7. Summary of Material Accounting Policies Information
a. Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company
and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is meas¬
ured at the fair value of the consideration received or receivable, taking into account contractually defined
terms of payment and excluding taxes or duties collected on behalf of the government.
i. Sale of Goods
Sales are recognized when the substantial risks and rewards of ownership in the goods, including custody,
are transferred to the buyer as per the terms of the contract and are measured at the fair value of the con¬
sideration received and receivable and net of trade discounts, allowable sales return and sales tax/value
added tax/goods and service tax.
ii. Interest Income
Interest Income from a financial asset is recognized when it is probable that the economic benefits will
flow to the Company and the amount of income can be measured reliably. Interest income is accrued on
a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which
is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
asset to the asset's net carrying amount on initial recognition.
iii. Dividend
Dividend income is recognized when the right to receive dividend is established.
b. Inventories
Inventories are stated at lower of cost and net realisable value. The cost is calculated on First in First Out (FIFO)
method. Cost comprises expenditure incurred in the normal course of business in bringing such inventories
to its present location and condition and includes, where applicable, appropriate overheads based on normal
level of activity. Net realisable value is the estimated selling price less estimated costs for completion and sale.
Obsolete, slow moving, and defective inventories are identified from time to time and, where necessary, a pro¬
vision is made for such inventories.
c. Taxation
Income tax expense represents the sum of current and deferred tax (including MAT).
Current income tax assets and liabilities are measured at the amount to be recovered from or paid to taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively
enacted at the reporting date.
Income tax expense is recognized in the Statement of Profit and Loss, except to the extent that it relates to
items recognized directly in equity or other comprehensive income, in such cases the tax is also recognized
directly in equity or in other comprehensive income.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Balance
sheet and the tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets
are generally recognized for all deductible temporary differences, Deferred tax assets are recognized to the
extent that it is probable that future taxable profits will be available against which those deductible temporary
differences and the carry forward of unused tax credits and unused tax losses can be utilised. Deferred tax
assets and deferred tax liabilities are offset, 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 differ¬
ences can be utilised.
Minimum Alternative Tax (MAT) is applicable to the Company. Credit of MAT is recognised as an asset only
when and to the extent there is convincing evidence that the Company will pay normal income tax during
the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which
the MAT credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the
profit and loss account and shown as MAT credit entitlement. The Company reviews the same at each balance
sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer
convincing evidence to the effect that the Company will pay normal income tax during the specified period.
d. Property, Plant and Equipment
Property, Plant and Equipment are stated at cost less accumulated depreciation and accumulated impairment
of loss, if any.
Cost of any item of property, plant and equipment comprises its purchase price including import duties and
non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of
bringing the item to its working condition.
Depreciation is provided on the straight line method by depreciating carrying amount of Property, Plant and
Equipment over remaining useful life of the assets.
Depreciation methods, useful life and residual values are reviewed at each financial year end.
The useful life and residual value as per such review is normally in accordance with schedule II of the Compa¬
nies Act 2013.
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is deter¬
mined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in
the Statement of Profit and Loss on the date of disposal or retirement.
e. Intangible Assets
Intangible assets are stated at cost less accumulated amortization and impairment. Intangible assets are amor¬
tized over their respective individual estimated useful life on a straight line method.
Gains or losses arising from de-recognition 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 or
loss when the asset is derecognized.
f. Impairment of Assets
The Company assesses at each balance sheet date whether there is any indication that a Property, plant and
equipment may have been impaired. If any such indication exists, the Company estimates the recoverable
amount of the Property, plant and equipment. If such recoverable amount of the Property, plant and equip¬
ment or the recoverable amount of the cash generating unit to which the Property, plant and equipment be¬
longs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction
is treated as an impairment loss and is recognized in the profit and loss. If at the balance sheet date there is an
indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed
and the Asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.
g. Borrowing Costs
Interest and other costs connected with the borrowing for the acquisition / construction of qualifying fixed
assets are capitalized up to the date that when such asset are ready for their intended use and other borrow¬
ing cost are charged to statement of profit & loss. Borrowing cost includes exchange difference to the extent
regarded as an adjustment to the borrowing cost.
h. Lease
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Iden¬
tification of a lease requires significant judgment. The Company uses significant judgement in assessing the
lease term (including anticipated renewals) and the applicable discount rate.
The Company determines the lease term as the non-cancellable period of a lease, together with both periods
covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and
periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that
option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or
not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an
economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option
to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period
of a lease.
The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or
for a portfolio of leases with similar characteristics.
Company as a lessee
The Company accounts for each lease component within the contract as a lease separately from non-lease
components of the contract and allocates the consideration in the contract to each lease component based
on the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease
components.
The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term
at the lease commencement date. The cost of the right-of-use asset measured at inception 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 less any lease incentives received, plus any initial direct costs incurred and an esti¬
mate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the
underlying asset or site on which it is located. 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 shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of-use
assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are
tested for impairment whenever there is any indication that their carrying amounts may not be recoverable.
Impairment loss, if any, is recognised in the statement of profit and loss.
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 interest rate implicit in the
lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses in¬
cremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease-by-lease
basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate
for the portfolio as a whole. The lease payments shall include fixed payments, variable lease payments, residual
value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise
that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising
an option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying
amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments
made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect
revised in-substance fixed lease payments. The company recognises the amount of the re-measurement of
lease liability due to modification as an adjustment to the right-of-use asset and statement of profit and loss
depending upon the nature of modification. Where the carrying amount of the right-of-use asset is reduced
to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any
remaining amount of the re-measurement in statement of profit and loss.
Company as a Lessor
At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance
lease. The Company recognises lease payments received under operating leases as income on a straight- line
basis over the lease term. In case of a finance lease, finance income is recognised over the lease term based
on a pattern reflecting a constant periodic rate of return on the lessor's net investment in the lease. When the
Company is an intermediate lessor it accounts for its interests in the head lease and the sub-lease separately.
It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head
lease, not with reference to the underlying asset. If a head lease is a short term lease to which the Company
applies the exemption described above, then it classifies the sub-lease as an operating lease.
The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets
that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease
payments associated with these leases are recognized as an expense on a straight-line basis over the lease
term.
i. Foreign Currencies Translations
Transactions in foreign currencies are initially recorded in reporting currency by the Company at spot rates at
the date the transaction first qualifies for recognition.
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 recognized in statement of profit and loss.
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. Non-monetary items measured at fair value in a foreign
currency a re translated using the exchange rates at the date when the fair value is determined.The gain or loss
arising on translation of nonmonetary 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 OCI or statement profit or loss are also recognised in OCI or statement profit and loss,
respectively).
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