6. Material Accounting Policies:6.1 Property, Plant and Equipment (PPE) :
(i) An item of PPE is recognised 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. PPE is stated at its original cost net of tax / duty credits
availed, if any, but including borrowing costs for qualifying assets and other attributable costs incurred for bringing
the asset to its working condition for its intended use, less accumulated depreciation and cumulative impairment, if
any.
(ii) Subsequent expenditure incurred is included in the asset’s carrying amount appropriately, only when it is probable
that future economic benefits will flow to the Company and related costs can be measured reliably. All other costs in
the nature of repairs and maintenance expenses are charged to the Statement of Profit and Loss during the reporting
period in which they are incurred.
(iii) Where a cost of a part of an asset (“asset component”) is significant to total cost of the asset and useful life of that part
is different from the useful life of the remaining asset, useful life of that significant part is determined separately and
such asset component is depreciated over its separate useful life.
(iv) Items of PPE not ready for its intended use on the reporting date are disclosed as “Capital Work in Progress”.
(v) An item of PPE is de-recognised upon disposal or when retired from active use when no future benefits are expected
from its use. Gains/ losses on de-recognition are recognised in the statement of Profit and Loss.
6.2 Intangible Assets :
(i) An Intangible asset is recognised when it is probable that the future economic benefits that are attributable to the
asset will flow to the Company and the cost of the asset can be measured reliably and is stated at cost less
accumulated amortisation and impairments, if any.
(ii) Software, which is not an integral part of any related hardware, is classified as an intangible asset.
(iii) The carrying amount of an intangible asset is de-recognised on disposal or when no future economic benefits are
expected to flow from its use or disposal. The gain or loss arising from de-recognition is recognised in the Statement
of Profit and Loss.
6.3 Investment property :
(i) Investment in land and/or buildings that are not intended to be occupied substantially for use by or in the operations of
the Company are classified as investment property.
(ii) Investment property is initially measured at cost, including related transaction costs. The cost of investment property
includes its purchase price and directly attributable expenditure, if any. Subsequent expenditure is capitalised to the
asset’s carrying amount only when it is probable that future economic benefits associated with 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.
(iii) Subsequent to the initial recognition, investment property is stated at cost less accumulated depreciation and
accumulated impairment loss, if any.
(iv) Investment property is derecognised either when it is disposed of or permanently withdrawn from use and no future
economic benefit is expected from its disposal.
(v) Though the Company measures investment property using cost-based measurement, the fair value of investment
property is disclosed as required by IND AS 40 ‘Investment Properties’. Fair values are determined based on a
periodic evaluation performed by an accredited external independent valuer applying valuation model
recommended by recognised valuation standards committee.
6.4 Depreciation and Amortisation :
(i) Depreciation on fixed assets is charged on Written Down Value method using the useful lives and residual values of
all the assets, as prescribed under Part - C of Schedule II to the Companies Act, 2013, except as stated in para (b) &
(c) below.
(ii) Leasehold land is amortised on a straight-line basis over the period of lease.
(iii) Computer Software are being amortised on a straight-line basis over a period of 6 years from the date of put to use.
(iv) Depreciation on investment property is charged on Written Down Value method using the useful lives as per the
useful life prescribed under Schedule II of the Act.
6.5 Non-Current Assets Held for Sale :
(i) The Company classifies non-current assets as held for sale, if their carrying amounts are expected to be recovered
principally through sale transaction rather than through continuing use. The criteria for classification of assets as
‘assets held for sale’ are regarded as met only when the sale is highly probable and the asset is available for
immediate sale in its present condition. The sale is considered as highly probable when the management is
committed to the sale, an active programme to locate a buyer is initiated, and the sale is expected to be completed
within a period of twelve months.
(ii) Non-current assets, classified as held for sale are measured at the lower of their carrying amounts and the fair value
less costs to sell. Any resulting impairment loss is recognised in the Statement of Profit and Loss. Subsequent
increases in fair value less costs to sell are recognised to the extent of previously recognised impairment losses.
(iii) Depreciation or amortisation on such assets ceases from the date of classification as held for sale.
(iv) Non-current assets classified as held for sale are presented separately in the Balance Sheet. Liabilities, if any,
directly associated with disposal groups classified as held for sale are presented separately in the Balance Sheet.
6.6 Impairment of Non-Financial Assets :
The Company assesses at each reporting date, whether there is any indication that a non-financial asset is required to be
impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. Recoverable amount
is the higher of an asset’s fair value less costs of disposal or its value in use. Where carrying amount of an asset exceeds its
recoverable amount, the asset is considered as impaired and is written down to its recoverable amount. Value in use is
arrived at by discounting the future cash flows to their present value based on an appropriate discounting factor.
The impairment loss, is recognised in the statement of profit and loss.
When there is an indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or
may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, to the extent the
amount was previously charged to the Statement of Profit and Loss. However, the carrying value after reversal is not
increased beyond the carrying value that would have prevailed by charging usual depreciation, if there was no impairment.
6.7 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. The company recognises a financial instrument when it becomes a party to the contractual
provisions of instrument.
(i) Financial Assets :(a) Initial Recognition
On initial recognition, a financial asset is recognised at fair value. In case of financial assets which are recognised
at fair value through profit and loss (FVTPL), its transaction costs are recognised in the statement of profit and
loss. In other cases, the transaction costs are added to or deducted from, as the case may be, the fair value of
such financial assets or liabilities, on initial recognition.
(b) Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
Financial Assets measured at Amortised Cost:
Financial assets are subsequently measured at amortised cost, if these financial assets are held within a
business model with an objective to hold these assets for collecting contractual cash flows and the contractual
terms of the financial assets give rise, on specified dates, to cash flows that are solely payments of principal and
interest on the principal amount outstanding. Subsequent measurement is done using the effective interest rate
(EIR) method. The EIR amortisation of these financial assets is included in finance income. Impairment losses
and reversals thereof arising on these assets are recognised in the Statement of Profit and Loss.
Financial Assets Measured at Fair Value through Other Comprehensive Income (FVOCI):
Financial assets are measured at fair value through Other Comprehensive Income (OCI), if financial assets are
held within a business model with an objective to hold these assets in order to collect contractual cash flows and
to sell 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. Subsequent
measurement, until they are derecognised or reclassified, is done at fair value and unrealised gains and losses
are recognised in other comprehensive income except for the recognition of impairment losses and reversals
thereof, interest revenue and foreign exchange gains and losses are recognised in the Statement of Profit and
Loss.
Financial Assets Measured at Fair Value through Profit or loss (FVTPL):
Financial assets are measured at fair value through Profit or loss unless it is measured at amortised cost or at fair
value through OCI. Subsequent measurement is done at fair value and unrealised gains and losses are
recognised in the statement of profit and loss.
Investment in equity instruments issued by subsidiary, associate and joint venture companies are measured at
cost less impairment.
(c) Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies the expected credit loss (” ECL”) model for measurement
and recognition of impairment loss on financial assets and credit risk exposures. The Company follows ‘simplified
approach’ for recognition of impairment loss allowance on trade receivables. Simplified approach does not
require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on
lifetime ECL at each reporting date, right from its initial recognition.
The impairment provisions for financials assets are mainly based on past history, assumptions about risk of
defaults, expected loss rates and timing of cash flows. As a practical expedient, the company uses a standard
provision matrix. The company applies standard ECL impairment allowance based on ageing of receivables to
estimate the provision amount. However, in case of significant increase in the credit risk, lifetime ECL is used.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the
contract and all the cash flows that the Company expects to receive after applying a standard provision matrix.
ECL impairment loss allowance or reversal thereof is recognised in the Statement of Profit and Loss.
(d) De-recognition of Financial Assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset
expire, or the company transfers its rights to receive cash flows from the asset and transfers substantially all risks
and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to
control the transferred asset, the Company recognises its retained interest in the assets and an associated
liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the
Company continues to recognise the financial asset and also recognises a collateralised borrowing for the
proceeds received.
(ii) Financial Liabilities :(a) Initial Recognition
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs that are not recognised at fair value through profit and loss account.
(b) Subsequent Measurement
For the purposes of subsequent measurement, financial liabilities are classified and measured as follows-
Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon
initial recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the
purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the
Statement of Profit and Loss.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost
using the EIR method. Any difference between the proceeds (net of transaction costs) and the settlement or
redemption of borrowings is recognised over the term of the borrowings in the Statement of Profit and Loss.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and
Loss.
(c) De-recognition of Financial Liabilities
Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or
expired. When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated
as de-recognition of the original liability and recognition of a new liability. The difference in the respective carrying
amounts is recognised in the Statement of Profit and Loss.
6.8 Fair Value Measurements:
(i) Fair value is the price that would be received on sale of an asset or paid for transfer of a liability in an orderly
transaction between market participants at the measurement date
(ii) Fair value measurement of assets and liabilities is based on the presumption that the transaction to sell the asset or
transfer the liability takes place either in 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.
(iii) All assets and liabilities for which fair value is measured or disclosed are categorised within 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 market prices in the active market for identical assets and
Level-2 : Valuation techniques for which lowest level input that is significant to the fair value measurement is directly
or indirectly observable.
Level-3 : Valuation techniques for which lowest level input that is significant to the fair value measurement is directly
or indirectly unobservable.
Above levels of fair value hierarchy are applied consistently and generally, there are no transfers between the levels
of the fair value hierarchy unless the circumstances change warranting such transfer.
6.9 Investment in Associate :
(i) Non-current investments in equity instruments issued by associate are measured and carried at cost less
accumulated impairment losses, if any.
(ii) When the indication of impairment exits, the carrying amount of investment is written down to the recoverable
amount.
(iii) On disposal of investment in subsidiaries, the difference between net disposal proceeds and the carrying value is
recognised in the Statement of Profit and Loss.
6.10 Borrowing Costs :
(i) Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
(ii) Borrowing costs, net of any investment income from temporary investment of related borrowings, directly attributable
to the acquisition, construction or production of a qualifying asset, are capitalised as a part of the cost of the asset. A
qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or
sale. All other borrowing costs are charged to the Statement of Profit and Loss in the period in which they are
incurred.
6.11 Cash and Cash Equivalents :
Cash and cash equivalents are cash, balances with bank and short-term deposits (three months or less from the date of
placement), highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of
changes in value. Cash and cash equivalents include balances with banks other than balances that have no restrictions for
withdrawal/usage.
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