located. Subsequent costs are included in the asset's
carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will flow to
the entity and the cost can be measured reliably.
In case of Property, Plant and Equipment, the Company
has availed the carrying value as deemed cost on the
date of Ind AS transition i.e. 1st April, 2015.
PPE not ready for the intended use on the date of Balance
Sheet are disclosed as “Capital Work-in-Progress" and
expenses incurred relating to it, net of income earned
during the project development stage, are disclosed
as pre-operative expenses under “Capital Work-in¬
Progress".
Gains or losses arising from derecognition of a PPE are
measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are
recognized in the Statement of Profit and Loss when the
asset is derecognized.
Depreciation on PPE
a) Depreciation on the PPE is provided to the extent of
depreciable amount on the Straight Line Method over
the useful life of the assets as prescribed in Schedule II to
the Companies Act, 2013 except in respect of following
assets where the useful life is different than those
prescribed in Schedule II as per technical evaluation:
C SUMMARY OF MATERIAL ACCOUNTING
POLICIES
(I) PROPERTY, PLANT AND EQUIPMENT
(PPE):
PPE are stated at cost net of recoverable taxes, less
accumulated depreciation and impairment loss, if any.
Such cost includes purchase price, borrowing cost
and any other cost directly attributable to bringing
the asset to its working condition for its intended use,
the initial estimate of the costs of dismantling and
removing the item and restoring the site on which it is
The Management believes that the useful lives as given
above represent the period over which management
expects to use these assets.
b) PPE acquired under finance lease is depreciated on a
straight line basis over the lease term.
c) The leasehold land is amortized over the lease period.
d) Depreciation on PPE which are added / disposed off
during the year is provided on pro-rata basis with
reference to the date of addition / deletion. Freehold
land is not depreciated.
e) The residual values, useful lives and method of
depreciation of PPE are reviewed at each reporting
date and adjusted prospectively, if appropriate.
(II) INTANGIBLE ASSETS:
I ntangible Assets are stated at cost of acquisition net
of recoverable taxes less accumulated amortization
and accumulated impairment losses, if any. Such cost
includes purchase price, borrowing cost and any cost
directly attributable to bringing the asset to its working
condition for its intended use.
In case of Intangible Assets, the Company has availed
the carrying value as deemed cost on the date of Ind AS
transition i.e. 1st April, 2015.
The Company does not have any intangible assets
having indefinite life. Intangible assets are amortized on
a straight line method based on useful lives estimated
by the management. Technical Know-how is amortized
over the useful life of the underlying plant. Softwares are
amortized over a period of three years and Indefeasible
Right to Use has been amortized over the period of
the agreement.
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 recognized in the statement
of profit and loss when the asset is derecognized.
(III) MINING RIGHTS / MINE DEVELOPMENT
EXPENDITURE:
Mining rights / mine development expenditure includes
leases, costs incurred for acquiring / developing
properties / rights up to the stage of commercial
production. If the exploration activities are found to be
not fruitful, the expenditure on such exploratory work
included in mine development expenditure is written off
in the year in which it is decided to abandon the project.
Mining rights / Mine development expenditure are
depreciated over the useful life of the mine or lease
period whichever is shorter.
(IV) IMPAIRMENT OF NON-FINANCIAL
ASSETS - PPE AND INTANGIBLE ASSETS:
The Company assesses at each reporting date as
to whether there is any indication that any PPE and
intangible assets or group of assets, called cash
generating units (CGU) may be impaired. If any
such indication exists the recoverable amount of an
asset or CGU is estimated to determine the extent of
impairment, if any. When it is not possible to estimate
the recoverable amount of an individual asset, the
Company estimates the recoverable amount of the
CGU to which the asset belongs.
An impairment loss is recognized in the Statement of
Profit and Loss to the extent, asset's carrying amount
exceeds its recoverable amount. The recoverable
amount is higher of an asset's fair value less cost of
disposal and value in use. Value in use is based on
the estimated future cash flows, discounted to their
present value using pre-tax discount rate that reflects
current market assessments of the time value of money
and risk specific to the assets.
The impairment loss recognized in prior accounting
period is reversed if there has been a change in the
estimate of recoverable amount.
(V) INVENTORIES:
The inventories are measured at lower of cost and net
realisable value. Net realisable value is the estimated
selling price in the ordinary course of business, less
estimated costs of completion and estimated costs
necessary to make the sale. The cost of inventories
comprises of all costs of purchase, costs of conversion
and other costs incurred in bringing them to their
respective present location and condition.
The cost of Raw Materials and Stores & Spares are
determined at weighted average method. By-products
are measured at net realisable value. The cost of Work-
In-Progress and Finished Goods is determined on
absorption costing method.
(VI) CASH AND CASH EQUIVALENT:
Cash and cash equivalent in the balance sheet
comprise cash at banks, on hand, cheques in hand, and
short-term deposits with an original maturity of three
months or less, which are subject to an insignificant risk
of changes in value.
For the purpose of the statement of cash flows, cash
and cash equivalents consist of cash and short-term
deposits, as defined above, net of outstanding bank
overdrafts as they are considered an integral part of the
Company's cash management.
(VII) 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.
(i) Financial Assets -Initial recognition and
measurement
All financial assets are initially recognized at
fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial
assets, which are not at fair value through profit
or loss, are adjusted to the fair value on initial
recognition. Financial assets are classified, at
initial recognition, as financial assets measured
at fair value or as financial assets measured at
amortized cost. Purchase and sale of financial
assets are recognized using trade date
accounting. However, trade receivables that do
not contain a significant financing component are
measured at transaction price.
(ii) Financial Assets -Subsequent
measurement
a) Financial Assets carried at amortized
cost (AC)
Financial assets are measured at amortized
cost if it is held within a business model
whose objective is to hold asset 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.
b) Financial Assets measured at fair value
through other comprehensive income
(FVTOCI)
Financial assets are measured at FVTOCI
if it is held within a business model whose
objective is achieved by both collecting
contractual cash flows and selling of financial
assets 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.
c) Financial Assets measured at fair value
through profit and loss (FVTPL)
A financial asset which is not classified in
any of the above categories is measured
at FVTPL.
(iii) Financial Assets - Derecognition
A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is primarily derecognized (i.e. removed
from the Company's Balance Sheet) when:
a) The rights to receive cash flows from the
asset have expired, or
b) The Company has transferred its rights to
receive cash flow from the asset.
(iv) Impairment of Financial Assets
In accordance with Ind AS 109, the Company uses
‘Expected Credit Loss' (ECL) model, for evaluating
impairment of financial assets 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-months 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 instrument)
For trade receivables Company applies ‘simplified
approach' which requires expected lifetime losses
to be recognized from initial recognition of the
receivables. The Company uses historical default
rates to determine impairment loss on the portfolio
of trade receivables. At every reporting date these
historical default rates are reviewed and changes
in the forward looking estimates are analysed.
For other assets, the Company uses 12 months
ECL to provide for impairment loss where there
is no significant increase in credit risk. If there is
significant increase in credit risk full lifetime ECL
is used.
(v) Financial Liabilities - Initial recognition
and measurement
All financial liabilities are recognized initially at
fair value, in the case of loans and borrowings
and payables, net of directly attributable
transaction costs.
(vi) Financial Liabilities - Subsequent
measurement
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.
(vii) Financial Liabilities - Derecognition
A financial liability is derecognized when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another, from the same
lender on substantially different terms, or the terms
of an existing liability are substantially modified,
such an exchange or modification is treated as
the derecognition of the original liability and the
recognition of a new liability. The difference in the
respective carrying amounts is recognized in the
statement of profit and loss.
(viii) Reclassification of Financial Assets
The Company determines classification of
financial assets and liabilities on initial recognition.
After initial recognition, no reclassification is made
for financial assets which are equity instruments
and financial liabilities. For financial assets which
are debt instruments, a reclassification is made
only if there is a change in the business model
for managing those assets. Changes to the
business model are expected to be infrequent.
The Company's senior management determines
change in the business model as a result of external
or internal changes which are significant to the
Company's operations. Such changes are evident
to external parties. A change in the business
model occurs when the Company either begins or
ceases to perform an activity that is significant to
its operations. If the Company reclassifies financial
assets, it applies the reclassification prospectively
from the reclassification date which is the first day
of the immediately next reporting period following
the change in business model. The Company
does not restate any previously recognized gains,
losses (including impairment gains or losses)
or interest.
(ix) Offsetting of Financial Instruments
Financial assets and liabilities are offset and the
net amount is reported in the balance sheet where
there is a legally enforceable right to offset the
recognized amounts and there is an intention to
settle on a net basis, to realise the asset and settle
the liability simultaneously. The legally enforceable
rights must not be contingent on future events
and must be enforceable in the normal course of
business and in the event of default, insolvency or
bankruptcy of the Company or counterparty.
(VIII)FAIR VALUE MEASUREMENT:
The Company measures financial instruments at fair
value at each balance sheet date.
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. The fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:
a) In the principal market for the asset or liability, or
b) I n the absence of a principal market, in the most
advantageous market for the asset or liability.
A fair value measurement of a non-financial asset takes
into account a market participant's ability to generate
economic benefits by using the asset in its highest and
best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorized
within the fair value hierarchy.
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