(i) Revenue Recognition
(a) Sale of products
The Company derives revenue primarily from sale of
Graphite Electrodes.
Revenue from the sale of goods is recognized at
the point in time when control of the goods is
transferred to the customer which is usually on
dispatch/ delivery and the amount of revenue can
be measured reliably and recovery of consideration
is probable.
Revenue is measured based on the transaction price
(net of variable consideration) which is adjusted
for volume discounts, rebates, scheme allowances,
price concessions, incentives, and returns, if any,
as specified in the contracts with the customers.
Revenue excludes taxes collected from customers
on behalf of the government. Due to short nature
of credit period given to customers, there is no
financing component in the contract.
(b) Power
Revenue from power generation is recognized on
transmission of electricity to State Electricity Board
or third parties at rate stipulated by SEB's and/or IEX
at market rate equivalent.
(c) Other Operating Revenues
(i) Entitlements to Renewal Energy Certificates
owing to generation of power at Tawa hydel
plant are recognized at actual rate of realization.
(ii) Export entitlements are recognised when the
right to receive credit as per the terms of the
schemes is established in respect of the exports
made by the Company and where there is no
significant uncertainty regarding the ultimate
collection of the relevant export proceeds.
(d) Interest Income
- Interest Income from customers is recognized
on a time proportion basis taking into account
the amount outstanding and the applicable
interest rate.
- Interest Income from financial asset is
recognized when it is probable that economic
benefits will flow to the company and amount
of income can be measured reliably. Interest
income is accrued on time basis, by reference
to principal outstanding and at effective
interest rate applicable, which is the rate
that exactly discounts estimated future cash
receipts through the expected life of financial
asset to that asset's net carrying amount on
initial recognition.
(e) Other Income
(i) Dividend income is recognized when the right
to receive payment is established and the
amount of dividend can be measured reliably.
(ii) Other income is recognized when no significant
uncertainty exists with regard to the amount to
be realized and the ultimate collection thereof.
(ii) Inventories
Inventories are valued at cost or net realizable value,
whichever is lower except by products which are valued at
net realizable value. The raw materials and other supplies
held for use in the production are valued at net realisable
value only if the finished products in which they are to be
incorporated are expected to be sold below cost. The cost
in respect of the various items of inventory is computed
as under:
(i) In case of finished goods and work-in-progress, cost
of inventories comprises of cost of purchase, cost of
conversion and other costs incurred in bringing them
to their respective present location and condition.
(ii) In case of stores, spares and raw material at weighted
average cost. The cost includes cost of purchase and
other costs incurred in bringing the inventories to
their present location and condition.
(iii) Obsolete stocks are identified at each reporting date
on the basis of technical evaluation and are charged
off to revenue.
Net Realisable Value is the estimated selling price in
ordinary course of business less estimated cost of
completion and estimated cost necessary to make
the sales.
(iii) Property, Plant and Equipment
The cost of an item of property, plant and equipment is
recognised as an asset when it is probable that future
economic benefits associated with the item will flow
to the entity and the cost of the item can be measured
reliably.
Freehold Land is carried at historical cost. All other items
of property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment
losses, if any.
Cost includes its purchase price (net of taxes and duty
recoverable), after deducting trade discounts and rebates.
It includes other costs directly attributable to bringing
the asset to the location and condition necessary for it
to be capable of operating in the manner intended by
management and the borrowing costs for qualifying
assets and the initial estimate of restoration cost if the
recognition criteria are met.
When significant parts of plant and equipment are required
to be replaced at intervals, the Company depreciates them
separately based on their specific useful lives.
Subsequent cost relating to property, plant and equipment
are included in the assets carrying value or recognised as
separate assets as appropriate, only when it is probable
that future economic benefits associated with the item
will flow to the company and the costs of the item can be
measured reliably. All other repairs and maintenance costs
are charged to the standalone statement of profit and loss
when incurred.
An item of Property, Plant and Equipment is derecognised
upon disposal or when no future economic benefits are
expected from its use. Any gain or loss arising on de¬
recognition of the asset, measured as the difference
between the net disposal proceeds and the carrying
amount of the asset, is included in the income statement
when the asset is derecognized. Fully depreciated assets
still in use are retained in financial statements.
Property, plant and equipment which are not ready for
intended use at each balance sheet date are disclosed
as "Capital work-in-progress" and advances paid towards
the acquisition of Property, plant and equipment
outstanding at each balance sheet date are classified
as Capital advances under "Other non-current assets".
Directly attributable expenditure (including finance costs
relating to borrowed funds for construction or acquisition
of property, plant and equipment) incurred on projects
under implementation are treated as pre-operative
expenses and are included in Capital work-in-progress.
(iv) Investment property
Investment Properties comprises freehold land and
building that are held for long-term rental yields or for
capital appreciation and both are classified as investment
property.
Investment properties are measured initially at cost,
comprising the purchase price and directly attributable
expenditure. Subsequently, investment property is carried
at cost model, which is cost less accumulated depreciation
and accumulated impairment losses, if any, in similar lines
of Ind AS 16.
An investment property is derecognized on disposal or
when the investment property is permanently withdrawn
from use and no future economic benefits are expected
from its disposal. Gains or losses arising on de-recognition
of investment property are measured as the difference
between the net disposal proceeds and the carrying
amount of the asset and are recognised in standalone
statement of profit and loss in the period of the retirement
or disposal.
(v) Other Intangible Assets
An Intangible asset is recognized when it is probable
that the expected future economic benefits that are
attributable to the asset will flow to the entity; and the
cost of the asset can be measured reliably.
Intangible assets are stated at cost less accumulated
amortization and accumulated impairment losses, if any.
The cost of intangible asset comprises of its purchase price,
net of recoverable taxes and any directly attributable cost
of preparing the asset for its intended use.
Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure is
recognised in standalone statement of profit and loss as
incurred.
The cost and related accumulated amortization are
eliminated from standalone financial statements upon
disposal or retirement of the assets and the resulted gain
or losses arising from de-recognition 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 standalone statement of profit and loss.
(vi) Depreciation
Depreciation is recognised to write-off the cost of assets
(other than freehold land and capital work in progress)
less their residual values over the useful lives, in a
systematic manner.
(A) Property, Plant and Equipment
Based on internal assessment and independent technical
evaluation carried out by external valuer, the Management
believes that the useful life of the assets as stated below
best represents the life over which the management
expects to use the assets. Hence the useful life for these
assets is different from the useful lives as prescribed under
Part C of Schedule II of the Companies Act 2013.
The method of depreciation and useful life considered on
different assets is as below:
(i) Depreciation on all the assets at Hydel Power Project
at Tawa is provided on Straight Line Method. The
useful life of other assets determined is as below:
(ii) On the assets other than those mentioned at (i)
above, depreciation is provided on following basis:
In case of Plant and machinery, depreciation is
provided on Straight Line Method and in case of
other assets on written Down Method. The useful life
of assets determined is as below:
(iii) Assets costing up to C 5,000 are fully depreciated in
the year of purchase.
Depreciation methods estimated and useful lives are
reviewed at the end of each reporting period and
the effect of any changes in estimate accounted for
on a prospective basis.
(B) Investment property
Depreciation on investment properties is provided on the
written down value method over its useful life of 58 years
which has been determined based on internal assessment
and independent technical evaluation carried out by
external valuer.
The depreciation charge for each period is recognised
in the Statement of Profit and Loss. The useful lives and
method of depreciation are reviewed at the end of each
financial year and the effect of any changes in estimate
accounted for on a prospective basis.
(vii) Amortization
Other Intangible Assets
Other Intangible assets are amortized over their respective
individual useful lives on a straight line basis from date
they are available. The estimated useful life is based on
number of factors including effect of obsolescence and
other economic factors and is as under:
Amortisation method and useful lives are reviewed at the
end of each financial year and the effect of any changes in
estimate accounted for on a prospective basis.
(viii)Impairment of Non-Financial Assets
Property, Plant and Equipment and Investment property
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.
If such assets are considered to be impaired, the
impairment to be recognized in the standalone statement
of profit and loss is measured by the amount by which
the carrying value of the assets exceeds the estimated
recoverable amount of the asset.
An impairment loss is reversed in the standalone
statement of profit and loss if there has been a change
in the estimates used to determine the recoverable
amount. The carrying amount of the asset is increased to
its revised recoverable amount, provided that this amount
does not exceed the carrying amount that would have
been determined (net of any accumulated depreciation),
had no impairment loss been recognized for the asset in
prior years.
Impairment is reviewed periodically, including at each
financial year end.
(ix) Foreign Currency Translations
Transactions in currencies other than the Company's
functional currency are recognized 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. Exchange differences arising
on the settlement of monetary items or on re-translated
monetary items at rates different from those at which
they were translated on initial recognition during the
period or in previous financial statements are recognised
in standalone statement of profit and loss in the period in
which they arise.
Non-monetary items denominated in foreign currency
and measured at historical cost are translated at the
exchange rate prevalent at the date of transaction, Non¬
monetary items that are measured in term of historical
cost in foreign currency are not reinstated.
(x) Employee Benefits
(A) Post-Employment Benefits
(a) Defined contribution Plan
(i) Provident Fund
The Company makes contribution to statutory
Provident Fund in accordance with Employees
Provident Fund and Miscellaneous Provisions Act,
1952 which is a defined contribution plan and
contribution paid or payable is recognized as an
expense in the period in which services are rendered
by the employee.
(ii) Superannuation
The Company makes contribution in regard to
superannuation to a separate trust and contribution
paid or payable is recognized as an expense in
the period in which services are rendered by the
employee.
(b) Defined Benefit Plan
Gratuity
The Company provides for gratuity, a defined benefit
retirement plan covering eligible employees. The gratuity
plan provides for lump sum payment to vested employee
at retirement, death, incapacitation or termination of
employee, based on the respective employee's salary and
the tenure of employment.
The liability or asset recognised in the balance sheet in
respect of the defined benefit plan is the present value of
the defined benefit obligation at the end of the reporting
period less the fair value of plan assets. The liability/asset is
determined using projected unit credit method, through
actuarial valuation carried out at the end of each annual
reporting period.
The net interest cost is calculated by applying the discount
rate to the net balance of the defined benefit obligation
and the fair value of plan assets. Such net interest cost
along with the current service cost and, if applicable, the
past service cost and settlement gain/loss, is included
in employee benefit expense in the statement of profit
and loss.
Re-measurement gains and losses arising from experience
adjustments and changes in actuarial assumptions,
comprising actuarial gains/losses and return on plan
assets (excluding the amount recognised in net interest
on the net defined liability), are recognised in the period
in which they occur, directly in other comprehensive
income. They are included in retained earnings in the
statement of changes in equity and in the balance sheet.
(B) Short term employee benefits
Short term employee benefits including non-accumulated
absences are charged to standalone statement of profit
and loss on an undiscounted, accrual basis for the period
during which services are rendered by the employee.
(C) Other long term employee benefits- Compensated
Absences
The expected cost of accumulating compensated
absences is determined by actuarial valuation performed
by an independent actuary at each balance sheet date
using projected unit credit method and is recognized
in employee benefit expense in the statement of profit
and loss..
(xi) Leases
Company as a lessee
The Company's lease assets primarily consist of leases
for land and Building. The Company assesses whether
a contract contains a lease, at inception of a contract. A
contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a
period of time, in exchange for consideration. To assess
whether a contract conveys the right to control the use
of an identified asset, the Company assesses whether: (i)
the contract involves the use of an identified asset (ii) the
Company has substantially all of the economic benefits
from use of the asset through the period of the lease
and (iii) the Company has the right to direct the use of
the asset.
At the date of commencement of the lease, the
Company recognizes a right-of-use asset ("ROU") and a
corresponding lease liability for all lease arrangements in
which it is a lessee, except for leases with a term of twelve
months or less (short-term leases) and of low value leases.
For these short-term and low value leases, the Company
recognizes the lease payments as an operating expense
on a systematic basis over the term of the lease.
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
accumulated impairment losses, if any.
Right-of-use assets are depreciated from the
commencement date on a straight-line basis over the
shorter of the lease term and useful life of the underlying
asset. Right of use assets are evaluated for recoverability
whenever events or changes in circumstances indicate
that their carrying amounts may not be recoverable.
For the purpose of impairment testing, the recoverable
amount (i.e. the higher of the fair value less cost to sell
and the value-in-use) is determined on an individual asset
basis unless the asset does not generate cash flows that
are largely independent of those from other assets. In
such cases, the recoverable amount is determined for the
Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at
the present value of the future lease payments. The lease
payments are discounted using the interest rate implicit in
the lease or, if not readily determinable, using the lessee's
incremental borrowing rate.
Lease Liability and Right-of-Use Asset have been separately
presented in the Balance Sheet. The interest expense
on the lease liability has been separately presented as
a component of finance costs in the statement of profit
and loss. The payments of principal portion and interest
portion of lease liability have been classified under
financing activities in the statement of cash flows.
The payments for short-term leases and leases of low-
value assets have been recognized in the statement of
profit and loss have been classified under operating
activities in the statement of cash flows.
Company as a lessor
Leases for which the company is a lessor is classified as a
finance or operating lease. Whenever the terms of the lease
transfer substantially all the risks and rewards of ownership
to the lessee, the contract is classified as a finance lease.
All other leases are classified as operating leases.
For operating leases, lease payments received are
recognized on systematic basis over the term of the
relevant lease as a part of other income.
(xii) Segment Reporting
Segments are identified based on the manner in
which the Company's Chief Operating Decision Maker
('CODM') decides about resource allocation and reviews
performance.
(1) Segment Revenue includes sales and other income
directly identifiable with/ allocable to the segment
including inter- segment revenue.
(2) Expenses and Incomes that are directly identifiable
with/ allocable to the segments are considered for
determining the segment result. Expenses and
Income not allocable to segments are included
under unallocable category.
(4) Segment results includes margin on inter
segment sales.
(5) Segment assets and Liabilities include those directly
identifiable with the respective segments. Assets and
liabilities not allocable to any segment are classified
under unallocable category.
(xiii) Tax Expense
Tax expense comprises of current and deferred tax. Tax
expense is recognised in statement of Profit and Loss
except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive
income or directly in equity, as the case may be.
(1) Current tax
Current tax is the tax payable/receivable on the
taxable profit/loss for the year using the tax rates
and tax laws that have been enacted or substantively
enacted by the end of the reporting period and any
adjustment to taxes in respect of previous years.
Interest expenses related to income tax are included
in finance cost. Interest Income related to income tax
is included in other income.
The current tax assets and current tax liabilities
have been set off to the extent (a) there is a legally
enforceable right to set off the recognised amounts;
and (b) the Company intends either to settle on a net
basis, or to realise the asset and settle the liability
simultaneously.
(2) Deferred Tax
Deferred Tax assets and liabilities are recognized
using the balance sheet approach on temporary
differences at the reporting date between the tax
bases of assets and liabilities and their carrying
amounts in financial statements.
Deferred income tax assets and liabilities are
measured using tax rates and tax laws that are
expected to apply to period in which the temporary
differences are expected to be recovered or settled,
based on tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the
reporting period. The effect of changes in tax rates
on deferred tax assets and liabilities is recognized as
income or expense in the period as and when there
is change in tax rates.
A deferred tax asset is recognized to the extent that it
is probable that future taxable profit will be available
against which the deductible temporary differences
and tax losses can be utilized.
Deferred tax assets are reviewed at each reporting
date and reduced to the extent that it is no longer
probable that related tax benefits will be realized
to allow all or part of the deferred tax assets to be
utilised. Unrecognised deferred tax assets, if any, are
reassessed at each reporting date and are recognised
to the extent that it has become probable that future
taxable profits will allow deferred tax assets to be
recovered.
Deferred tax assets and deferred tax liabilities have
been set off as it relates to income taxes levied by the
same taxation authority.
(xiv) Government grants
Government grants are not recognized until there is
reasonable assurance that all attached conditions will be
complied with and the grant will be received.
When the grants relates to an expense item, it is
recognised in the Statement of profit and loss by way
of reduction from the related cost, which the grants are
intended to compensate.
Government grants that become receivable as
compensation for expenses or losses already incurred
or for the purpose of giving financial support to
the Company with no related costs is recognised
in the Statement of profit or loss of the period in
which it becomes receivable under 'Other operating
income'/'Other income' based on the nature of grant.
Government grants relating to the purchase of property,
plant and equipment are deducted from its gross value
and are recognised in profit or loss on a systematic over
the expected useful lives of the related assets by way of
reduced depreciation.
(xv) Borrowing Costs
Borrowing costs directly attributable to the acquisition
or construction of items of qualifying assets, which are
the assets that necessarily takes a substantial period of
time to get ready for its intended use are capitalized as
part of the cost of the asset until such time as the assets
are not ready for their intended use. All other borrowing
costs are charged to the standalone statement of profit
and loss in the period in which they are incurred.
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