3. Significant Accounting Policies
3.1) Basis of Measurement
The Financial Statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been
measured at fair value:
- Derivatives financial instruments
- Certain Financial assets measured at fair value (refer accounting policy regarding financial instruments)
The financial statements are prepared in Indian Rupees ("INR") and all values are rounded to the nearest Lakhs, except otherwise
indicated.
3.2 Property, Plant and Equipment
Property, Plant and equipment are stated at cost less accumulated deprciation/amortization and impairment, if any. Freehold land not
containing mineral reserve is disclosed at cost less impairment, if any Cost comprises of purchase price and directly attributable cost of
acquisition/bringing the asset to its working condition for its intended use (net of credit availed, if any)
When significant parts of the plant and equipment are required to be replaced at intervals the company depreciates them seperately
based on their specific useful lives. Capital work in progress is carried at cost and directly attributable expenditure during construction
period which is allocated to the property, plant and equipment on the completion of project.
Borrowing costs directly attributable to the acquisition/construction of a qualifying asset are capitalized as part of the cost of such asset
till such time the asset is ready for its intended use.Other borrowing costs are recognized as an expense in the period in which they are
incurred.
Depreciation and Amortisation
Depreciation is provided on written down value method / straight line method over the estimated useful lives of the assets. Leasehold
Property are depreciated over their expected lease terms. No depreciation is charged on Freehold land. Estimated useful lives of the
assets are as follows:
Gains or Losses arising from de-recognition of assets are measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of Profit and loss when the asset is derecognized.
The residual Values, useful lives and method of depreciation of property plant and equipment are reviewed at each financial year end
adjusted prospectively, if appropriate.
3.3 Intangible Assets
Intangiable assets are stated at cost less accumulated amortization and impairment, if any. Cost comprises of purchase price and directly
attributable cost of acquisition/bringing the asset to its working condition for its intended use (net of credit availed, if any)
Amortization is provises on a written down value method over estimated useful lives.
The residual values, useful lives and method of depreciation of intangible assets are reviewed at each financial year end and adjusted
prospectively if appropriate.
3.4 Derecognition of Tangible and Intangible assets
An item of PPE is de-recognised upon disposal or when no future economic benefits are expected to arise from its use or disposal Gain or
loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in the Statement of Profit and Loss.
3.5 Leases
Company as Lessee
The Company assesses whether a contract contains a lease, at inception of a contract, 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
recognises right-of-use asset (“ROU”) and corrresponding lease liability for all lease arrangements in which it is a lessee, except for leases
with the term of twelve months or less (Short Term Leases) and no value leases. for these short term and low value leases, the company
recognises the lease payments as an operating expense or a straight -line basis over the term of the lease. Certain lease arrangements
includes the options to extent or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these
options when it is reasonabily certain that they will be exercised. The right -of-use assets, are initially recognized at costwhich comprises
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. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that there
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 sale and the value in use) is determined on an individual asset basis unless the asset doesn’t 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.
3.6 Impairment of Non-Financial Assets
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal &
external factors. An impairment loss is recognized wherever the carrying amounts of an asset exceed its recoverable amount. The
recoverable amount is the greater of the assets’ net selling price and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value at the weighted average cost of capital. Reversal of impairment loss is recognized immediately
as Income in the Statement of Profit and Loss.
3.7 Financial Assets and Financial Liabilities
Financial assets and financial liabilities (financial instruments) are recognized when the Company becomes a party to the contractual
provisionsof the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition
or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately
in the Statement of Profit and Loss.
The financial assets and financial liabilities are classified as current, if they are expected to be realised or settled within operating cycle of
the Company or otherwise these are classified as non-current.
The classification of financial instruments whether to be measured at Amortised Cost, at Fair Value through Profit and Loss (FVTPL)
or at FairValue through Other Comprehensive Income (FVTOCI) depends on the objective and contractual terms to which they relate.
Classification of financial instruments are determined on initial recognition
i) Cash & Cash equivalents
Cash & Cash equivalents consist of Cash on Hand, Cash at Bank, Term Deposits & Cheques in Hand. All highly liquid financial instruments,
which are readily convertible into determinable amounts of cash and which are subject to an insignificant risk of change in value and
are having original maturities of three months or less from the date of purchase, are considered as cash equivalents. Cash and cash
equivalents includes balances with banks which are unrestricted for withdrawal and usage
ii) Financial Assets and Financial Liabilities measured at amortised cost
Financial Assets held within a business whose objective is to hold these assets in order to collect contractual cash flows and the
contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest onthe
principal amount outstanding are measured at amortised cost
The above Financial Assets and Financial Liabilities subsequent to initial recognition are measured at amortized cost using Effective
Interest Rate (EIR) method.
The effective interest rate is the rate that discounts estimated future cash payments or receipts (including all fees and points paid
orreceived, transaction costs and other premiums or discounts) through the expected life of the Financial Asset or Financial Liability to
the gross carrying amount of the financial asset or to the amortised cost of financial liability, or where appropriate, a shorter period, to the
net carrying amount on initial recognition
iii) Financial Asset at Fair Value through Other Comprehensive Income (FVTOCI)
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose
objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset
give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amountoutstanding. Subsequent
to initial recognition, they are measured at fair value and changes therein are recognized directly in othercomprehensive income
iv) For the purpose of para (ii) and (iii) above, principal is the fair value of the financial asset at initial recognition and interest consists
ofconsideration for the time value of money and associated credit risk.
v) Financial Assets or Liabilities at Fair value through profit or loss
Financial Instruments which does not meet the criteria of amortised cost or fair value through other comprehensive income are classified
as Fair Value through Profit and loss. These are recognised at fair value and changes therein are recognized in the statementof profit and
loss.
vi) Derivative and Hedge Accounting
The Company enters into derivative financial instruments such as foreign exchange forward, swap and option contracts to mitigate the
risk of changes in foreign exchange rates in respect of financial instruments and forecasted cash flows denominated in certain foreign
currencies. The Company uses hedging instruments which provide principles on the use of such financial derivatives consistent with
the risk management strategy of the Company. The hedge instruments are designated and documented as hedges and effectiveness
of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at inception and on an
ongoing basis.
Any derivative that is either not designated as a hedge, or is so designated but is ineffective as per Ind AS 109 “Financial Instruments”, is
categorised as a financial asset, at fair value through profit or loss.Transaction costs attributable are also recognised in Statement of profit
and loss. Changes in the fair value of the derivative hedging instrument designated as a fair value hedge are recognised in the Statement
of profit and loss
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised in other comprehensive
income and presented within equity as cash flow hedging reserve to the extent that the hedge is effective.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge
accounting is discontinued prospectively. Any gain or loss recognised in other comprehensive income and accumulated in equity till that
time remains and thereafter to the extent hedge accounting being discontinued is recognised in Statement of profit and loss. When a
forecasted transaction is no longer expected to occur, the cumulative gain or loss accumulated in equity is transferred to the Statement
of profit and loss.
vii) Impairment of financial assets
A financial asset is assessed for impairment at each balance sheet date. A financial asset is considered to be impaired if objective evidence
indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.
The Company measures the loss allowance for a financial asset at an amount equal to the lifetime expected credit losses if the creditrisk
on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has notincreased
significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to
12-month expected credit losses.
However, for trade receivables or contract assets that result in relation to revenue from contracts with customers, the Company measures
the loss allowance at an amount equal to lifetime expected credit losses.
viii) Derecognition of financial instruments
The Company derecognizes a financial asset or a Company of financial assets when the contractual rights to the cash flows from the
asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party
On derecognition of a financial asset (except for equity instruments designated as FVTOCI), the difference between the asset’s carrying
amount and the sum of the consideration received and receivable are recognised in statement of profit and loss.
On derecognition of assets measured at Fair Value through Other Comprehensive Income FVTOCI, the cumulative gain or loss previously
recognised in other comprehensive income isreclassified from equity to profit or loss as a reclassification adjustment
Financial liabilities are derecognised if the Company’s obligations specified in the contract expire or are discharged or cancelled. The
difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognized in
Statement of Profit and Loss
3.8 Investments
Investments that are readily realizable and intended to be held for not more than a year are classified as current investment. All other
investments are classified as long term investments. Current Investments are carried at lower of cost and fair value determined on
individual investment basis. Long-terms investments are carried at cost. A provision of diminution is made to recognize a decline, other
than temporary, in the value of long-term investments
3.9 Inventories
Inventories are valued at lower of cost or net realisable value. Cost of inventories is ascertained on 'FIFO’ basis. Materials and other
supplies held for use in the production of inventories are not written down below cost if the related finished products are expected to be
sold at or above cost.
i) Raw Materials, Stores and spares
These are valued at the lower of cost and estimated net realizable value, after providing for cost of obsolescence and other anticipated
losses, wherever, considered necessary.
ii) Work-in-progress and Finished Goods
These include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is
determined on First in First out (FIFO) basis.
3.10 Foreign Currency Transaction
Foreign currency transactions are recorded in the reporting currency prevailing at the date of the transaction. Realized gains/ losses on
foreign exchange transactions during the year are recognized in the Statement of Profit and Loss.
Monetary assets and liabilities denominated in foreign currency are translated at the year end rates and resultant gains/losses from
foreign exchange transactions are recognized in the Statement of Profit and loss.
Forward Exchange Contracts not intended for trading or speculation purposes.
The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the statement of profit and loss in the year in which the exchange
rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for
the year.
3.11 Equity Share Capital
An equity instrument is a contract that evidences residual interest in the assets of the Company after deducting all of its liabilities. Par value
ofthe equity shares is recorded as share capital and the amount received in excess of par value is classified as Securities Premium.
Costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects
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