2A Material accounting policies
This note provides a list of the material
accounting policies adopted in the preparation
of these standalone financial statements
('financial statements'). These policies have been
consistently applied to all the years presented,
unless otherwise stated.
i. Basis of Preparation
(a) Compliance with Ind AS
The financial statements comply in all
material aspects with Indian Accounting
Standards (Ind AS) notified under Section
133 of the Companies Act, 2013 ('the Act')
[Companies (Indian Accounting Standards)
Rules, 2015] (as amended) ('the Rules') and
other relevant provisions of the Act.
(b) Historical cost convention
The financial statements have been prepared
on a historical cost basis, except for the
following:
• Certain financial assets and liabilities
that are measured at fair values;
• Assets held for sale - measured at fair
value less cost to sell or their carrying
amount whichever is lower;
• Defined benefit plans - plan assets
measured at fair value, and
• Share-based payments
(c) New and amended standards adopted by the
Company
The Ministry of Corporate Affairs vide
notification dated September 09, 2024
notified the Companies (Indian Accounting
Standards) Second Amendment Rules,
2024 and Companies (Indian Accounting
Standards) Third Amendment Rules, 2024,
respectively, which amended / notified
certain accounting standards (see below),
and are effective for annual reporting period
on or after April 01,2024:
• Insurance contracts - Ind AS 117
• Lease Liability in Sale and Leaseback -
Amendments to Ind AS 116
The other amendments to Ind AS notified
by these rules are primarily in the nature of
clarifications.
These amendments did not have any material
impact on the amounts recognized in prior
periods and are not expected to significantly
affect the current or future periods.
ii. Segment Reporting
Operating segments are reported in a manner
consistent with the internal reporting provided to
the Chief Operating Decision Maker ("CODM”) of
the Company. The CODM consists of Chairman
and Managing Director who are responsible for
allocating resources and assessing performance
of the operating segments. Refer Note 45 for
segment information presented.
iii. Revenue Recognition
Sale of goods
Revenue is recognized when the control of the
goods is transferred to customer, being when the
goods are shipped or delivered to the customer
and there are no unfulfilled obligations that could
affect the customer's acceptance of the goods.
Delivery occurs when the goods have been
shipped or delivered to the specific location as the
case may be, the risks of obsolescence and loss
has been transferred, and either the customer has
accepted the goods in accordance with the sales
contract, or the Company has objective evidence
that all criteria for acceptance have been satisfied.
Revenue is recognized based on the price specified
in the contract, net of any trade discounts, volume
rebates and any taxes or duties collected on behalf
of the Government, which are levied on sales
such as goods and services tax, sales tax, value
added tax, etc. Discounts given includes rebates,
price reductions and other incentives given to
customers. The Company bases its estimates
on historical results, taking into consideration
the type of customer, the type of transaction and
the specifics of each arrangement. Accumulated
experience is used to estimate and provide for the
discounts and returns. The volume discounts are
assessed based on anticipated annual purchases.
No element of financing is deemed present
as sales are made with a credit term which is
consistent with market practice.
A receivable is recognized when the goods are
shipped or delivered, as per the terms of sales
contract as this is the point in time that the
consideration is unconditional because only the
passage of time is required before the payment is
due.
Sale of services
Revenue from services is recognized in the
accounting period in which the services are
rendered.
In the case of fixed-price contracts, the customer
pays the fixed amount based on a payment
schedule. If the services rendered by the
Company exceed the payment, a contract asset is
recognized. If the payments exceed the services
rendered, a contract liability is recognized.
iv. Property, plant and equipment:
Freehold land is carried at historical cost. All other
items of property, plant and equipment are stated
at historical cost net of accumulated depreciation
and accumulated impairment losses, if any.
Depreciation methods, estimated useful lives and
residual value:
Depreciation is provided on the straight-line
method to allocate the cost of assets, net of their
residual values, over their estimated useful lives.
Depreciation is calculated on a pro-rata basis from
the date of acquisition / installation till the date the
assets are sold or disposed of:
Leasehold land presented under Right-of-Use
Assets.
Individual assets acquired for less than ' 0.05
Lakhs are entirely depreciated in the year of
acquisition. The residual values are not more than
5% of the original cost of the asset.
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
are included in the Statement of Profit and Loss
within other gains / (losses).
The carrying amount of an asset is written down
immediately to its recoverable amount if the
carrying amount of the asset is greater than its
estimated recoverable amount.
Refer note 2B (v) in other accounting policies
below relevant to Property, plant and equipment.
v. Intangible assets
Computer software includes enterprise resource
planning project and other cost relating to such
software which provides significant future
economic benefits. These costs comprise of
license fees and cost of system integration
services.
Computer software cost is amortized over a period
of 3 years using straight-line method.
Refer note 2B (vii) in other accounting policies
below relevant to Intangible assets.
vi. Investment properties:
Land and building that is held for long-term rental
yields or for capital appreciation or both, and
that is not in use by the Company, is classified
as investment property. Land held for a currently
undetermined future use is also classified as an
investment property.
The building component of investment properties
net of residual value are depreciated using the
straight-line method over their estimated useful
life of 30 to 60 years from the date of capitalization.
Refer note 2B (viii) in other accounting policies
below relevant to Investment properties.
vii. Impairment of assets:
The carrying amount of assets are reviewed at
each Balance Sheet date to assess if there is
any indication of impairment based on internal
/ external factors. An impairment loss on
such assessment will be recognized wherever
the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount of
the assets is fair value less cost of disposal. A
previously recognized impairment loss is further
provided or reversed depending on changes in
the circumstances and to the extent that carrying
amount of the assets does not exceed the carrying
amount that will be determined if no impairment
loss had previously been recognized.
viii. Trade receivables
Trade receivables are amounts due from
customers for goods sold or services performed
in the ordinary course of business and reflects
Company's unconditional right to consideration
(that is, payment is due only on the passage of
time). Trade receivables are recognized initially
at the transaction price as they do not contain
significant financing components. The Company
holds the trade receivables with the objective of
collecting the contractual cash flows and therefore
measures them subsequently at amortized cost
using the effective interest method, less loss
allowance.
ix. Inventories
Raw materials, packing materials, work-in¬
progress, finished goods, goods in transit, stock-
in-trade, stores and spares other than specific
spares for machinery are valued at cost or net
realizable value whichever is lower.
Items of inventory are valued at cost or net
realizable value, whichever is lower after providing
for obsolescence and other losses, where
considered necessary. Cost is determined on the
following basis:
• Stores, spares, raw materials, packaging
material and stock-in-trade - Weighted
average cost
• Work-in-progress and finished goods -
Material cost plus appropriate value of
overheads
• Others (land) - At cost on conversion to
stock-in-trade plus cost of improvement
Cost comprises all costs of purchase, costs of
conversion and other costs incurred in bringing
the inventory to the present location and condition.
Due allowances are made for slow moving and
obsolete inventories based on estimates made by
the Company. Items such as spare parts, stand-by
equipment and servicing equipment which is not
plant and machinery gets classified as inventory.
x. Investments and other financial assets
(a) 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 business
model of the entity for managing financial
assets and the contractual terms of the cash
flows.
For assets measured at fair value, gains and
losses will either be recorded the 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 that are not held for
trading, this will depend on whether the
Company has made an irrevocable election
(on an instrument-by-instrument basis) at
the time of initial recognition to account for
the equity investment at fair value through
other comprehensive income.
(b) Subsequent measurement
After initial recognition, financial assets are
measured at:
• Fair value {through Other Comprehensive
Income (FVOCI) or through profit or loss
(FVPL)} or,
• Amortized cost
Equity instruments:
The Company subsequently measures all
investments in equity instruments other than
subsidiary Company, associate Company and
joint venture at fair value. The Management
of the Company has elected to present
fair value gains and losses on such equity
investments in other comprehensive income.
There is no subsequent reclassification of
fair value gains and losses to the Statement
of Profit and Loss where FVOCI option is
chosen. Dividends from such investments
continue to be recognized in the Statement
of Profit and Loss as other income when the
right to receive payment is established.
Changes in the fair value of financial assets
at fair value through profit or loss are
recognized 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 subsidiary companies:
Investments in subsidiary companies is
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 in subsidiary
companies, the difference between net
disposal proceeds and the carrying amounts
are recognized in the Statement of Profit and
Loss.
(c) Impairment of financial assets
The Company assesses on a forward looking
basis the expected credit losses associated
with its assets carried at amortized cost (e.g.
trade receivables, other contractual rights to
receive cash or other financial assets). The
impairment methodology applied depends
on whether there has been a significant
increase in credit risk.
For trade receivables only, the Company
applies the simplified approach required
by Ind AS 109, which requires expected
lifetime losses to be recognized from initial
recognition of the receivables.
The Company's assessment is that credit
risk in relation to sales made to government
customers or sub-contractors to government
customers is extremely low as the probability
of default is insignificant.
For all non-government customers, the
Company has used a practical expedient by
computing the expected credit loss allowance
for trade receivables based on a provision
matrix by taking into consideration payment
profiles over a period of 36 months before
the reporting date and the corresponding
historical credit loss experience within this
period. The historical loss rates are adjusted
to reflect the current and forward looking
information on macro economic factors
affecting the ability of customers to settle
receivables. The expected credit loss is
based on aging of days, the receivables due
and the expected credit loss rate. Further, the
Company assesses credit risk on an individual
basis in respect of certain customers in case
of event driven situation such as litigations,
disputes, change in customer's credit risk
history, specific provision are made after
evaluating the relevant facts and expected
recovery.
(d) Income recognition:
• Interest income
Interest income from financial assets
at amortized cost is calculated using
the effective interest rate method and
is recognized in the Statement of Profit
and Loss.
Interest income is calculated by
applying the effective interest rate to
the gross carrying amount of a financial
asset except for financial assets that
subsequently become credit impaired.
For credit impaired financial assets the
effective interest rate is applied to the
net carrying amount of the financial
asset (after the deduction of loss
allowance).
Ý Dividends
Dividends are recognized in the
Statement of Profit and Loss only
when the right to receive payment
is established, it is probable that the
economic benefits associated with
the dividend will flow to the Company,
and the amount of the dividend can be
measured reliably.
Refer note 2B (viii) in other accounting
policies below relevant to Investment
and other financial assets.
ti. Financial liabilities and equity instruments
(i) Classification as debt or equity
Debt and equity instruments issued by
the entity are classified as either financial
liabilities or as equity in accordance with the
substance of the contractual arrangements
and the definition of a financial liability and
an equity instrument.
(ii) Initial recognition and measurement
Financial liabilities are recognized when the
Company becomes a party to the contractual
provisions of the instrument. Financial
liabilities are initially measured at the fair
value.
(iii) Subsequent measurement
Financial liabilities are subsequently
measured at amortized cost using the
effective interest rate method. Financial
liabilities carried at fair value through profit
or loss are measured at fair value with all
changes in fair value recognized in the
Statement of Profit and Loss.
(iv) Derecognition
A financial liability is de-recognized when
the obligation specified in the contract is
discharged, cancelled or expires. A financial
liability is extinguished when the debtor
either:
a) discharges the liability by paying the
creditor, normally with cash, other
financial assets, goods or services or;
b) is legally released from primary
responsibility for the liability either by
process of law or by the creditor.
xii. 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
recognized 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.
xiii. Employee benefits
(a) Post-employment obligations
Defined Benefits plan
Gratuity liability is a defined benefit obligation
and is computed on the basis of an actuarial
valuation by an actuary appointed for the
purpose as per projected unit credit method
at the end of each financial year. The liability
or asset recognized in the Balance Sheet
is the present value of the defined benefit
obligation at the end of the reporting period
less the fair value of plan assets. The liability
so provided is paid to trusts administered
by the Company for all employees, which in
turn invests in eligible securities to meet the
liability as and when it accrues for payment in
future. Any shortfall in the value of assets over
the defined benefit obligation is recognized
as a liability with a corresponding charge to
the Statement of Profit and Loss.
Provident fund contributions for certain
employees are made to a trust administered
by the Company in India. The Company's
liability is actuarially determined (using the
Projected Unit Credit method) at the end
of the year and any shortfall in the fund
balance maintained by the Trust set up
by the Company is additionally provided.
Actuarial losses and gains are recognized in
other comprehensive income and shall not
be reclassified to the Statement of Profit and
Loss in a subsequent period.
Defined contribution plan
The Company contributes towards
Employees State Insurance Scheme, Family
Pension Fund, Superannuation Fund and
Provident Fund for certain employees, which
are defined contribution schemes.
Refer note 2B (xvii) in other accounting
policies below relevant to Employee benefits.
2.1 Critical estimates and judgments
The preparation of financial statements requires
the use of accounting estimates which, by
definition, will seldom equal the actual results.
Management also needs to exercise judgment in
applying the Company's accounting policies.
This note provides an overview of the areas
that involved a higher degree of judgment or
complexity, and of items which are more likely
to be materially adjusted due to estimates and
assumptions turning out to be different than those
originally assessed. Detailed information about
each of these estimates and judgments is included
in relevant notes together with information about
the basis of calculation for each affected line
item in the financial statements. In addition, this
note also explains where there have been actual
adjustments this year as a result of changes to
previous estimates.
The areas involving critical estimates or judgments
are:
• Estimation of useful life of property, plant and
equipment: Notes 2A(iv), 2B(v) and 3(a)
• Loss Allowance on trade receivables: Refer
Notes 10 and 39
• Recoverability of deferred tax assets: Refer
Note 36
• Estimation of defined benefit obligation:
Note 41
• Contingent Liabilities: Note 43
Estimates and judgments are continually
evaluated. They are based on historical experience
and other factors, including expectations of future
events that may have a financial impact on the
Company and that are believed to be reasonable
under the circumstances.
2B Summary of other accounting policies
This note provides a list of other accounting
policies adopted in the preparation of these
financial statements to the extent they have not
already been disclosed in note 2A above. These
policies have been consistently applied to all the
years presented, unless otherwise stated.
i. Foreign Currency Transactions
a) Functional and presentation currency
Items included in the financial statements
of the Company are measured using
the currency of the primary economic
environment in which the Company operates
('the functional currency'). The financial
statements are presented in Indian Rupee
('), which is the functional and presentation
currency of the Company.
b) Transactions and balances
Foreign currency transactions are
translated into the functional currency
using the exchange rates at the dates of
the transactions. Foreign exchange gains
and losses resulting from the settlement of
such transactions and from the translation of
monetary assets and liabilities denominated
in foreign currencies at year end exchange
rates are generally recognized in the
Statement of Profit and Loss.
Non-monetary items that are measured at
fair value in a foreign currency are translated
using the exchange rates at the date when
the fair value was determined. Translation
differences on assets and liabilities carried at
fair value are reported as part of the fair value
gain or loss.
ii. Income tax
The income tax expense or credit for the period is
the tax payable on the taxable income of the current
period based on the applicable income tax rates
adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences and
unused tax losses. The current income tax charge
is calculated on the basis of the tax laws enacted
or substantively enacted at the end of the reporting
period. The Management periodically evaluates
positions taken in tax returns with respect to
situations in which applicable tax regulation is
subject to interpretation and considers whether it
is probable that a taxation authority will accept an
uncertain tax treatment. The Company measures
its tax balances either based on the most likely
amount or the expected value, depending on
which method provides a better prediction of the
resolution of the uncertainty.
Deferred income tax is provided in full, using the
liability method, on temporary differences arising
between the tax bases of assets and liabilities
and their carrying amounts. Deferred income tax
is also not accounted for if it arises from initial
recognition of an asset or liability in a transaction
other than a business combination that at the time
of the transaction affects neither accounting profit
nor taxable profit / (tax loss). Deferred income
tax is determined using tax rates (and laws) that
have been enacted or substantially enacted by
the Balance Sheet date and are expected to apply
when the related deferred income tax asset is
realized or the deferred income tax liability is
settled.
Deferred tax assets are recognized for all deductible
temporary differences and unused tax losses only
if it is probable that future taxable amounts will
be available to utilize those temporary differences
and losses.
Deferred tax assets and liabilities are offset
when there is a legally enforceable right to offset
current tax assets and liabilities and when the
deferred tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are
offset where the entity has a legally enforceable
right to offset and intends either to settle on a net
basis, or to realize the asset and settle the liability
simultaneously.
Current and deferred tax is recognized in the
Statement of Profit or Loss, except to the extent
that it relates to items recognized in Other
Comprehensive Income or directly in equity. In
this case, the tax is also recognized in Other
Comprehensive Income or directly in equity,
respectively.
iii. Government grants
Government grants 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 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 in
proportion to depreciation over the expected lives
of the related assets and presented within other
income.
Government grants relating to income are deferred
and recognized in the Statement of Profit and Loss
over the period necessary to match them with the
costs that they are intended to compensate and
presented within other income.
Eligible export incentives are recognized in the
year in which the conditions precedent are met
and there is no significant uncertainty about the
collectability.
iv. Leases
As a lessee
The Company's lease asset classes primarily
consist of leases for Land and Buildings. The
Company assesses whether a contract is or
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.
At the date of commencement of the lease, the
Company recognizes a right-of-use asset ("ROU”)
and a corresponding lease liability for all lease
arrangements in which it is a lessee, except for
leases with a term of twelve months or less (short
term leases) and leases of low value assets. For
these short term and leases of low value assets,
the Company recognizes the lease payments as
an operating expense on a straight-line basis over
the term of the lease.
The lease liability is initially measured 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. 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.
The right-of-use 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, if any. Right-of-use
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.
A lease liability is remeasured upon the occurrence
of certain events such as a change in the lease
term or a change in an index or rate used to
determine lease payments. The remeasurement
normally also adjusts the leased assets.
As a lessor
Lease income from operating leases where the
Company is a lessor is recognized in income on
a straight-line basis over the lease term unless
the receipts are structured to increase in line
with expected general inflation to compensate
for the expected inflationary cost increases.
The respective leased assets are included in the
Balance Sheet based on their nature.
v. Property, Plant and Equipment
Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the carrying
amount of asset 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 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 expenses are charged to the
Statement of Profit and Loss during the reporting
period in which they are incurred.
Spare parts, stand-by equipment and servicing
equipment are recognized as property, plant and
equipment if they are held for use in the production
or supply of goods or services, for rental to others,
or for administrative purposes and are expected to
be used during more than one period.
Property, plant and equipment which are not ready
for intended use as on the date of Balance Sheet
are disclosed as 'Capital work-in-progress'.
Leasehold improvements are amortized over the
period of lease or estimated useful lives of such
assets, whichever is lower. Period of lease is either
the primary lease period or where the Company as
a lessee has the right of renewal of lease, and it
is intended to renew for further periods, then such
extended period.
The estimated useful life and depreciation method
are reviewed at the end of each annual reporting
period, with the effect of any changes in the
estimate being accounted for on a prospective
basis.
Refer note 2A (iv) in material accounting policies
above relevant to Property, plant and equipment.
vi. Transition to Ind AS
On transition to Ind AS, the Company has elected
to continue with the carrying value of all of
its property, plant and equipment, investment
properties and intangible assets recognized
as at April 01, 2016 measured under IGAAP
as the deemed cost of the property, plant and
equipment, investment properties and intangible
assets.
vii. Intangible assets
Capitalized development costs are recorded as
intangible assets and amortized from the point at
which the asset is available for use.
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
are included in the Statement of Profit and Loss
within other gains (net).
The estimated useful life and amortization method
are reviewed at the end of each annual reporting
period, with the effect of any changes in the
estimate being accounted for on a prospective
basis.
Refer note 2A (v) in material accounting policies
above relevant to Intangible assets.
Research and development:
Research expenditure and development
expenditure that do not meet the capitalization
criteria as mentioned above are recognized as
an expense as incurred. Development costs
previously recognized as an expense are not
recognized as an asset in a subsequent period.
viii. Investment properties
Investment property is measured initially at its
acquisition cost, including related transaction
costs and where applicable borrowing costs.
Subsequent expenditure is capitalized to the
asset's carrying amount only when it is probable
that future economic benefits associated with
the expenditure will flow to the Company and the
cost of the item can be measured reliably. All other
repairs and maintenance costs are expensed when
incurred. When part of an investment property is
replaced, the carrying amount of the replaced part
is derecognized.
Refer note 2A (vi) in material accounting policies
above relevant to Investment properties.
ix. Cash and cash equivalents
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 known 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.
x. 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. Trade payables
are presented as current liabilities unless payment
is not due within 12 months after the reporting
period. They are recognized initially at their fair
value and subsequently measured at amortized
cost using the effective interest method.
xi. Non-current assets (or disposal groups) held for
sale and discontinued operations
Non-current assets (or disposal groups) 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.
An impairment loss is recognized for any initial or
subsequent write-down of the asset (or disposal
group) to fair value less costs to sell. A gain is
recognized for any subsequent increases in fair
value less costs to sell of an asset (or disposal
group), but not in excess of any cumulative
impairment loss previously recognized. A gain or
loss not previously recognized by the date of the
sale of the non-current asset (or disposal group)
is recognized at the date of de-recognition.
Non-current assets (including those that are
part of a disposal group) are not depreciated or
amortized while they are classified as held for
sale. Interest and other expenses attributable to
the liabilities of a disposal group classified as held
for sale continue to be recognized.
Non-current assets classified as held for sale and the
assets of a disposal group classified as held for sale
are presented separately from the other assets in
the Balance Sheet. The liabilities of a disposal group
classified as held for sale are presented separately
from other liabilities in the Balance Sheet.
A discontinued operation is a component of the
entity that has been disposed of or is classified as
held for sale and that represents a separate major
line of business or geographical area of operations,
is part of a single co-ordinated plan to dispose of
such a line of business or area of operations, or
is a subsidiary acquired exclusively with a view to
resale. The results of discontinued operations are
presented separately in the Statement of Profit
and Loss.
xii. Investments and other financial assets
(a) Initial recognition and measurement
Regular way purchases and sales of financial
assets are recognized on trade-date, being
the date on which the Company commits
to purchase or sale financial assets. At
initial recognition, the Company measures a
financial asset (excluding trade receivables
which do not contain a significant financing
component) 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.
(b) Subsequent measurement
Investments in subsidiary companies:
Financial assets are recognized when the
Company becomes a party to the contractual
provisions of the instrument. Financial assets
are recognized initially at fair value plus, in
the case of financial assets not recorded at
fair value through profit or loss, transaction
costs that are attributable to the acquisition
of the financial asset. Transaction costs of
financial assets carried at fair value through
profit or loss are expensed in the Statement
of Profit and Loss.
Fair Value hierarchy
The judgments and estimates made in
determining the fair values of the financial
instruments that are (a) recognized and
measured at fair value and (b) measured at
amortized cost and for which fair values are
disclosed in the financial statements in the
Note 37. To provide an indication about the
reliability of the inputs used in determining
fair value, the Company has classified its
financial instruments into the three levels
prescribed under the accounting standard.
An explanation of each level follows:
Level 1: Level 1 hierarchy includes financial
instruments measured using quoted prices.
Level 2: The fair value of financial instruments
that are not traded in an active market is
determined using valuation techniques which
maximize the use of observable market data
and rely as little as possible on entity-specific
estimates. If all significant inputs required to
fair value an instrument are observable, the
instrument is included in level 2.
Level 3: If one or more of the significant inputs
is not based on observable market data, the
instrument is included in level 3. This is the
case for unlisted equity securities, contingent
consideration and indemnification asset
included in level 3.
Debt instruments
Subsequent measurement of debt
instruments depends on the business model
of the Company for managing the asset
and the cash flow characteristics of the
asset. There are 3 measurement categories
into which the Company classifies its debt
instruments:
• Measured at 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.
Interest income from these financial assets is
included in Other Income using the effective
interest rate method. Any gain or loss arising
on derecognition is recognized directly in
profit or loss and presented in other gains /
(losses). Impairment losses are presented as
separate line item in the Statement of Profit
and Loss.
• Measured at 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 income
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. Foreign exchange gains
and losses are presented in other gains
/ (losses) and impairment expenses are
presented as separate line item in Statement
of Profit and Loss.
• Measured at fair value through profit or loss
(FVPL):
Assets that do not meet the criteria for
amortized cost or FVOCI are measured at
fair value through profit or loss. A gain or loss
on a debt investment that is subsequently
measured at fair value through profit or loss
is recognized in profit or loss and presented
net within other gains / (losses) in the
period in which it arises. Interest income
from these financial assets is included
in the other income. Refer note 2A (x) in
material accounting policy above relevant to
Investments and other financial assets.
(c) Derecognition 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 not transferred
substantially all risks and rewards of
ownership of the financial asset, the financial
asset is not 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 de¬
recognized 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 recognized
to the extent of continuing involvement in the
financial asset.
xiii. Derivative instruments
The Company holds derivative financial
instruments such as foreign exchange forward
and commodity futures to mitigate the risk of
changes in exchange rates on foreign currency
exposures and changes in prices of raw materials.
The counterparty for these contracts is generally a
bank.
Derivative financial assets or liabilities are not
designated as hedges. Although the Company
believes that these derivatives constitute hedges
from an economic perspective, they may not
qualify for hedge accounting under Ind AS 109,
Financial Instruments.
Derivatives not designated as hedges are
recognized initially at fair value and attributable
transaction costs are recognized in net profit in
the Statement of Profit and Loss, when incurred.
Subsequent to initial recognition, these derivatives
are measured at fair value through profit or loss
and the resulting exchange gains or losses are
included in Other income. Assets / liabilities in this
category are presented as current assets / current
liabilities if they are expected to be realized within
12 months after the Balance Sheet date.
xiv. Borrowings
Borrowings are initially recognized 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
recognized 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 recognized as transaction
costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down.
In this case, the fee is deferred until the draw down
occurs.
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 recognized in the Statement
of Profit and Loss as other gains / (losses).
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.
xv. Borrowing costs
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.
Investment income earned on the temporary
investment of specific borrowings pending their
expenditure on qualifying assets is deducted from
the borrowing costs eligible for capitalization.
Other borrowing costs are expensed in the period
in which they are incurred.
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