MATERIAL ACCOUNTING POLICIES
Basis of Preparation of Financial Statements:
The financial statements have been prepared in accordance
with the Indian accounting standard (Ind AS), notified under
section 133 of the Companies Act 2013 read with Rule 3 of
the Companies (Indian Accounting Standards) Rules, 2015
as amended from time to time.The Company has adopted
all the applicable Ind AS. The financial statements have been
prepared on accrual and going concern basis. The accounting
policies are applied consistently to all the periods presented in
the financial statements. The Company has decided to round
off the figures to the nearest lakhs.
Use of estimates and judgments:
The preparation of financial statements requires management
to make judgments, estimates and assumptions in the
application of accounting policies that affect the reported
amounts of assets, liabilities, income and expenses and
disclosure of contingent liabilities. Actual results may differ
from these estimates. Continuous evaluation is done on the
estimation and judgments based on historical experience and
other factors, including expectations of future events that are
believed to be reasonable. Revisions to accounting estimates
are recognised prospectively.
Current and Non-Current Classification
All assets and liabilities have been classified as current or non
current as per the Company's normal operating cycle and
other criteria as set out in the Division II of Schedule III to the
Companies Act, 2013. Based on the nature of products and
the time between acquisition of assets for processing and their
realisation in cash and cash equivalents, the Company has
ascertained its operating cycle as 12 months for the purpose
of current or non current classification of assets and liabilities
except for Real Estate. Operating cycle for Real Estate is
ascertained as 5 years. Deferred tax assets and liabilities are
classified as non-current assets and liabilities.
Revenue from contracts with customers
Revenue towards satisfaction of a performance obligation is
measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation. The
transaction price of goods sold and services rendered is net
of variable consideration on account of various discounts
and schemes offered by the Company as part of contract.
Transaction price is the amount of consideration to which the
Company expects to be entitled in exchange for transferring
promised goods or service to a customer, excluding amounts
collected on behalf of a third party and is adjusted for variable
considerations.
Revenue from contracts with customers is recognised
when control of the goods or services are transferred to the
customer at an amount that reflects the consideration to which
the Company expects to be entitled in exchange for those
goods or services. The Company has generally concluded
that it is the principal in its revenue arrangements, except for
the agency services, because it typically controls the goods or
services before transferring them to the customer.
Revenue is recognised in the income statement to the extent
that it is probable that the economic benefits will flow to the
Company and the revenue and costs, if applicable, can be
measured reliably.
The Company has applied five step model as per Ind AS
115 “Revenue from Contracts with Customers” to recognise
revenue in the financial statements. The Company satisfies a
performance obligation and recognises revenue over time, if
one of the following criteria is met:
a) The customer simultaneously receives and consumes the
benefits provided by the Company's performance as the
Company performs; or
b) The Company's performance creates or enhances an
asset that the customer controls as the asset is created or
enhanced; or
c The Company's performance does not create an asset
with an alternative use to the Company and the entity
has an enforceable right to payment for performance
completed to date.
For performance obligations where one of the above conditions
are not met, revenue is recognised at the point in time at which
the performance obligation is satisfied.
Revenue is recognised either at a point in time and over a
period of time based on various conditions as included in the
contracts with customers.
The Company presents revenues net of indirect taxes in its
Statement of Profit and Loss.
Revenue from real estate projects
Revenue from sale / sub-lease of undeveloped land is
recognized as per agreed terms in each agreement to sell /
sub-lease/ term sheet when possession is handed over and
all significant risks and rewards are vested in the Customer,
provided no significant uncertainty exists regarding the
amount of consideration that will be derived from such sales
and it is not unreasonable to expect ultimate collection.
Revenue from sale / sub-lease of developed land / plot and FSI
rights is recognized based on the “Satisfaction of performance
obligation at a point in time method”, as per agreed terms in
each agreement to sell / sub lease and offer of possession and
all significant risks and rewards are vested in the customer”,
provided where no significant uncertainty exists regarding the
amount of consideration that will be derived from such sales
and it is not unreasonable to expect ultimate collection.
Revenue from real estate development of constructed
properties is recognized on the “Satisfaction of each
performance obligation at a point in time method'” that is
incumbent, upon providing ‘Offer of Possession' or execution
of sub lease deed / sale deed to a customer who is vested
with all significant risks and rewards, subject to realisation /
certainty of realisation.
The Company receives facility maintenance amount from the
customers and recognises the same as revenue.
The Company recognises incremental costs of obtaining a
contract with a customer as an asset except in case where
the amortisation period of the asset is one year or less. The
Company amortises the same in consonance with the concept
of matching cost and revenue.
Revenue from sale of goods - [Cement & Clinker and
Others]
Revenue from sale of goods is recognised at a point in time
when control of the goods is transferred to the customer,
generally on delivery of the goods. In determining the
transaction price for the sale of goods, the Company considers
the effects of variable consideration and other terms.
Revenue from construction and other contracts
The Company recognises revenue from construction contracts
over time, using an input method to measure progress
towards complete satisfaction of the service, because the
customer simultaneously receives and consumes the benefits
provided by the Company. The estimated project cost includes
construction cost, construction material cost, labour cost &
other direct relatable cost, borrowing cost and overheads of
such project. The estimates of the contract price and costs
are reviewed periodically and effect of any changes in such
estimates is recognised in the period such changes are
determined. However, when the total project cost is estimated
to exceed total revenues from the project, the loss is recognised
immediately. Transaction price is the amount of consideration
to which the Company expects to be entitled in exchange for
service to a customer excluding amounts collected on behalf
of a third party and is adjusted for variable considerations.
Due to the nature of the work required to be performed on
many of the performance obligations, the estimation of total
revenue and cost of completion is complex, subject to many
variables and requires significant judgement. Variability in the
transaction price arises primarily due to price variation clauses,
changes in scope, incentives, liquidated damages if any. The
Company considers its experience with similar transactions
and expectations regarding the contract in estimating the
amount of variable consideration to which it will be entitled.
The estimates of variable consideration are based largely on
an assessment of anticipated performance and all information
(historical, current and forecasted) that is reasonably available.
Costs to obtain a construction contract which are incurred
regardless of whether the contract was obtained are charged-
off in Statement of Profit and Loss immediately in the period in
which such costs are incurred.
Revenue from Power supply
Revenue from Power supply is recognised in terms of power
purchase agreements entered into with the respective
purchasers.
Revenue from Hotel & Hospitality Operation
Revenue from Hotel operation and related services is
recognised net of discounts and sales related taxes in the
period in which the services are rendered. Advances received
for time share weeks are reckoned as income in equal amounts
spread over the time share period commencing from the year
in which full payment is received.
Revenue from Other services - [Manpower services,
Fabrication jobs and Sports Events]
Income from other services is recognised as per the
management agreement with the parties, as and when
Company satisfies performance obligation by delivering the
promised goods or services as per contractual agreed terms.
Other Income:
Interest Income:
Interest income is recognized using the effective interest rate
(EIR). EIR is the rate that exactly discounts the estimated
future cash flows over the expected life of financial instrument,
to the gross carrying amount of the financial assets or to the
amortized cost of the financial liability.
Dividend Income:
Dividend income from investments is recognised when the
Company's right to receive the payment is established, which
is generally when shareholders approve the dividend provided
that it is probable that the economic benefit will flow to the
Company.
Royalties:
Royalties are accounted on an accrual basis in accordance
with the substance of the relevant agreement.
Other Income:
Any other items of income other than interest, dividend or
royalties are accounted as and when the right to receive such
income arises and it is probable that the economic benefits
will flow to the Company and the amount of income can be
measured reliably.
Contract balances
Contract assets
A contract asset is the right to consideration in exchange
for goods or services transferred to the customer. If the
Company performs by transferring goods or services to a
customer before the customer pays consideration or before
payment is due, a contract asset is recognised for the earned
consideration that is conditional.
Trade receivables
A receivable represents the Company's right to an amount of
consideration that is unconditional (i.e. only the passage of
time is required before payment of the consideration is due).
Refer to accounting policies of financial assets in Financial
instruments - initial recognition and subsequent measurement.
Contract liabilities
A contract liability is the obligation to transfer goods or
services to a customer for which the Company has received
consideration (or an amount of consideration is due) from
the customer. If a customer pays consideration before the
Company transfers goods or services to the customer, a
contract liability is recognised when the payment is made or
the payment is due (whichever is earlier). Contract liabilities
are recognised as revenue when the Company performs
under the contract.
Cost Recognition:
Revenue Costs and expenses except real estate expenses are
recognized in statement of profit and loss when incurred and
are classified according to their nature. Real estate expenses
are recognised in consonance with the recognition of real
estate revenue.
Property, plant and equipment:
Property, plant and equipment are stated at cost [i.e. cost
of acquisition or construction inclusive of freight, erection
and commissioning charges, non-refundable duties and
taxes, expenditure during construction period, other directly
attributable costs, borrowing costs (in case of a qualifying
asset) up to the date of acquisition/ installation], net of
accumulated depreciation and accumulated impairment
losses, if any.
Property, plant and equipment which are not ready for intended
use as on the date of Balance Sheet are disclosed as “Capital
work-in-progress” and are carried at cost comprising direct
costs, related incidental expenses, other directly attributable
costs and borrowing costs (in case of a qualifying asset).
Property, Plant and Equipment which are significant to the total
cost of that item of Property, Plant and Equipment and having
different useful life are accounted separately.
Subsequent costs are included in the asset's carrying amount
or recognised as a separate asset, as appropriate, only 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.
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. Likewise, when
a major inspection is performed, its cost is recognised in the
carrying amount of the plant and equipment as a replacement
if the recognition criteria are satisfied. All other repair and
maintenance costs are recognised in profit or loss as incurred.
The present value of the expected cost for the decommissioning
of an asset after its use is included in the cost of the respective
asset when the recognition criteria for a provision are met.
An item of property, plant and equipment and any significant
part initially recognised is derecognised upon disposal or
when no future economic benefits are expected from its use
or disposal. The cost and related accumulated depreciation
are eliminated from the financial statements, either on disposal
and any gain or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is recognised
in profit or loss when the asset is derecognised.
Depreciation and amortisation
Depreciation on property, plant and equipment is provided
over the useful life of assets as specified in schedule II of the
Act. Property, plant and equipment which are added / disposed
off during the year, deprecation is provided prorata basis with
reference to the month of addition / deletion.
Depreciation is calculated on straight line basis over the
However, certain class of temporary buildings used in
construction projects are depreciated over the lives of
project based on technical evaluation and the management's
experience of use of the assets as against the period as
prescribed in Schedule II of Companies Act, 2013.
Where cost of a component of the asset is significant to total
cost of the asset and useful life of that component is different
from the useful life of the remaining asset, useful life of that
significant component is determined separately and such
asset component is depreciated over its separate useful life.
Freehold land is not depreciated.
The residual values, useful lives and depreciation methods are
reviewed, and adjusted if appropriate, at each reporting date.
Assets acquired on lease and leasehold improvements are
depreciated over the unexpired period of the lease or the
estimated useful life of the assets, whichever is shorter.
Right-of-use assets
A right-of-use asset is recognised at the commencement date
of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted
for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received,
any initial direct costs incurred, and, except where included
in the cost of inventories, an estimate of costs expected to be
incurred for dismantling and removing the underlying asset,
and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis
over the unexpired period of the lease or the estimated useful
life of the asset, whichever is the shorter. Where the Company
expects to obtain ownership of the leased asset at the end of
the lease term, the depreciation is provided over its estimated
useful life. Right-of use assets are subject to impairment or
adjusted for any remeasurement of lease liabilities.
The Company has elected not to recognise a right-of-use
asset and corresponding lease liability for short-term leases
with terms of 12 months or less and leases of low-value assets.
Lease payments on these assets are expensed to profit or loss
as incurred.
Intangible assets:
Intangible assets acquired separately are measured on
initial recognition at cost which comprises purchase price
(including import duties and non-refundable purchase taxes,
after deducting trade discounts and rebates) and any directly
attributable cost of preparing the asset for its intended use.
An intangible assets acquired in a business combination is
recognised at fair value at the date of acquisition.
After initial recognition, intangible assets are carried at
cost less any accumulated amortisation and accumulated
impairment losses. Internally generated intangible assets,
excluding capitalised development costs, are not capitalised
and the related expenditure is reflected in profit or loss in the
period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either
finite or indefinite.
Intangible assets with finite lives are amortised over the useful
economic life and assessed for impairment whenever there
is an indication that the intangible asset may be impaired.
Amortisation is recognised on a straight line basis over
their estimated useful life. The amortisation period and the
amortisation method for an intangible asset with a finite useful
life are reviewed at least at the end of each reporting period.
Changes in the expected useful life or the expected pattern
of consumption of future economic benefits embodied in
the asset are considered to modify the amortisation period
or method, as appropriate, and are treated as changes in
accounting estimates being accounted for on a prospective
basis. The amortisation expense on intangible assets with finite
lives is recognised in the statement of profit and loss unless
such expenditure forms part of carrying value of another asset.
Intangible assets with indefinite useful lives are not amortised,
but are tested for impairment annually, either individually or
at the cash-generating unit level. The assessment of indefinite
life is reviewed annually to determine whether the indefinite life
continues to be supportable. If not, the change in useful life
from indefinite to finite is made on a prospective basis.
An intangible asset is derecognised on disposal, or when no
future economic benefits are expected from use or disposal.
Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are
recognised in the statement of profit or loss when the asset is
derecognised.
Computer Software is amortized over a period of 5 years.
Government Grants:
Government grants are recognised where there is reasonable
assurance that the grant will be received and all attached
conditions will be complied with. When the grant relates to
an expense item, it is recognised as income on a systematic
basis over the periods that the related costs, for which it is
intended to compensate, are expensed. Government grants
that are receivable as compensation for expenses or losses
already incurred or for the purpose of giving immediate
financial support to the company with no future related costs
are recognised in statement of profit or loss in the period in
which they become receivable. Grants related to depreciable
assets are usually recognised in profit or loss over the periods
and in the proportions in which depreciation expense on those
assets is recognised. Grants related to non-depreciable assets
may also require the fulfilment of certain obligations and would
then be recognised in profit or loss over the periods that bear
to the cost of meeting the obligations.
When the Company receives grants of non-monetary assets,
the asset and the grant are recorded at fair value amounts
and released to profit or loss over the expected useful life
in a pattern of consumption of the benefit of the underlying
asset. When loans or similar assistance or deferred liability
are provided by governments, with nil interest rate or rate
below the current applicable market rate, the effect of this
favourable interest is regarded as a government grant. The
loan or assistance is initially recognised and measured at fair
value and the government grant is measured as the difference
between the initial carrying value of the loan and the proceeds
received. The loan is subsequently measured as per the
accounting policy applicable to financial liabilities.
Foreign Currencies:
Functional Currency
The Company's financial statements are presented in INR,
which is also its functional currency.
Transactions and balances:
Transactions in foreign currencies are initially recorded by
the Company at functional currency spot rates at the date the
transaction first qualifies for recognition. However, for practical
reasons, the Company uses an average rate if the average rate
approximates the actual rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot rates
of exchange at the reporting date. Exchange differences
arising on settlement or translation of monetary items are
recognised in Statement of Profit and Loss. They are deferred
in equity if they are attributable to part of the net investment in
a foreign operation.
Foreign exchange gains and losses that relate to borrowings
are presented in the statement of profit or loss, within finance
costs. All other foreign exchange gains and losses are
presented in the statement of profit or loss on a net basis within
Foreign Currency Rate Difference [Net] - Other than financing.
Non-monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange
rates at the dates of the initial transactions. Exchange
differences arising on settlement or translation of monetary
items are recognised in profit or loss.
Non-monetary items measured at fair value in a foreign currency
are translated using the exchange rates at the date when the
fair value is determined. The gain or loss arising on translation
of non-monetary items measured at fair value is treated in line
with the recognition of the gain or loss on the change in fair
value of the item (i.e., translation differences on items whose
fair value gain or loss is recognised in Other Comprehensive
Income [OCI] or profit or loss are also recognised in OCI or
profit or loss, respectively).
In case of an asset, expense or income where a non-monetary
advance is paid/received, the date of transaction is the date
on which the advance was initially recognised. If there were
multiple payments or receipts in advance, multiple dates of
transactions are determined for each payment or receipt of
advance consideration.
Inventories:
Inventories are measured as under:
i Raw materials, construction materials, stores and spares,
packing materials, stock of food and beverages, operating
stores and supplies are measured at lower of cost or net
realisable value. However, these items are considered to
be realisable at cost, if the finished products, in which
they will be used, are expected to be sold at or above
cost. Cost is determined on weighted average basis.
Cost includes cost of purchase and other costs incurred
in bringing the inventories to their present location and
condition.
ii Finished goods, Stock in Process, Cost of Construction,
Projects Under Development are measured at lower
of cost or net realisable value. Cost includes cost of
raw materials, cost of conversion, borrowing costs of
qualifying asset and other costs incurred in bringing the
inventories to their present location and condition. Cost
of finished goods and stock in process is determined on
weighted average basis.
iii Traded goods are measured at lower of cost or net
realisable value. Cost includes cost of purchase and other
costs incurred in bringing the inventories to their present
location and condition. Cost is determined on weighted
average basis.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and
the estimated costs necessary to make the sale.
Borrowing Costs:
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying asset, that necessarily
takes a substantial period of time to get ready for its intended
use or sale, are capitalised as part of the cost of the asset.
The borrowing cost cease to capitalise when the assets are
substantially ready for their intended use or sale.
Investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for
capitalisation.
All other borrowing costs are expensed in the period in which
they occur.
Borrowing costs consist of interest and other costs that
an entity incurs in connection with the borrowing of funds.
Borrowing cost also includes finance charges in respect of
finance lease and exchange differences arising from foreign
currency borrowing to the extent regarded as an adjustment
to the interest costs.
Employee benefits:
The undiscounted amount of short-term employee benefits
i.e. wages and salaries, bonus, incentive, annual leave and
sick leave etc. expected to be paid in exchange for the service
rendered by employees are recognized as an expense except
in so far as employment costs may be included within the cost
of an asset during the period when the employee renders the
services.
Retirement benefit in the form of provident fund and pension
contribution is a defined contribution scheme and is recognized
as an expense except in so far as employment costs may be
included within the cost of an asset.
Gratuity and leave encashment is a defined benefit obligation.
The liability is provided for on the basis of actuarial valuation
made at the end of each financial year. The actuarial valuation
is done as per Projected Unit Credit method.
Remeasurements, comprising of actuarial gains and losses,
the effect of the asset ceiling, excluding amounts included in
net interest on the net defined benefit liability and the return
on plan assets (excluding amounts included in net interest on
the net defined benefit liability), are recognised immediately
in the balance sheet with a corresponding debit or credit to
profit or loss through OCI in the period in which they occur.
Remeasurements are not reclassified to profit or loss in
subsequent periods.
Leases Liabilities:
Company as lessee:
The lease liability is initially recognised at the present value
of the lease payments to be made over the term of the lease,
discounted using the interest rate implicit in the lease or, if that
rate cannot be readily determined, the Company's incremental
borrowing rate. Lease payments comprise of fixed payments
less any lease incentives receivable, variable lease payments
that depend on an index or a rate, amounts expected to be
paid under residual value guarantees, exercise price of a
purchase option when the exercise of the option is reasonably
certain to occur, and any anticipated termination penalties.
The variable lease payments that do not depend on an index
or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the
effective interest method. Lease liability is subsequently
remeasured by increasing the carrying amount to reflect
interest on the lease liability and reducing the carrying amount
to reflect the lease payments made. The carrying amounts are
remeasured if there is a change in the following: future lease
payments arising from a change in an index or a rate used;
residual guarantee; lease term; certainty of a purchase option
and termination penalties. When a lease liability is remeasured,
an adjustment is made to the corresponding right-of use asset,
or to profit or loss if the carrying amount of the right-of-use
asset is fully written down.
Company as lessor:
Amounts due from lessee under finance leases are recorded
as receivables at the Company's net investment in the leases.
Finance lease income is allocated to accounting periods
so as to reflect a constant periodic rate of return on the net
investment outstanding in respect of the lease. A lease which
is not classified as a finance lease is an operating lease.
Rental income from operating lease is recognised on a straight¬
line basis over the term of the relevant lease unless either:
[i] another systematic basis is more representative of the
time pattern in which benefit derived from the use of the
leased asset is diminished, even if the payments to the
lessors are not on that basis; or
[ii] the payments to the lessor are structured to increase in
line with expected general inflation to compensate for the
lessor's expected inflationary cost increases. If payments
to the lessor vary according to factors other than inflation,
then this condition is not met.
Research and development costs
Research costs are expensed as incurred. Development
expenditures on an individual project are recognised as an
intangible asset when the Company can demonstrate:
[i] The technical feasibility of completing the intangible asset
so that the asset will be available for use or sale
[ii] Its intention to complete and its ability and intention to use
or sell the asset
[iii] How the asset will generate future economic benefits
[iv] The availability of resources to complete the asset
[v] The ability to measure reliably the expenditure during
development
Following initial recognition of the development expenditure
as an asset, the asset is carried at cost less any accumulated
amortisation and accumulated impairment losses. Amortisation
of the asset begins when development is complete and the
asset is available for use. It is amortised over the period of
expected future benefit. Amortisation expense is recognised in
the statement of profit and loss unless such expenditure forms
part of carrying value of another asset.
During the period of development, the asset is tested for
impairment annually.
Impairment of non-financial assets:
The Company assesses, at each reporting date, whether there
is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is
required, the Company estimates the asset's recoverable
amount. An asset's recoverable amount is the higher of an
asset's or cash-generating unit's (CGU) fair value less costs
of disposal and its value in use. Recoverable amount is
determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those
from other assets or groups of assets. When the carrying
amount of an asset or CGU exceeds its recoverable amount,
the asset is considered impaired and is written down to its
recoverable amount.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of
money and the risks specific to the asset. In determining fair
value less costs of disposal, recent market transactions are
taken into account. If no such transactions can be identified,
an appropriate valuation model is used. These calculations are
corroborated by valuation multiples, quoted share prices for
publicly traded companies or other available fair value indicators.
Impairment losses of continuing operations, including
impairment on inventories, are recognised in the statement
of profit and loss, except for properties previously revalued
with the revaluation surplus taken to OCI. For such properties,
the impairment is recognised in OCI up to the amount of any
previous revaluation surplus.
For assets excluding goodwill, an assessment is made at each
reporting date to determine whether there is an indication
that previously recognised impairment losses no longer exist
or have decreased. If such indication exists, the Company
estimates the asset's or CGU's recoverable amount. A
previously recognised impairment loss is reversed only if there
has been a change in the assumptions used to determine the
asset's recoverable amount since the last impairment loss was
recognised. The reversal is limited so that the carrying amount
of the asset does not exceed its recoverable amount, nor
exceed the carrying amount that would have been determined,
net of depreciation, had no impairment loss been recognised
for the asset in prior years. Such reversal is recognised in
the statement of profit or loss unless the asset is carried at a
revalued amount, in which case, the reversal is treated as a
revaluation change.
Goodwill is tested for impairment as at each Balance Sheet
date and when circumstances indicate that the carrying value
may be impaired.
Impairment is determined for goodwill by assessing the
recoverable amount of each CGU (or group of CGUs) to which
the goodwill relates. When the recoverable amount of the
CGU is less than its carrying amount, an impairment loss is
recognised. Impairment losses relating to goodwill cannot be
reversed in future periods.
Intangible assets with indefinite useful lives are tested for
impairment annually as at each Balance sheet date at the CGU
level, as appropriate, and when circumstances indicate that
the carrying value may be impaired.
Provisions
General:
Provisions are recognised when the Company has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
Provisions (excluding gratuity and compensated absences)
are determined based on management's estimate required to
settle the obligation at the Balance Sheet date. Provisions are
reviewed at the end of each reporting period and adjusted to
reflect the current best estimate.
When the Company expects some or all of a provision to
be reimbursed (like under an insurance contract, indemnity
clauses or suppliers' warranties) and the Company is solely
liable to pay the liability, the reimbursement is recognised
as a separate asset. The expense relating to a provision
is presented in the statement of profit and loss net of any
reimbursement if the Company is not solely liable to pay the
liability. The reimbursement of provision is only recognized
when it is virtually certain that the company will receive the
reimbursement.
If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects current
market assessments of the time value of money and the risks
specific to the liability. When discounting is used, the increase
in the provision due to the passage of time is recognised as a
finance cost.
Restructuring Provisions:
Restructuring provisions are recognised only when the
Company has a constructive obligation, which is when a
detailed formal plan identifies the business or part of the
business concerned, the location and number of employees
affected, a detailed estimate of the associated costs, and an
appropriate timeline, and the employees affected have been
notified of the plan's main features.
Warranties:
A warranty provision is recognised for the best estimate of
the expenditure that will be required to settle the company
obligation of relevant goods.
Decommissioning Liability:
The Company records a provision for decommissioning
costs with respect to manufacturing units/ project sites etc.
Decommissioning costs are provided at the present value of
expected costs to settle the obligation using estimated cash
flows and are recognised as part of the cost. The cash flows
are discounted at a current pre-tax rate that reflects the risks
specific to the decommissioning liability. The unwinding of
the discount is expensed as incurred and recognised in the
statement of profit and loss as a finance cost. The estimated
future costs of decommissioning are reviewed annually and
adjusted as appropriate. Changes in the estimated future
costs or in the discount rate applied are added to or deducted
from the cost of the asset.
Onerous contract:
The Company does recognise and measure as a provision
the present obligation under an onerous contract, an onerous
contract being a contract under which the unavoidable costs
of meeting the obligations under the contract exceed the
economic benefits expected to be received under it.
|