II. Significant Accounting Policies followed by the Company '
(a) Basis of preparation
(i) Compliance with Ind AS
These financial statements have been prepared in accordance with the Indian Accounting
Standards (hereinafter referred to as the 'Ind AS') as notified by Ministry of Corporate
Affairs pursuant to Section 133 of the Companies Act, 2013 ('Act') read with of the Companies
(Indian Accounting Standards) Rules,2015 as amended and other relevant provisions of the
Act.
The accounting policies are applied consistently to all the periods presented in the financial
statements.
(ii) Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the
following:
1) Certain financial assets and liabilities that are measured at fair value;
2) Assets held for sale - measured at lower of carrying amount or fair value less cost to sell;
3) Defined benefit plans - plan assets measured at fair value;
(iii) Current non-current classification
All assets and liabilities have been classified as current or non-current as per the Company's
normal operating cycle (twelve months) and other criteria set out in the Schedule III to the Act.
(iv) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the
nearest lakhs as per the requirement of Schedule III, unless otherwise stated.
(b) Use of estimates and judgments
The estimates and judgments used in the preparation of the financial statements are continuously
evaluated by the Company and are based on historical experience and various other assumptions
and factors (including expectations of future events) that the Company believes to be reasonable
under the existing circumstances. Differences between actual results and estimates are recognised in
the period in which the results are known/materialised.
The said estimates are based on the facts and events, that existed as at the reporting date, or
that occurred after that date but provide additional evidence about conditions existing as at the
reporting date.
(c) Property, Plant and Equipment
The Company has applied for the one-time transition exemption of considering the carrying cost on
the transition date i.e., April 1,2016 as the deemed cost under IND AS, hence regarded thereafter
as historical cost.
Freehold land is carried at cost. All other items of property, plant and equipment are stated al
cost less depreciation and impairment, if any. Historical cost includes expenditure that is directly
attributable to the acquisition of the items
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 derecognised 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.
Depreciation methods, estimated useful lives and residual value
Depreciation on tangible fixed assets is provided using the straight-line method as prescribed under
Schedule II to the Companies Act 2013 and is charged to the statement of profit and loss. In respecl
of individual assets costing less than ' 5000 the policy of the Company is to charge depreciation al
95% of the cost on pro-rata basis to the period of use, considering the useful life of assets as less
than 1 year.
The residual values are not more than 5% of the original cost of the asset. The assets residual values
and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
In case of pre-owned assets, the useful life is estimated on a case-to-case basis.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These
are included in the Statement of Profit and Loss.
(d) Investment properties
Property that is held for long-term investments for capital appreciation, and that is not occupied
by the Company, is classified as investment property. Investment property is measured at its cost,
including related transaction costs and where applicable borrowing costs and impairment if any.
(e) Intangible assets
Computer software
Computer software are stated at cost, less accumulated amortisation and impairments, if any.
Amortisation method and useful life
The Company amortizes computer software using the straight-line method over the period of 3
years.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These
are included in the Statement of Profit and Loss.
(f) Lease
Operating Lease
The Company has adopted the new accounting standard Ind AS 116 "Leases" Ind AS 116 is
a single lessee accounting model and sets out the principles for the recognition, measurement,
presentation and disclosure of leases for both lessees and lessors.
As a lessee: The Company's lease assets primarily consist of office premises which are of short¬
term lease with the term of twelve months or less and low value leases. For these short term and
low value leases, the Company has recognized the lease payments as an expense in the Statement
of Profit and Loss on a straight-line basis over the term of lease. 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. 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: Leases in which the Company does not transfer substantially all the risks and rewards
of ownership of an asset are classified as operating leases. Rental income from operating lease
is recognised on a straight-line basis over the term of the relevant lease unless the receipts are
structured to increase in line with expected general inflation to compensate for the lessor's expected
inflationary cost increases. Initial direct costs incurred in negotiating and arranging an operating
lease are added to the carrying amount of the leased asset and recognised over the lease term
on the same basis as rental income. Contingent rents are recognised as revenue in the period in
which they are earned.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership
transfer from the Company to the lessee. Amounts due from lessees 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.
(g) Cash and Cash Equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes
cash on hand, bank overdraft, 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
known amounts of cash and which are subject to an insignificant risk of changes in value.
(h) Inventories
Inventories of Raw Materials, Work-in-Progress, Stores and spares, Finished Goods and Stock-in¬
trade are stated 'at cost or net realisable value, whichever is lower'. Goods-in-Transit are stated
'at cost'. Cost comprises all cost of purchase, cost of conversion and other costs incurred in bringing
the inventories to their present location and condition. Cost formulae used are 'First-in-First-out',
'Weighted Average cost' or 'Specific identification', as applicable. Due allowance is estimated and
made for defective and obsolete items, wherever necessary.
(i) Investments and other financial assets
(i) Classification
The Company classifies its financial assets in the following measurement categories:
(1) Those to be measured subsequently at fair value (either through other comprehensive
income, or through the Statement of Profit and Loss), and
(2) Those measured at amortised cost.
The classification depends on the Company's business model for managing the financial
assets and the contractual terms of the cash flows.
(ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value. Transaction
costs of financial assets carried at fair value through the Profit and Loss are expensed in the
Statement of Profit and Loss.
(1) Amortised 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 amortised
cost. Interest income from these financial assets is included in other income using the effective
interest rate method.
(2) Fair value through profit and loss: Assets that do not meet the criteria for amortised cost
are measured at fair value through Profit and Loss. Interest income from these financial
assets is included in other income.
(3) Fair value through other comprehensive income: Assets are measured at fair value
through other comprehensive income if financial assets are held within business model
whose objective is achieved by both collecting contractual cash flows on specified dates
that are solely payments of principal and interest on the principal amount outstanding and/
or selling financial assets.
Equity instruments:
The Company measures its equity investment other than in subsidiaries, joint ventures and
associates at fair value through profit and loss. However, where the Company's management
makes an irrevocable choice on initial recognition to present fair value gains and losses on
specific equity investments in other comprehensive income (Currently no such choice made),
there is no subsequent reclassification, on sale or otherwise, of fair value gains and losses to
the Statement of Profit and Loss.
(iii) Impairment of financial assets
The Company measures the expected credit loss associated with its assets based on historical
trend, industry practices and the business environment in which the entity operates or any other
appropriate basis. The impairment methodology applied depends on whether there has been
a significant increase in credit risk in the normal operation at the end of each reporting period.
(iv) Income Recognition
Interest Income
Interest on investments is recognized on a time proportion basis taking into account the amounts
invested and the rate of interest.
Dividends
Dividends are recognised in the Statement of Profit and Loss only when the right to receive
payment is established.
(j) Impairment of non-financial assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation
and are tested annually for impairment, or more frequently if events or changes in circumstances
indicate that they might be impaired. Other assets are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and
value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows which are largely independent of the cash
inflows from other assets or group of assets (cash-generating units). Non-financial assets other than
goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the
end of each reporting period.
(k) Non-current assets held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use and a sale is considered
highly probable. They are measured at the lower of their carrying amount and fair value less
costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits,
financial assets and contractual rights under insurance contracts, which are specifically exempt from
this requirement.
Non-current assets are not depreciated or amortised while they are classified as held for sale.
(l) Derivative financial instruments
Derivative financial instruments such as forward contracts, option contracts and cross currency swaps,
to hedge its foreign currency risks are initially recognised at fair value on the date a derivative
contract is entered into and are subsequently re-measured at their fair value with changes in fair
value recognised in the Statement of Profit and Loss in the period when they arise.
(m) Segment Reporting:
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision maker.
(n) Borrowings
Borrowings are initially recognised at net of transaction costs incurred and measured at amortised
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.
(o) Borrowing costs
Interest and other borrowing costs attributable to qualifying assets are capitalised. Other interest
and borrowing costs are charged to Statement of Profit and Loss.
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