C. Material accounting policies
A summary of the material accounting policies applied in the preparation of the financial statements are as given
below. These accounting policies have been applied consistently to all periods presented in the financial statements.
1. Current and non-current classification
The Company presents assets and liabilities in the balance sheet based on current/non-current classification.
An asset is current when it is:
• Expected to be realized or intended to sold or consumed in normal operating cycle;
• Held primarily for the purpose of trading;
• Expected to be realized within twelve months after the reporting period; or
• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.
All other assets including deferred tax asset are classified as non-current.
A liability is current when:
• It is expected to be settled in normal operating cycle;
• It is held primarily for the purpose of trading;
• It is due to be settled within twelve months after the reporting period; or
• There is no unconditional right to defer settlement of the liability for at least twelve months after the reporting
period.
All other liabilities including deferred tax liability are classified as non-current.
2. Property Plant & Equipment
2.1. Initial recognition and measurement
Items of Property, Plant and Equipment are measured at cost less accumulated depreciation/amortization
and accumulated impairment losses. Cost includes expenditure that is directly attributable to bringing the
asset, inclusive of non-refundable taxes & duties, to the location and condition necessary for it to be capable
of operating in the manner intended by management.
When parts of an item of property, plant and equipment have different useful lives, they are recognized
separately.
Items of spare parts, stand-by equipment and servicing equipment which meet the definition of Property,
Plant and Equipment are capitalized.
2.2. Subsequent costs
Subsequent expenditure is recognized as an increase in the carrying amount of the asset when it is probable
that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the
item can be measured reliably.
The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount
of the item if it is probable that the future economic benefits embodied within the part will flow to the Company
and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs
of the day-to-day servicing of Property, Plant and Equipment are recognized in Statement of Profit and Loss
as incurred.
2.3. De-recognition
Property, Plant and Equipment are derecognized when no future economic benefits are expected from their
use or upon their disposal. Gains and losses on disposal of an item of Property, Plant and Equipment are
determined by comparing the proceeds from disposal with the carrying amount of Property, Plant and
Equipment, and are recognized in the Statement of Profit and Loss.
2.4. Depreciation/Amortization
Depreciation is recognized in Statement of Profit and Loss on a Straight-line method basis over the estimated
useful lives of each part of an item of Property, Plant and Equipment.Leasehold lands are amortized over
the lease term unless it is reasonably certain that the Company will obtain ownership by the end of the lease
term.
Assets costing up to Rs. 5,000/- are fully depreciated in the year of acquisition.
Depreciation on additions to/deductions from Property, Plant and Equipment during the year is charged on
pro-rata basis from/up to the date on which the asset is available for use/disposed.
Where it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise
and the cost of the item can be measured reliably, subsequent expenditure on a Property, Plant and Equipment
along-with its unamortized depreciable amount is charged off prospectively over the revised useful life
determined by technical assessment.
In circumstance, where a property is abandoned, the cumulative capitalized costs relating to the property
are written off in the same period.
For charging depreciation falling useful life is considered based on the internal technical assessment by the
management or as per Schedule III of Companies Act, 2013.
3. Capital work-in-progress
The cost of self-constructed assets includes the cost of materials & direct labour, any other costs directly
attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the
manner intended by management and borrowing costs.
Expenses directly attributable to construction of property, plant and equipment incurred till they are ready for
their intended use are identified and allocated on a systematic basis on the cost of related assets.
4. Intangible assets and Intangible Assets under Development
4.1. Initial recognition and measurement
Intangible Assets are stated at cost of acquisition net of recoverable taxes, trade discount and rebates less
accumulated amortization /depletion and impairment loss, if any. Such cost includes purchase price, borrowing
costs, and any cost directly attributable to bringing the asset to its working condition for the intended use,
net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable
to the intangible assets. 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.
Expenditure incurred which are eligible for capitalizations under intangible assets are carried as intangible
assets under development till they are ready for their intended use.
4.2. De-recognition
An intangible asset is derecognized when no future economic benefits are expected from their use or upon
their disposal. Gains and losses on disposal of an item of intangible assets are determined by comparing
the proceeds from disposal with the carrying amount of intangible assets and are recognized in the statement
of profit and loss.
4.3. Amortization
Intangible assets having definite life are amortized on straight line method over their useful lives. Useful life
of computer software is estimated at 3 years.If life of any intangible asset is indefinite, then it is not amortized
and tested for Impairment at the reporting date.
5. Borrowing Cost
Borrowingcosts that are directly attributable to the acquisition, construction/exploration/development or erection
of qualifying assets are capitalized as part of cost of such asset until such time the assets are substantially
ready for their intended use. Qualifying assets are assets which take a substantial period of time to get ready for
their intended use or sale. All other borrowing costs are charged to revenue as and when incurred.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing cost eligible for capitalization.
6. Inventories
Inventories are valued at the lower of cost and net realizable value.
(i) The cost of raw materials, stores, components at factories are taken at weighted average rate, after providing
for obsolescence.
(ii) The cost of finished goods is determined by taking material, labour and related factory overheads including
depreciation on Property, Plant and Equipment. The cost of work in process is taken at material cost and
stage-wise overhead cost including depreciation on Property, Plant and Equipment.
Spare parts other than those capitalized as Property, Plant and Equipment are carried as inventory.
The diminution in the value of obsolete, unserviceable and surplus stores & spares is ascertained on review and
provided for.
7. Cash and Cash Equivalent
Cash and cash equivalent in the Balance Sheet comprises cash at banks, cash in hand and short-term deposits
with an original maturity of three months or less, which are subject to insignificant risk of change in value.
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