III. SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the financial statements are as
given below. These accounting policies have been applied consistently to all periods presented in the
financial statements.
1. Property, Plants and Equipment’s, Depreciation/Amortization
A. Property, Plants and Equipment’s
i) The Property, Plants and Equipment’s are held for use in production, supply of goods or services or
For administrative purposes. They are stated at their original cost net of tax/duty, credits availed, if any,
including incidental expenditure related to acquisition and installation less accumulated depreciation.
Cost represents all expenses directly attributable to bringing the asset to its working condition capable
of operating in the manner intended and includes borrowing cost capitalized in accordance with the
Company's Accounting Policy.
ii) When parts of an item of property, plant and equipment have different useful lives, they are recognized
separately
iii) Item of spare parts, stand by equipment to and servicing equipment which meet the definition of
property, Plant and Equipment are Capitalized.
B. Depreciation
Assets are depreciated using straight line method other than mining equipment which are depreciated using
WDV method over the estimated useful life of the asset as specified in Part “C” of Schedule II of Companies
Act, 2013 after retaining residual value of 5% of original cost. Assets residual values and useful lives are
reviewed at each financial year end considering the physical condition of the assets.
Depreciation on additions to/deductions from fixed assets during the year is charged on pro-rata basis from/up
to the date on which the asset is available for use/disposed.
Where it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise
and the cost of the item can be measured reliably, subsequent expenditure on a PPE along-with its
Un amortised depreciable amount is charged off prospectively over the revised useful life determined by
technical assessment.
In circumstance, where a property is abandoned, the cumulative capitalized costs relating to the property are
written off in the same period.
2. Capital work-in-progress
The Property, Plants and Equipment’s not ready for the intended use on the date of balance sheet including
expenditure incurred pending for allocation is shown as “capital work-in progress".
The cost of self-constructed assets includes the cost of materials & direct labour, any other costs directly
attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the
manner intended by management and borrowing costs.
Expenses directly attributable to construction of property, plant and equipment incurred till they are ready for
their intended use are identified and allocated on a systematic basis on the cost of related assets.
3. Borrowing Cost
Borrowing costs that are attributable to the acquisition / construction of qualifying assets are capitalized as part
of cost of such asset till such time as the asset is ready for its intended use or sale.
Borrowing cost consists of interest and other costs that an entity incurs in connection with the borrowing of
funds. Borrowing costs also includes exchange differences to the extent regarded as an adjustment to the
borrowing costs. 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 cost are recognized as expense in the period in which
they are incurred.
4. Statement of Cash Flows
Cash flow statement has been prepared in accordance with the indirect method as prescribed in Ind AS 7
Statement of Cash Flows.
5. Inventories
Inventories are valued at the lower of the cost or net realizable value. The cost of the inventories is assigned by
using At Cost Method. Raw Material, Stores & Spares and Packing Materials have been valued at cost.
Process Stock is valued at cost, which is determined by taking direct material, labour cost and certain related
Factory Overheads, Finished Goods have been determined on full absorption cost basis which includes all
direct cost, depreciation etc.
6. Financial instruments
Financial assets and liabilities are recognised when the company becomes a party to the contractual
provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction
costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other
than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from
the fair value measured on initial recognition of financial asset or financial liability.
Financial assets at amortised cost (AC)
Financial assets are subsequently measured at amortised cost if these financial assets are held within a
business whose objective is to hold these assets in order to collect contractual cash flows 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.
Financial assets at fair value through other comprehensive income (FVTOCI)
Financial assets are measured at fair value through other comprehensive income if these financial assets are
held within a business whose objective is achieved by both collecting contractual cash flows on specified
Dates that are solely payments of principal and interest on the principal amount outstanding and selling
financial assets.
Equity and Mutual Fund Investment
All investment in equity instrument classified under financial assets are subsequently measured ai fair value at
FVOCI.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets are measured at fair value through profit or loss unless they are measured at amortised cost
or at fair value through other comprehensive income on initial recognition. The transaction costs directly
attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are
immediately recognised in statement of profit and loss.
Impairment of Financial assets
In accordance with Ind AS 109, the company uses 'Expected Credit Loss' (ECL) model, for evaluating
impairment of financial asets other than those measured at fair value through profit and loss (FVTPL)
Expected credit losses are measured through a loss allowance at an amount equal to:
• The 12 month expected credit losses (expected credit losses that result from those default events on the
financial instrument that are possible within 12 months after the reporting date); or
• Full lifetime expected credit losses (expected credit losses that result from all possible default events
over the life of the financial instruments).
Financial liabilities
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the
instrument financial liabilities are initially measured at the amortised cost unless at initial recognition, they are
classified as fair value through profit and loss.
Financial liabilities are subsequently measured at amortised cost using the EIR method. Financial liabilities
carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in
the Statement of Profit and Loss.
7. Revenue Recognition
Revenue from the sale of goods is recognised upon transfer of control of the goods have passed to the buyer,
which generally coincides with dispatch. Revenue from export sales are recognized on dispatch from the
factory and in accordance with terms and condition of the sale. Revenue from the sale of goods is measured at
an amount that reflects the consideration we expect to receive in exchange for those products (i.e. the
transaction price). The Company presents revenues net of indirect taxes, returns and allowances. Inter unit
transaction reduced from gross turnover in arriving Net Turnover.
Revenue from Job work services is recognised based on the service rendered in accordance with terms of
contract.
The Company recognizes other income on accrual basis. However, where the ultimate collection of the same
laps reasonable uncertainty, revenue recognition is postponed to the extent of uncertainty.
8. Impairment of Assets
At the end of each accounting year the carrying amount of property, plant and equipment intangible assets and
financial assets is reviewed for impairment. Impairment, if any, is recognized where the carrying amount
exceeds the recoverable amounts being the higher of net realizable price and value in use. An impairment loss
is charged to Statement of Profit and loss in the year in which an asset is identified as impaired. The
impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate
of recoverable amount.
9. Taxes on Income
Income tax expense for the year comprises of current tax and deferred tax. Current tax provision has been
determined on the basis of relief, deductions etc. available under the Income Tax Act, 1961 and deferred tax is
provided using balance sheet approach on temporary differences at the reporting date as difference between
the tax base and the carrying amount of assets and liabilities. Deferred tax is recognized subject to the
probability that taxable profit will be available against which the temporary differences can be reversed.
10. Foreign Currency Transactions and balances
(i) Foreign currency transactions are recorded at the exchange rate prevailing on the date of the
Transaction.
(ii) Monetary items denominated in foreign currencies (such as secured loan, receivables, payables etc.)
Outstanding at the year end, are translated at exchange rates applicable on year end date.
(iii) Non-monetary items denominated in foreign currency, (such as plant and equipment) are valued at the
exchange rate prevailing on the date of transaction and carried at cost.
(iv) Any gains or losses due to exchange differences arising on translation or settlement are accounted for in
the Statement of Profit and Loss.
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