NOTE NO. 1. MATERIAL ACCOUNTING POLICIES
1.1 Basis of preparation of financial statements
(i) Statement of compliance
These financial statements are the separate financial statements of the Company (also called standalone financial
statements) prepared in accordance with Indian Accounting Standards (‘Ind AS’) notified under Section 133 of the
Companies Act, 2013, read together with the Companies (Indian Accounting Standards) Rules, 2015 as amended.
(ii) Historical cost convention
These financial statements have been prepared and presented under the historical cost convention, on the accrual
basis of accounting except for certain financial assets and financial liabilities that are measured at fair values at the
end of each reporting period, as stated in the accounting policies set out below. The accounting policies have been
applied consistently over all the periods presented in these financial statements.
(iii) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest Lakhs as per the
requirement of Schedule III, unless otherwise stated
1.2 Key accounting estimates and judgements
The preparation of the Company’s financial statements requires the management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures,
and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Critical accounting estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have
a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year, are described below:
a. Property, Plant and Equipment
Property, Plant and Equipment represent a significant proportion of the asset base of the Company. The charge in
respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the
expected residual value at the end of its life. The useful lives and residual values of Company’s assets are determined
by the management at the time the asset is acquired and reviewed periodically, including at each financial year end.
The lives are based on historical experience with similar assets as well as anticipation of future events, which may
impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in
production or from a change in market demand of the product or service output of the asset.
b. Defined benefit obligation
The costs of providing post-employment benefits are charged to the Statement of Profit and Loss in accordance with
Ind AS 19 ‘Employee benefits’ over the period during which benefit is derived from the employees’ services. The costs
are assessed on the basis of assumptions selected by the management. These assumptions include salary escalation
rate, discount rates, expected rate of return on assets and mortality rates. The same is disclosed in Note 33, ‘Employee
benefits’.
c. Fair value measurement of Financial Instruments
When the fair values of financials assets and financial liabilities recorded in the Balance Sheet cannot be measured
based on quoted prices in active markets, their fair value is measured using prudent valuation techniques, which
involve various judgements and assumptions.
d. Income taxes
The Company’s tax jurisdiction is India. Significant judgements are involved in estimating budgeted profits for the
purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/
recovered for uncertain tax positions/deferred tax liability/assets.
1.3 Current & non-current classification:
The assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12
months after the reporting date.
Current assets include the portion of non-current financial assets. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after reporting date; or
d) the company does not have an unconditional right to defer settlement of the liability for at least 12 months after the
reporting date.
Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non-current.
1.4 Property, Plant and Equipment and Intangible Assets
(i) Property, Plant and Equipment
Property, plant and equipment are stated at cost net of recoverable taxes and includes amounts added on revaluation,
less accumulated depreciation and impairment loss, if any.
The cost of an item of property, plant and equipment comprises of its purchase price including import duties and other
nonrefundable purchase taxes or levies, and any directly attributable cost of bringing the asset to its working condition
for its intended use and the initial estimate of decommissioning, restoration and similar liabilities, if any. Any trade
discounts and rebates are deducted in arriving at the purchase price. Cost includes cost of replacing a part of a plant
and equipment if the recognition criteria are met. Expenditure incurred on start-up and commissioning of the project
and/or substantial expansion, including the expenditure up to the date of commencement of commercial production
are capitalised. Subsequent expenditures related to an item of fixed asset are capitalised to its book value only if they
increase the future benefits from the existing asset beyond its previously assessed standard of performance.
(ii) Capital work in progress and Capital advances:
Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work in progress.
Advances paid towards acquisition of fixed assets outstanding at each Balance Sheet date are disclosed as Other
Non-Current Assets.
(iii) Intangible Assets
• Acquired Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization /
impairment loss, if any.
Subsequent expenditure is capitalized only when it increases the future economic benefits from the specific
asset to which it relates.
• Internally generated intangible assets
Internally generated intangibles including research cost are not capitalized and the related expenditure is recognized
in the Statement of Profit and Loss in the period in which the expenditure is incurred.
(iv) Derecognition
The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future
economic benefits are expected from its use or disposal. The gain or loss arising from the derecognition of an item of
property, plant and equipment is measured as the difference between the net disposal proceeds and the carrying
amount of the item and is recognized in the Statement of Profit and Loss when the item is derecognized
The carrying amount of an intangible asset is derecognized on disposal or when no future economic benefits are
expected from its use or disposal. The gain or loss arising from the derecognition of an intangible asset is measured as
the difference between the net disposal proceeds and the carrying amount of the intangible asset and is recognized in
the Statement of Profit and Loss when the asset is derecognized.
(v) Depreciation and Amortization
• Depreciation
Depreciation on each part of an item of property, plant and equipment is provided using the Straight-Line Method
as per the useful lives and in the manner prescribed under Part C of Schedule II of the Companies Act, 2013.
Freehold land is not depreciated. Leasehold land and Leasehold improvements are amortized over the period of
the lease.
The useful lives, residual values of each part of an item of property, plant and equipment and the depreciation
methods are reviewed at the end of each financial year. If any of these expectations differ from previous estimates,
such change is accounted for as a change in an accounting estimate.
On increase in value due to revaluation on the basis of remaining useful life as estimated by the valuer, the
corresponding amount is directly transferred to General Reserve from Revaluation Reserve.
• Amortization
Intangible Assets with finite lives are amortized on a Straight-Line basis over the estimated useful economic life.
The amortization expense on intangible assets with finite lives is recognized in the Statement of Profit and Loss.
The estimated useful life of intangible assets like Product development, Software systems etc. has been estimated
as five years.
The amortization period and the amortization method for an intangible asset with finite useful life is reviewed at
the end of each financial year. If any of these expectations differ from previous estimates, such change is accounted
for as a change in an accounting estimate.
1.5 Impairment
The Company assesses at each Balance Sheet date whether there is any indication that an asset/cash generating unit may
be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset/cash generating
unit. If such recoverable amount of the asset or the recoverable amount of the cash generating unit is less than the carrying
amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is
recognized in the Statement of Profit and Loss.
An assessment is also done at each balance sheet date whether there is any indication that an impairment loss recognized
for an asset/cash generating unit in prior accounting periods may no longer exist or may have decreased. If any such
indications exists, the assets/ cash generating unit’s recoverable amount is estimated. The carrying amount of the fixed
asset/ cash generating unit is increased to the revised estimate of its recoverable amount but only to the extent that the
increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognized for the asset in previous periods. A reversal of impairment loss is recognized in the Statement of Profit and
Loss.
1.6 Revenue Recognition
Revenue from sale of products & services is recognized when the significant risks and rewards of ownership of the products
or services are transferred to the buyer, recovery of the consideration is reasonably assured and the amount of revenue can
be measured reliably. Revenues is net of goods & service tax (GST) and discounts, if any.
Income from subsidy, disbursed/disbursable by the Governments is included in other operating income. The subsidy amount
is recognized only to the extent that the realization is reasonably assured.
Dividend income is recognized when the right to receive the income is established.
Income from interest on deposits and loans is recognized on time proportionate basis.
Export incentives/ benefits are accounted for on accrual basis in the year in which exports are made and are included in
other operating income.
1.7 Government grants and subsidies
The Company is entitled to subsidies from government in respect of manufacturing unit located in specified regions.
Such subsidies are measured at amounts receivable from the government which are non-refundable and are recognized as
income when there is a reasonable assurance that the Company will comply with all necessary conditions attached to them.
Government subsidy relating to purchase of property, plant and equipment are included in non-current liabilities as deferred
income and are credited to Statement of Profit and Loss on a straight line basis over the expected life of the related assets
and presented within other operating revenue.
1.8 Inventory
Inventories are stated at lower of cost or net realisable value except scrap which is valued at net estimated realizable value.
The cost for the purpose of valuation is computed on the basis of weighted average price in case of Conductors and in case
of Insulators Division on the basis of First-in-First out (FIFO).
Cost of inventory comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities)
and all other costs incurred in bringing the inventory to their present location and condition.
The cost of work-in-progress and finished goods comprises of raw materials, packing materials, direct labour, other direct
costs, and appropriate portion of variable and fixed production overheads and such other costs incurred as to bring the
inventory to its present location and condition. Fixed production overheads are allocated on the basis of normal capacity of
production facilities.
Net realisable value is the estimate of the selling price in the ordinary course of business, less the estimated costs of
completion/ reprocessing and the estimated cost necessary to make the sale.
1.9 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.
A) Financial Assets
The Company recognizes a financial asset in its Balance Sheet when it becomes party to the contractual provisions of
the instrument. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date
basis.
All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value,
depending on the classification of the financial assets.
a) Effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating
interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash receipts (including all fees paid or received that form an integral part of the effective interest rate,
transaction costs and other premium or discounts) through the expected life of the debt instrument, or where
appropriate, a shorter period to the net carrying amount on initial recognition.
Income is recognized on effective interest basis for debt instruments other than those financial assets classified
as at FVTPL. Interest income is recognized in the statement of profit and loss and is included in the” Other
income” line item.
b) Investment in Equity Instruments at fair value through profit & loss
These investments are initially measured at fair value plus transaction costs subsequently, they are measured at
fair value with gains and losses arising from changes in fair value recognized in profit & loss
c) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair valued through profit
or loss. Such financial assets are subsequently measured at fair value at each reporting date. Fair value changes
are recognized in the Statement of Profit and Loss.
B) Financial Liabilities
The Company recognizes a financial liability in its Balance Sheet when it becomes party to the contractual provisions
of the instrument. Financial liabilities are subsequently carried at amortized cost using the effective interest method.
For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate
fair value due to the short maturity of these instruments.
1.10 Derivative financial instrument
The Company uses derivative financial instruments, such as forward & Options currency contracts to hedge its foreign
currency risks. Derivative financial instruments are measured at their fair value at the end of each reporting period.
1.11 Measurement of Fair Values
The Company measures financial instruments at fair value in accordance with the accounting policies mentioned above.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the
fair value hierarchy that categorizes into three levels, described as follows, the inputs to valuation techniques used to
measure value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or
liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).
Level 1 — quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 — inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly
Level 3 — inputs that are unobservable for the asset or liability
1.12 Investment in Subsidiary Companies
The Company has elected to recognize its investments in subsidiary companies at cost in accordance with the option
available in Ind AS 27, ‘Separate Financial Statements’. The details of such investments are given in Note 6.
1.13 Foreign Currency Translation
Initial Recognition:
On initial recognition, transactions in foreign currencies entered into by the Company are recorded in the functional currency
(i.e. Indian Rupees), by applying to the foreign currency amount, the spot exchange rate between the functional currency
and the foreign currency at the date of the transaction. Exchange differences arising on foreign exchange transactions
settled during the year are recognized in the Statement of Profit and Loss.
Measurement of foreign currency items at reporting date:
Foreign currency monetary items of the Company are translated at the closing exchange rates. Non-monetary items that
are measured at historical cost in a foreign currency, are translated using the exchange rate at the date of the transaction.
Non-monetary items that are measured at fair value in a foreign currency, are translated using the exchange rates at the
date when the fair value is measured.
Exchange differences arising out of these translations are recognized in the Statement of Profit and Loss.
1.14 Income Taxes
Tax expense is the aggregate amount included in the determination of profit or loss for the period in respect of current tax
and deferred tax.
Current tax:
Current tax is the amount of income taxes payable in respect of taxable profit for a period. Taxable profit differs from ‘profit
before tax’ as reported in the 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.
Current tax is measured using tax rates that have been enacted by the end of reporting period for the amounts expected to
be recovered from or paid to the taxation authorities.
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 Income Tax Act, 1961.
Deferred tax liabilities are generally recognized for all taxable temporary differences.
Deferred tax assets are generally recognized for all deductible temporary differences to the extent it is probable that taxable
profits will be available against which those deductible temporary difference can be utilized.
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 the benefits of part or all of such deferred tax
assets to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted by the
Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled.
Presentation of current and deferred tax:
Current and deferred tax are recognized as income or an expense in the Statement of Profit and Loss, except when they
relate to items that are recognized in Other Comprehensive Income, in which case, the current and deferred tax income/
expense are recognized in Other Comprehensive Income.
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.
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