1.3. Material Accounting Policies
(a) Basis of Measurement
The Financial statements have been prepared under historical cost convention on accrual basis, except for the items that have been
measured at fair value as required by relevant Ind AS.
The standalone financial statements are presented in Indian Rupees (?), which is the Company’s functional and presentation currency
and all amounts are rounded to the nearest Lakh (?'00,000) and two decimals thereof, except as stated otherwise.
(b) Basis of classification of Current and Non - Current
Assets and Liabilities in the balance sheet have been classified as either current or non-current.
An asset has been classified as current if (a) it is expected to be realized in, or is intended for sale or consumption in, the Company’s
normal operating cycle; or (b) it is held primarily for the purpose of being traded; or (c) it is expected to be realized within twelve
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 twelve months after the reporting date. All other assets have been classified as non-current.
A liability has been classified as current when (a) it is expected to be settled in the Company’s normal operating cycle; or (b) it is held
primarily for the purpose of being traded; or (c) it is due to be settled within twelve months after the reporting date; or (d) the Company
does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. All other
liabilities have been classified as noncurrent.
Deferred tax assets and liabilities are classified as non-current assets and non-current liabilities.
An operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. The
Company has identified twelve months as its operating cycle for the purpose of current /non-current assets and liabilities.
(c) Property, Plant and Equipment (PPE)
Property, Plant and Equipment are carried at deemed cost (fair value model) less accumulated depreciation and accumulated
impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of the items.
The Assets’ residual values, useful lives and method of depreciation are reviewed at each financial year end and adjusted prospectively,
if appropriate. Depreciation on Plant, Property and equipment has been provided using straight line method over the useful life of
assets as specified in Schedule II of the Companies Act, 2013. However, in case of certain Plant & Machinery depreciation have been
provided based on technical evaluation of the useful life by technical valuer ranging from 40-48 years.
Depreciation on additions/ disposals is provided with reference to the month of addition/ disposal. Certain plant and machinery have
been considered as continuous process plant as provided in schedule II of the Companies Act, 2013 on technical evaluation.
Freehold land is not depreciated. Leasehold land is amortised over the period of lease
Property, plant and equipment are eliminated from financial statement, either on disposal or when retired from active use. Losses/
gain arising in the case of retirement of property, plant and equipment and gains or losses arising from disposal of property, plant and
equipment are recognized in the statement of profit and loss in the year of occurrence.
Expenditure during construction
Expenditure including qualifying interest during construction period is being included under capital work-in progress and the same is
allocated to Property, Plant & Equipment on completion of installation/construction.
(d) Investment Properties
Investment properties are measured at cost less accumulated depreciation and impairment losses, if any.
Depreciation on such properties is provided over the estimated useful lives as specified in Schedule II to the Companies Act, 2013.
The residual values, useful lives and depreciation method of investment properties are reviewed, and adjusted on prospective basis
as appropriate, at each financial year end. The effects of any revision are included in the statement of profit and loss when the
changes arise.
Though the Company measures investment property using cost based measurement, the fair value of investment property is
disclosed in the notes. Fair values are determined based on annual evaluation performed by an external independent valuer/internal
assessment.
(e) Intangible Assets
Identifiable intangible assets are recognised a) when the Company controls the asset, b) it is probable that future economic benefits
attributed to the asset will flow to the Company and c) the cost of the asset can be reliably measured.
Computer software’s are capitalised at the amounts paid to acquire the respective license for use and are amortised over the period
of license, generally not exceeding six years on straight line basis. The assets’ useful lives are reviewed at each financial year end.
(f) Leases
The Company, as a lessee, recognises a right-of-use asset and a lease liability for its leasing arrangements, if the contract conveys
the right to control the use of an identified asset.
The contract conveys the right to control the use of an identified asset, if it involves the use of an identified asset and the Company
has substantially all of the economic benefits from use of the asset and has right to direct the use of the identified asset. The cost of
the right-of-use asset shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments
made at or before the commencement date plus any initial direct costs incurred. The right-of-use assets is subsequently measured
at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease
liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the period of lease
term.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date
of the lease. The lease payments are discounted using the incremental borrowing rate of the company.
For short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis
over the lease term.
(g) Inventories
Inventories are valued ‘at lower of cost or net realizable value’ except stock of residual products and scrap which are valued at
net realizable value. The cost is computed on the weighted average basis. In case of finished goods and stock in process, cost is
determined by considering material, labour, related overheads and duties thereon.
(h) Employee benefits
I. Short-term employee benefits:
All employee benefits falling due within twelve months of the end of the period in which the employees render the related
services are classified as short term employee benefits, which include benefits like salaries, wages, short term compensated
absences, performance incentives, etc. and are recognised as expenses in the period in which the employee renders the
related service and measured accordingly.
II. Post-employment benefits
(i) Defined Contribution Plan
Employee benefits in the form of Provident Fund (with Government Authorities) are considered as defined contribution
plan and the contributions are charged to the statement of Profit & Loss of the year when the contributions to the respective
funds are due.
Actuarial Valuation
(ii) Defined Benefit Plan
Retirement benefits in the form of Gratuity and Long term compensated leaves are considered as defined benefit
obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the
date of the Balance Sheet.
The liability in respect of all defined benefit plans is accrued in the books of account on the basis of actuarial valuation
carried out by an independent actuary using the Projected Unit Credit Method, which recognizes each year of service
as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up the final
obligation. The obligation is measured at the present value of estimated future cash flows. The discount rates used for
determining the present value of obligation under defined benefit plans, is based on the market yields on Government
securities as at the Balance Sheet date, having maturity periods approximating to the terms of related obligations.
Other short term absences are provided based on past experience of leave availed.
Actuarial Gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized
immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive
income (OCI) in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent
periods.
All other expenses related to defined benefit plans are recognized in Statement of Profit and Loss as employee benefit
expenses.
(i) Foreign currency transactions and translation
Standalone financial statements have been presented in Indian Rupees (?), which is the Company’s functional and presentation
currency.
Transactions in foreign currencies are initially recorded by the Company at rates prevailing at the date of the transaction. Subsequently
monetary items are translated at closing exchange rates of balance sheet date and the resulting exchange difference recognised in
the statement of profit or loss. Differences arising on settlement of monetary items are also recognised in the statement of profit or
loss.
(j) Non-current assets held for sale and discontinued operations
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction
rather than through continuing use and a sale is considered highly probable.
Non-current assets classified as held for sale are measured at lower of their carrying amount and fair value less cost to sell.
Non-current assets classified as held for sale are not depreciated or amortised from the date when they are classified as held for sale.
Non-current assets classified as held for sale and the assets and liabilities of a disposal group classified as held for sale are
presented separately from the other assets and liabilities in the Standalone Balance Sheet.
A discontinued operation is a component of the entity that has been disposed off or is classified as held for sale and:
• represents a separate major line of business or geographical area of operations and;
• is part of a single co-ordinated plan to dispose of such a line of business or area of operations.
The results of discontinued operations are presented separately in the Standalone Statement of Profit and Loss.
(k) Grants
Grants and subsidies from the government are recognised at their fair value where there is a reasonable assurance that the grant/
subsidies will be received and the Company will comply with all attached conditions. Revenue Grants are recognised in the statement
of Profit & Loss. Government grants relating to the specific Property, Plant & Equipment is disclosed in the balance sheet as deferred
income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and presented within
other income to match them with the cost that they are intended to compensate. Changes in estimates are recognised prospectively
over the remaining life of the assets.
(l) Taxation
Income tax expense represents the sum of current and deferred tax. Tax is recognised in the Statement of Profit and Loss, except to
the extent that it relates to items recognised directly in equity or other comprehensive income.
Current tax provision is computed for Income calculated after considering allowances and exemptions under the provisions of the
applicable Income Tax Laws. Current tax assets and current tax liabilities are off set, and presented as net.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Balance sheet and the
corresponding tax bases used in the computation of taxable profit and are accounted for using the liability method. Deferred tax
liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all
deductible temporary differences, carry forward tax losses and allowances to the extent that it is probable that in future taxable profits
will be available to set off such deductible temporary differences. Deferred tax assets and liabilities are measured at the applicable
tax rates. Deferred tax assets and deferred tax liabilities are off- set, and presented as net.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available against which the temporary differences can be utilised.
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