeds and the carrying amount of the asset, are recognised in standalone statement of profit and loss when the
assets is derecognised.
(b) Internally generated intangible assets - Research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred. An Internally-generated
intangible asset arising from development (or from the development phase of an internal project) is recognised if and only if,
all the below stated conditions are fulfilled:
(i) the technical feasibility of completing the intangible asset so that it will be available for use or sale;
(ii) its intention to complete the asset and use or sell it;
(iii) its ability to use or sell the asset;
(iv) how the asset will generate probable future economic benefits;
(v) the availability of adequate resources to complete the development and to use or sell the asset; and
(vi) the ability to measure reliably the expenditure attributable to the intangible asset during development.
The amount initially recognised for internally-generated intangible assets is the sum of expenditure incurred from the date
when the intangible assets first meets the recognition criteria listed above. Where no internally-generated intangible assets
can be recognised, development expenditure is recognised in the standalone statement of profit and loss in the period in
which incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation
and accumulated impairment losses, on the same basis as intangible as intangible assets that are acquired separately.
(m) Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amount of its tangible and intangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the assets is estimated in order to determine the extent of impairment loss, if any. When it is not
possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the
cash generating unit to which the assets belongs. When a reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group
of cash-generating units for a reasonable and consistent allocation basis to be identified.
Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is
determined:
(i) in the case of an individual asset, at the higher of the net selling price and the value in use; and
(ii) in the case of a cash generating unit (a Group of assets that generates identified, independent cash flows), at the higher
of the cash generating unit's net selling price and the value in use.
The amount of value in use is determined as the present value of estimated future cash flows from the continuing use of
an asset and from its disposal at the end of its useful life. For this purpose, the discount rate (pre-tax) is determined based
on the weighted average cost of capital of the Company suitably adjusted for risks specified to the estimated cash flows of
the asset.
For this purpose, a cash generating unit is ascertained as the smallest identifiable Group of assets that generates cash inflows
that are largely independent of the cash inflows from other assets or group of assets.
If recoverable amount of an asset (or a cash generating unit) is estimated to be less than its carrying amount, such deficit is
recognised immediately in the statement of profit and loss as impairment loss and the carrying amount of the asset (or cash
generating unit) is reduced to its recoverable amount.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash generating unit) is increased
to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss is recognised for the asset (or a cash generating unit) in
prior years. A reversal of an impairment loss is recognised immediately in the standalone statement of profit and loss.
(n) Impairment of goodwill
Goodwill 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 the
goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised.
Impairment losses relating to goodwill cannot be reversed in future periods.
Any impairment loss for goodwill is recognised directly in profit or loss and is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the
profit or loss on disposal.
(o) Inventories
Basis of Valuation
Inventories consisting of raw materials and packing materials, work-in-progress, stock-in-trade and finished goods are
measured at the lower of cost and net realisable value.
Method of Valuation
The cost of all categories of inventories is based on the weighted average method. Cost of raw materials and packing materials
and stock-in-trade comprises cost of purchases. Cost of work-in-progress and finished goods comprises direct material,
direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis
of normal operating capacity. Costs of inventories also include all other costs incurred in bringing the inventories to their
present location and condition.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion
and costs necessary to make the sale.
(p) Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of
the instruments.
Financial assets
Initial recognition and measurement:
All financial assets are recognised initially at fair value excluding trade receivables which is recorded at transaction cost.
Transaction costs that are directly attributable to the acquisition of financial assets are added to the fair value of the financial
asset on initial recognition. Transaction costs directly attributable to the acquisition of financial assets as at fair value through
profit or loss are recognised immediately in profit or loss. All regular way purchases or sales of financial assets are recognized or
derecognized on a trade date basis. Regular way purchases or sales of financial assets are financial assets that require delivery
of assets within the time frame established by regulation or convention in the market place.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories -
(1) Debt instruments at amortised cost
(2) Debt instruments at fair value through other comprehensive income (FVTOCI)
(3) Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL)
(4) Equity instruments measured at fair value through other comprehensive income (FVTOCI)
(1) Debt instruments at amortised cost
A 'debt instrument' is measured at the amortised cost, if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and
interest (SPPI) 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 an integral part of the EIR. The EIR amortisation is included in other income of the Statement of profit and
loss. The losses arising from impairment are recognised in the Statement of profit or loss.
(2) Debt instrument at FVTOCI
A 'debt instrument' is measured as at FVTOCI, if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial
assets, and the contractual terms of the instrument that give rise on specified dates to cash flows that are SPPI on
the principal amount outstanding
b) Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at
fair value. Fair value movements are recognised in the other comprehensive income (OCI). However, the Company
recognise interest income, impairment losses and reversals and foreign exchange gain or loss in the profit or loss.
On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to
profit or loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR
method.
(3) Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization
as at amortised cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to designate a debt
instrument, which otherwise meets amortised cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only
if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as 'accounting mismatch').
(4) Equity Instruments
All equity Instruments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading
classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other
comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument- by¬
instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument
including foreign exchange gain or loss, 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.
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 (i.e. removed from the Company's balance sheet) when:
1) The contractual rights to receive cash flows from the asset have expired, or
2) 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 recognise 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. 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 financial assets measured at amortised cost, trade receivables, other contractual rights to receive cash or
other financial assets, and guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights.
Credit loss 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 Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest
rate (or credit adjusted effective interest rate for purchase or originated credit-impaired financial assets). The Company
estimates cash flow by considering all contractual terms of the financial instrument (for example, prepayment, extension,
call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit
losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on
a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance
for that financial instrument at an amount equal to 12 month expected credit losses. 12-month expected credit losses are
portion of the lifetime expected credit losses and represent the lifetime cash shortfalls that will result if the default occurs
within the 12-months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12months.
If the Company's measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous
period, but determines at the end of a reporting period that the credit risks has not increased significantly since initial
recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss
allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the
Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the
change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default
occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument
as at the date of initial recognition and considers reasonable and supportable information, that is available without undue
cost or effort, that is indicative of significant increase in credit risk since initial recognition.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used
a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision
matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt
instruments at FVTOCI except that the loss allowance is recognised in other comprehensive income and is not reduced
from the carrying amount in the balance sheet.
Financial liabilities and equity instruments
Classification as debts or equity:
Debts and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with
the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
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 issued by the Company are recognised at the proceeds received, net of direct issue cost.
Repurchase of the Company's own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised
in statement of profit and loss on the purchase, sale, issue or cancellation of the Company's own equity instruments.
Financial liabilities:
Initial recognition and measurement:
All financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the issue of
financial liabilities (other than financial liabilities at fair value through profit or loss) are deducted from the fair value of the
financial liabilities on initial recognition. Transaction costs directly attributable to the issue of financial liabilities as at fair
value through profit or loss are recognised immediately in profit or loss.
Subsequent measurement:
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL. However,
financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing
involvement approach applies, financial guarantee contracts, issued by the Company, and commitments issued by the
Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies
set out below.
Financial liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognised by the
Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at
FVTPL.
Financial liability is classified as held for trading if:
? it has been incurred principally for the purpose of repurchasing it in the near term; or
? on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and
has a recent actual pattern of short-term profit-taking; or
? it is a derivative that is not designated and effective as a hedging instrument.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or
loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in
the 'Other income' line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the fair value
of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive
income, unless the recognition of the effects of changes in the liability's credit risk in other comprehensive income would
create or enlarge an accounting mismatch in profit, or loss, in which case these effects of changes in credit risk are recognised
in profit or loss. The remaining amount of change in the fair value of liability is always recognised in profit and loss. Changes
in fair value attributable to a financial liability's credit risk that are recognised in other comprehensive income are reflected
immediately in retained earnings and are not subsequently reclassified to profit or loss.
Gains or losses on financial guarantee contracts and loan commitments issued by the company that are designated by the
Company as at fair value through profit or loss are recognised in profit or loss.
Fair value is determined in the manner described in Note 55.
Financial liabilities at amortised cost:
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end
of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised
cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset
is included in the 'Finance costs' line item.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments
(including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to
the net carrying amount on initial recognition.
Derecognition of financial liabilities:
The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled
or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for
as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial
modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor)
is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The
difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is
recognised in the statement of profit and loss.
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.
Derivative financial instruments:
The Company enters a variety of derivative financial instruments to manage its exposure to interest rate, foreign exchange
rate risks, including foreign exchange forward contracts, interest rate swaps and cross currency swaps. Derivatives are initially
recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair
value at the end of each reporting year. The resulting gain or loss is recognised in Statement of Profit and Loss immediately
unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in
Statement of Profit and Loss depends on the nature of the hedge item.
(q) Leases
The Company as a lessee:
The Company's lease asset classes primarily consist of leases for Residential premises, Office Premises, Godown, Industrials
land and Vehicle. The Company assesses whether a contract contains a lease, at inception of a contract.
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. The right-of-use assets and lease liability is initially
measured at the present value of the future lease payments. The lease payments are discounted using the interest rate
implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these
leases.
The lease payments that are not paid at the commencement date are discounted using the interest rate implicit in the lease.
If that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee's incremental
borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an
asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
Lease payments included in the measurement of the lease comprise:
? Fixed lease payments (including in-substance fixed payments) payable during the lease term and under reasonably
certain extension options, less any lease incentives.
? Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement
date;
? The amount expected to be payable by the lessee under residual value guarantees.
? The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
? Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
As a practical expedient, Ind AS 116 permits a lessee not to separate non-lease components when bifurcation of the payments
is not available between the two components, and instead account for any lease and associated non-lease components as
a single arrangement. The Company has used this practical expedient. Contingent and variable rentals are recognized as
expense in the periods in which they are incurred.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using
the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset)
whenever:
? The lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the
lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
? A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease
liability is remeasured by discounting the revised lease payments using a revised discount rate.
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. Whenever the
Company incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or
restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and
measured under Ind AS 37. The costs are included in the related right-of-use asset, unless those costs are incurred to produce
inventories.
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.
Extension and termination options are included in many of the leases. In determining the lease term the management
considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise 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.
Also Refer Note 46.
In respect of short-term leases and leases of low-value assets, the Company has elected not to recognise right-of-use
assets and lease liabilities for short-term leases of real estate properties that have a lease term of 12 months. The Company
recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
The Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are
classified as operating leases. Assets subject to such leases are presented under Investment Property. Rental income from
operating leases is recognised on a straight-line basis over the lease term. This includes the impact of lease income arising
from the fair value adjustment of refundable security deposits, where applicable. Costs associated with operating leases,
including depreciation, are recognised as an expense in the Statement of Profit and Loss.
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