2 Summary of significant accounting policies
a) Revenue recognition
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.
Sale of goods
For sale of goods, revenue is recognised when control of
the goods has transferred at a point in time i.e. when the
goods have been dispatched to the location of customer.
Following dispatch, the customer has full discretion over
the responsibility, manner of distribution, price to sell the
goods and bears the risks of obsolescence and loss in
relation to the goods. A receivable is recognised by the
Company when the goods are dispatched to the customer
as this represents the point in time at which the right to
consideration becomes unconditional, as only the
passage of time is required before payment is due.
Payment is due within 10-15 days. The Company
considers the effects of variable consideration, non-cash
consideration, and consideration payable to the customer
(if any).
Variable consideration
If the consideration in a contract includes a variable
amount, estimates the amount of consideration to which
it will be entitled in exchange for transferring the goods to
the customer. The variable consideration is estimated at
contract inception and constrained until it is highly
probable that a significant revenue reversal in the amount
of cumulative revenue recognised will not occur when the
associated uncertainty with the variable consideration is
subsequently resolved. The Company recognizes changes
in the estimated amount of variable consideration in the
period in which the change occurs. Some contracts for the
sale of goods provide customers with volume rebates and
pricing incentives, which give rise to variable
consideration.
Rebates are offset against amounts payable by the
customer. To estimate the variable consideration for the
expected future rebates, the Company applies the most
likely amount method for contracts with a single-volume
threshold. The selected method that best predicts the
amount of variable consideration is primarily driven by
the number of volume thresholds contained in the
contract. The Company then applies the requirements on
constraining estimates of variable consideration and
recognises a refund liability for the expected future
rebates.
Contract balances
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 Note No 2(i) Financial assets - initial
recognition and subsequent measurement.
Contract liabilities (which the Company refer to as
advance from customer)
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.
The Company presents revenues net of indirect taxes in its
Statement of Profit and Loss.
Cost to obtain a contract
The Company pays sales commission to its selling agents
for each contract that they obtain for the Company. The
Company has elected to apply the optional practical
expedient for costs to obtain a contract which allows the
Company to immediately expense sales commissions
(included in 'commission on sales' under other expenses)
because the amortization period of the asset that the
Company otherwise would have used is one year or less.
Costs to fulfil a contract i.e. freight, insurance and other
selling expenses are recognized as an expense in the
period in which related revenue is recognised.
Financing components
The Company does not expect to have any contracts
where the period between the transfer of the promised
goods or services to the customer and payment by the
customer exceeds one year. As a consequence, the
Company does not adjust any of the transaction prices for
the time value of money.
Rendering of services
Service income includes job work and its revenue is
recognised when the performance obligation to render
the services are completed as per contractually agreed
terms.
b) Other revenue streams
Interest income
Interest income from debt instrument is recognised using
the effective interest rate (EIR) method. EIR is the rate
which exactly discounts the estimated future cash
receipts over the expected life of the financial instrument
to the gross carrying amount of the financial asset. When
calculating the EIR the Company estimates the expected
cash flows by considering all the contractual terms of the
financial instrument (for example, prepayments,
extensions, call and similar options) but does not
consider the expected credit losses.
Dividend income
Dividends are recognised in the Statement of Profit and
Loss only when the Company's right to receive the
payment is established.
Export incentives
Export incentives principally comprise of duty drawback.
The benefit under these incentive schemes are available
based on the guideline formulated for respective
schemes by the government authorities. Duty drawback
is recognized as revenue on accrual basis to the extent it is
probable that realization is certain.
Government grants
Grants from the government are recognized at their fair
value where there is a reasonable assurance that the
grant will be received and the Company will comply with
all attached conditions.
Government grants which are revenue in nature and are
towards compensation for the qualifying costs, incurred
by the Company, are recognised as income in the
Statement of Profit and Loss in the period in which such
costs are incurred.Government grants relating to the
purchase of property, plant and equipment are included
in non-current liabilities as deferred income and are
credited to the Statement of Profit and Loss on a straight¬
line basis over the expected lives of the related assets and
presented within other income.
c) Income taxes
Income tax expense for the year comprises of current tax
and deferred tax. Income tax is recognized in the
Statement of Profit and Loss except to the extent that it
relates to an item which is recognised in other
comprehensive income or directly in equity, in which case
the tax is recognized in 'Other comprehensive income' or
directly in equity, respectively.
The Income tax expense or credit for the period is the tax
payable on the current period's taxable income based on
the applicable income tax rate for each jurisdiction
adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax
losses.
Current tax
Current tax is based on tax rates applicable for respective
years on the basis of tax law enacted and substantively
enacted at the end of the reporting period. The Company
establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Current is payable on taxable profit, which differs from
profit and loss in financial statements. Current tax is
charged to Statement of Profit and Loss. Provision for
current tax is made after taking in to consideration
benefits admissible under Income Tax Act, 1961.
Deferred tax
Deferred income taxes are calculated without discounting
the temporary differences between carrying amounts of
assets and liabilities and there tax base using the tax laws
that have been enacted or substantively enacted by the
reporting date. However deferred tax is not provided on
the initial recognition of assets and liabilities unless the
related transaction is business combination or affects tax
or accounting profit. Tax losses available to the carried
forward and other income tax credit available to the
entity are assessed for recognition as deferred tax assets.
Deferred tax liabilities are always provided for in full.
Deferred tax assets are recognized to the extent that it is
probable that they will be able to utilize against future
taxable income.
Deferred tax asset are recognised to the extent that is
probable that the underlying tax loss or deductible
temporary differences will be utilized against future
taxable income. This is assessed based on Company's
forecast of future operating income at each reporting
date.
Deferred tax assets and liabilities are offset where the
entity has a right and intention to set off current tax assets
and liabilities from the same taxation authority.
Minimum Alternative Tax (MAT)
Minimum Alternate Tax credit entitlement paid in
accordance with tax laws, which gives rise to future
economic benefit in form of adjustment to future tax
liability, is considered as an asset to the extent
management estimate its recovery in future years.
d) Leases
The determination of whether an arrangement is (or
contains) a lease is based on the substance of the
arrangement at the inception of the lease. The
arrangement is, or contains, a lease if fulfilment of the
arrangement is dependent on the use of a specific asset or
assets and the arrangement conveys a right to use the
asset or assets, even if that right is not explicitly specified
in an arrangement.
As a lessee
The Company's lease asset classes primarily consist of
leases for buildings. The Company assesses whether a
contract contains a lease, at inception of a contract. A
contract is, or contains, a lease if the contract conveys the
right to control the use of an identified asset for a period
of time in exchange for consideration. To assess whether a
contract conveys the right to control the use of an
identified asset, the Company assesses whether: (i) the
contract involves the use of an identified asset (ii) the
Company has substantially all of the economic benefits
from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the
asset. At the date of commencement of the lease, the
Company recognizes a right-of-use (ROU) asset and a
corresponding lease liability for all lease arrangements in
which it is a lessee, except for leases with a term of 12
months or less (short-term leases) and low value leases.
For these short-term and low-value leases, the Company
recognizes the lease payments as an operating expense
on a straight-line basis over the term of the lease. Certain
lease arrangements includes the options to extend or
terminate the lease before the end of the lease term. ROU
assets and lease liabilities includes these options when it
is reasonably certain that they will be exercised. The ROU
assets are initially recognized at cost, which comprises the
initial amount of the lease liability adjusted for any lease
payments made at or prior to the commencement date of
the lease plus any initial direct costs less any lease
incentives. They are subsequently measured at cost less
accumulated depreciation and impairment losses. ROU
assets are depreciated from the commencement date on
a straight-line basis over the shorter of the lease term and
useful life of the underlying asset. ROU assets are
evaluated for recoverability whenever events or changes
in circumstances indicate that their carrying amounts may
not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the fair
value less cost to sell and the value-in-use) is determined
on an individual asset basis unless the asset does not
generate cash flows that are largely independent of those
from other assets. In such cases, the recoverable amount
is determined for the Cash Generating Unit (CGU) to
which the asset belongs. The lease liability is initially
measured at amortized cost at the present value of the
future lease payments. The lease payments are
discounted using the interest rate implicit in the lease or,
if not readily determinable, using the incremental
borrowing rates . Lease liabilities are remeasured with a
corresponding adjustment to the related ROU asset if the
Company changes its assessment of whether it will
exercise an extension or a termination option. Lease
liability and ROU assets have been separately presented
in the Balance Sheet and lease payments have been
classified as financing cash flows.
As a lessor
Lease income from operating leases where the Company
is a lessor is recognised in the statement of profit and loss
on a straight- line basis over the lease term.
e) Impairment of non-financial assets
Assessment for impairment is done at each Balance Sheet
date as to whether there is any indication that a non¬
financial asset may be impaired. Indefinite-life intangibles
are subject to a review for impairment annually or more
frequently if events or circumstances indicate that it is
necessary.
For the purpose of assessing impairment, the smallest
identifiable Company of assets that generates cash
inflows from continuing use that are largely independent
of the cash inflows from other assets or Company of
assets is considered as a cash generating unit. Goodwill
acquired in a business combination is, from the
acquisition date, allocated to each of the Company's cash¬
generating units that are expected to benefit from the
synergies of the combination, irrespective of whether
other assets or liabilities of the acquire are assigned to
those units.
If any indication of impairment exists, an estimate of the
recoverable amount of the individual asset/cash
generating unit is made. Asset/cash generating unit
whose carrying value exceeds their recoverable amount
are written down to the recoverable amount by
recognizing the impairment loss as an expense in the
Statement of Profit and Loss. The impairment loss is
allocated first to reduce the carrying amount of any
goodwill (if any) allocated to the cash generating unit and
then to the other assets of the unit pro rata based on the
carrying amount of each asset in the unit. Recoverable
amount is higher of an asset's or cash generating unit's
fair value less cost of disposal and its value in use. Value in
use is the present value of estimated future cash flows
expected to arise from the continuing use of an asset or
cash generating unit and from its disposal at the end of its
useful life. Assessment is also done at each Balance Sheet
date as to whether there is any indication that an
impairment loss recognized for an asset in prior
accounting periods may no longer exist or may have
decreased. An impairment loss is reversed if there has
been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only
to the extent that the assets carrying amount does not
exceed the carrying amount that would have been
determined, net of depreciation and amortization, if no
impairment loss had been recognized. An impairment
loss recognized for goodwill is not reversed in subsequent
periods.
During the year under review, the Company engaged a
Chartered Engineer, to conduct a technical assessment of
certain machinery and equipment at our manufacturing
facility located in Kala-Amb, Himachal Pradesh.
Based on a detailed physical inspection and technical
evaluation, it was observed that a number of machines,
primarily injection moulding and tube filling equipment,
have become technologically obsolete and are no longer
supported by OEMs for service or spare parts. As a result,
the operational efficiency of these assets has significantly
declined.
Following the expert's recommendation, the carrying
values of these assets have been impaired to reflect their
recoverable (scrap/realisable) value. The total
impairment charge recognized during the year amounts
to ?286 lakhs. This step is in line with the Company's
prudent approach to asset management and financial
reporting.
f) Cash and cash equivalents
For the purpose of presentation in the statement of cash
flows, cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other
short-term, highly liquid investments with original
maturities of three months or less that are readily
convertible to know amounts of cash and which are
subject to an insignificant risk of changes in value, and
bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the balance sheet.
g) Inventories
(i) Raw materials, packaging materials and stores and
spare parts are valued at the lower of weighted
average cost and net realizable value. Cost includes
purchase price, taxes (excluding levies or taxes
subsequently recoverable by the enterprise from the
concerned revenue authorities), freight inwards and
other expenditure incurred in bringing such
inventories to their present location and condition.
However, these items are considered to be realizable
at cost if finished products in which they will be used
are expected to be sold at or above cost.
(ii) Work in progress, manufactured finished goods and
traded goods are valued at the lower of weighted
average cost and net realizable value. Cost of work in
progress and manufactured finished goods is
determined on the weighted average basis and
comprises direct material, cost of conversion and
other costs incurred in bringing these inventories to
their present location and condition.
(iii) Provision for obsolescence on inventories is made on
the basis of management's estimate based on
demand and market of the inventories.
(iv) Net realizable value is the estimated selling price in
the ordinary course of business, less the estimated
costs of completion and the estimated costs
necessary to make the sale.
(v) The comparison of cost and net realizable value is
made on an item by item basis.
h) Investments and Other Financial Assets
(I) Classification
The Company classifies its financial assets in the following
measurement categories:
- those to be measured subsequently at fair value
(either through other comprehensive income, or
through profit or loss), and
- those measured at amortized cost.
The classification depends on the entity's business model
for managing the financial assets and the contractual
terms of the cash flows.
For assets measured at fair value, gains and losses will
either be recorded in Statement of Profit and Loss or
other comprehensive income. For investments in debt
instruments, this will depend on the business model in
which the investment is held. For investments in equity
instruments, this will depend on whether the Company
has made an irrevocable election at the time of initial
recognition to account for the equity investment at fair
value through other comprehensive income.
The Company reclassifies debt investments when and
only when its business model for managing those assets
changes.
(ii) Initial measurement
At initial recognition, the Company measures a financial
asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss, transaction costs
that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets
carried at fair value through profit or loss are expensed in
profit or loss.
(iii) Subsequent measurement
Debt instruments
Subsequent measurement of debt instruments depends
on the Company's business model for managing the asset
and the cash flow characteristics of the asset. There are
three measurement categories into which the Company
classifies its debt instruments:
• Amortized cost: Assets that are held for collection of
contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at
amortized cost. A gain or loss on a debt investment that is
subsequently measured at amortized cost and is not part
of a hedging relationship is recognised in Statement of
Profit and Loss when the asset is derecognized or
impaired. Interest income from these financial assets is
included in finance income using the effective interest
rate method.
• Fair Value through Other Comprehensive Income
(FVOCI): Assets that are held for collection of contractual
cash flows and for selling the financial assets, where the
assets' cash flows represent solely payments of principal
and interest, are measured at FVOCI. Movements in the
carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest
revenue and foreign exchange gains and losses which are
recognized in profit and loss. When the financial asset is
derecognized, the cumulative gain or loss previously
recognized in OCI is reclassified from equity to profit or
loss and recognized in other gains/ (losses). Interest
income from these financial assets is included in other
income using the effective interest rate method. At
present no financial assets fulfil this condition.
• Fair Value Through Profit or Loss(FVTPL): Assets that
do not meet the criteria for amortized cost or FVOCI are
measured at FVTPL. A gain or loss on a debt investment
that is subsequently measured at fair value through profit
or loss and is not part of a hedging relationship is
recognized in the Statement of Profit and Loss and
presented net in the Statement of Profit and Loss within
other gains/(losses) in the period in which it arises.
Interest income from these financial assets is included in
other income.
Equity instruments
All equity investments in scope of Ind AS 109, are
measured at fair value. At Equity instruments which are
held for trading are classified as at FVTPL. For all other
equity instruments, the Company may make an
irrevocable election to present in other comprehensive
income subsequent changes in the fair value. The
Company makes such election on an instrument by
instrument basis. The classification is made on initial
recognition and is irrevocable.
Where the Company's management has elected to
present fair value gains and losses on equity investments
in other comprehensive income, there is no subsequent
reclassification of fair value gains and losses to the
Statement of Profit and Loss, even on sale of investment.
Dividends from such investments are recognized in the
Statement of Profit and Loss as other income when the
Company's right to receive payments is established.
Changes in the fair value of financial assets at fair value
through profit or loss are recognized in other gain/
(losses) in the Statement of Profit and Loss. Impairment
losses (and reversal of impairment losses) on equity
investments measured at FVOCI are not reported
separately from other changes in fair value.
Investments in subsidiaries
Investments are carried at cost less accumulated
impairment losses, if any Where an indication of
impairment exists, the carrying amount of the investment
is assessed and written down immediately to its
recoverable amount. On disposal of investments, the
difference between net disposal proceeds and the
carrying amounts are recognized in the Statement of
Profit and Loss.
(iv) Impairment of financial assets
For all financial assets with contractual cash flows other
than trade receivable, ECLs are measured at an amount
equal to the 12-month ECL, unless there has been a
significant increase in credit risk from initial recognition in
which case those are measured at lifetime ECL. The
amount of ECLs (or reversal) for the period is recognised
as expense/income in the Statement of Profit and Loss.
(v) De recognition of financial assets
A financial asset is derecognized only when:
• The Company has transferred the rights to receive
cash flows from the financial asset or
• retains the contractual rights to receive the cash flows
of the financial asset, but assumes a contractual
obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company
evaluates whether it has transferred substantially all risks
and rewards of ownership of the financial asset. In such
cases, the financial asset is derecognized.
Where the entity has neither transferred a financial asset
nor retains substantially all risks and rewards of
ownership of the financial asset, the financial asset is
derecognized if the Company has not retained control of
the financial asset. Where the Company retains control of
the financial asset, the asset is continued to be recognised
to the extent of continuing involvement in the financial
asset.
i) Financial liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables, net
of directly attributable transaction costs.
Subsequent measurement
Financial liabilities at amortized cost
After initial measurement, such financial liabilities are
subsequently measured at amortized cost using the
effective interest rate (EIR) method. Amortized cost is
calculated by taking into account any discount or
premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortization is included in
finance costs in the profit or loss.
Trade and other payables
These amounts represent liabilities for goods and services
provided to the Company prior to the end of financial year
which are unpaid. The amounts are unsecured and are
usually paid within the operating cycle of the business.
Trade and other payables are presented as current
liabilities unless payment is not due within 12 months
after the reporting period. They are recognised initially at
their fair value and subsequently measured at amortized
cost using the effective interest method.
Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortized cost. Any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognised in the Statement of Profit and Loss
over the period of the borrowings using the effective
interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan.
Borrowings are removed from the Balance Sheet when
the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying
amount of a financial liability that has been extinguished
or transferred to another party and the consideration
paid, including any non-cash assets transferred or
liabilities assumed, is recognised in the Statement of
Profit and Loss as other gains/(losses).
Where the terms of a financial liability are renegotiated
and the entity issues equity instruments to a creditor to
extinguish all or part of the liability (debt for equity swap),
a gain or loss is recognised in the Statement of Profit and
Loss, which is measured as the difference between the
carrying amount of the financial liability and the fair value
of the equity instruments issued.
Borrowings are classified as current liabilities unless the
Company has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting
period. Where there is a breach of a material provision of
a long-term loan arrangement on or before the end of the
reporting period with the effect that the liability becomes
payable on demand on the reporting date, the entity does
not classify the liability as current, if the lender agreed,
after the reporting period and before the approval of the
financial statements for issue, not to demand payment as
a consequence of the breach.
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 or loss.
j) Offsetting 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 recognised amounts
and there is an intention to settle on a net basis or realize
the asset and settle the liability simultaneously. The
legally enforceable right 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 the counterparty.
k) Property plant and equipment
Freehold land is carried at historical cost. Other property,
plant and equipment are stated at historical cost of
acquisition net of recoverable taxes(wherever
applicable), less accumulated depreciation and
amortization, if any. Cost comprises the purchase price,
any cost attributable to bringing the assets to its working
condition for its intended use and initial estimate of costs
of dismantling and removing the item and restoring the
site if any.
Where cost of a part of the asset is significant to the total
cost of the assets and useful lives of the part is different
from the remaining asset, then useful live of the part is
determined separately and accounted as separate
component.
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. The carrying
amount of any component accounted for as a separate
asset is derecognized when replaced. All other repairs and
maintenance are charged to the Statement of Profit and
Loss during the reporting period in which they are
incurred.
An asset's carrying amount is written down to its
recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount.
An item of property, plant and equipment and any
significant part initially recognised is derecognized upon
disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising
on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying
amount of the asset) is included in the Statement of Profit
or Loss when the asset is derecognized.
The Company has elected to continue with the carrying
value for all of its property, plant and equipment as
recognised in the financial statements on transition to Ind
AS, measured as per the previous GAAP and use that as its
deemed cost as at the date of transition.
l) Intangible assets
An intangible asset is recognised when it is probable that
the future economic benefits attributable to the asset will
flow to the enterprise and where its cost can be reliably
measured. Intangible assets are stated at cost of
acquisition less accumulated amortization and
impairment losses, if any. Cost comprises the purchase
price and any cost attributable to bringing the assets to its
working condition for its intended use.
Cost of Internally generated asset comprises of all
expenditure that can be directly attributed, or allocated
on a reasonable and consistent basis, to create, produce
and make assets ready for its intended use.
Losses arising from retirement of , and gains or losses on
disposals of intangible assets are determined as the
difference between net disposal proceeds with carrying
amount of assets and recognised as income or expenses
in the Statement of Profit and Loss.
The Company has elected to continue with the carrying
value for all of its intangible assets as recognised in the
financial statements on transition to Ind AS, measured as
per the previous GAAP and use that as its deemed cost as
at the date of transition.
m) Capital work in progress/ Intangible under development
Capital Work in progress/ Intangible under development
represents expenditure incurred in respect of capital
projects/ intangible assets under development and are
carried at cost. Cost includes related acquisition
expenses, development cost, borrowing cost(wherever
applicable) and other direct expenditures.
The Company has elected to continue with the carrying
value for all of its Capital Work in progress/ Intangible
under development as recognised in the financial
statements on transition to Ind AS, measured as per the
previous GAAP and use that as its deemed cost as at the
date of transition.
n) Depreciation and amortization
Depreciation on property plant and equipment has been
provided on straight line method in accordance with the
provisions of Part C of Schedule II of the Companies Act
2013. The Management believes that the estimated
useful lives as per the provisions of Schedule II to the
Companies Act, 2013, except for moulds and dies, are
realistic and reflect fair approximation of the period over
which the assets are likely to be used.
Based on internal assessment and technical evaluation,
the management has assessed useful lives of moulds and
dies as five years, which is different from the useful lives as
prescribed under Part C of Schedule II of the Companies
Act, 2013.
Depreciation and amortization on addition to property
plant and equipment is provided on pro rata basis from
the date of assets are ready to use. Depreciation and
amortization on sale/deduction from property plant and
equipment is provided for upto the date of sale,
deduction, discardment as the case may be.
The residual values, useful lives and methods of
depreciation of property, plant and equipment and
intangible assets are reviewed at each financial year end
and adjusted prospectively, if appropriate.
All assets costing Rs. 5,000 or below are depreciated/
amortized by a one-time depreciation/amortization
charge in the year of purchase.
o) Borrowing costs
Borrowing cost includes interest calculated using the
effective interest rate method and amortization of
ancillary cost incurred in connection with the
arrangement of borrowings. General and specific
borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying
asset are capitalized during the period of time that is
required to complete and prepare the asset for its
intended use or sale. Qualifying assets are assets that
necessarily take a substantial period of time to get ready
for their intended use or sale.
All Other borrowing costs are expensed in the period in
which they are incurred.
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