2 Material accounting policies:
This note provides a list of the significant accounting
policies adopted in the preparation of the financial
statements. These policies have been consistently
applied to all the years presented, unless otherwise
stated.
a) Statement of compliance:
The financial statements are prepared in
accordance with Indian Accounting Standards (Ind
AS) notified under Section 133 of the Companies
Act, 2013 (“the Act”) read with the Companies
(Indian Accounting Standards) Rules as amended
and guidelines issued by the Securities and
Exchange Board of India (SEBI), as applicable.
The presentation of financial statements is based
on Ind AS Schedule III of the Companies Act,
2013.
b) Basis of preparation:
The financial statements have been prepared
on an accrual basis and in accordance with the
historical cost convention with the exception of
certain assets and liabilities that are required to be
carried at fair values as per Ind AS. Fair value is
the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction
between market participants at the measurement
date.
c) Revenue recognition:
i) Revenue from contract with customers
Revenue is recognised when the performance
obligations have been satisfied, which is
once control of the goods is transferred
from the Company to the customer.
Revenue related to the sale of goods is
recognised when the product is delivered to
the destination specified by the customer,
and the customer has gained control through
their ability to direct the use of and obtain
substantially all the benefits from the asset.
Revenue is measured based on consideration
specified in the contract with a customer
which is measured at the fair value of the
consideration received or receivable, net
of returns and allowances, trade discounts
& volume rebates and excludes amounts
collected on behalf of third parties.
ii) Other income
Dividend income is recognised when the
right to receive the income is established.
Interest income is recognized on time
proportion basis taking into account the
amount outstanding and the rate applicable.
Rental income from investment properties is
recognised on a straight line basis over the
term of the relevant leases.
Incentives are recognized in the statement
of profit and loss, when right to receive such
entitlement is established as per terms of
the relevant scheme and where there is no
significant uncertainty regarding compliance
with the terms and conditions of such scheme.
d) Borrowing costs:
Borrowing costs directly attributable to
the acquisition, construction or production
of qualifying assets, which are assets that
necessarily take a substantial period of time
to get ready for their intended use or sale,
are added to the cost of those assets, until
such time as the assets are substantially
ready for the 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 cost eligible
for capitalization. Other borrowings costs
are expensed in the period in which they are
incurred.
e) Employee benefits:
(i) Short-term obligations
Liabilities for wages and salaries, including
non-monetary benefits that are expected to
be settled wholly within 12 months after the
end of the period in which the employees
render the related service are recognized in
respect of employees’ services up to the end
of the reporting period and are measured
at the amounts expected to be paid when
the liabilities are settled. The liabilities
are presented as current employee benefit
obligations in the balance sheet.
(ii) Other long-term employee benefit
obligations
The liabilities for earned leave is not expected
to be settled wholly within 12 months after
the end of the period in which the employees
render the related service. They are therefore
measured at the present value of expected
future payments to be made in respect
of services provided by employees up to
the end of the reporting period using the
projected unit credit method. The benefits
are discounted using the market yields at the
end of the reporting period that have terms
approximating to the terms of the related
obligations.
Remeasurements as a result of the experience
adjustments and changes in actuarial
assumptions are recognized in profit or loss.
The obligations are presented as current
liabilities in the balance sheet if the entity
does not have an unconditional right to defer
settlement for at least twelve months after
the reporting period, regardless of when the
actual settlement is expected to occur.
(iii) Gratuity obligations
The liability or assets recognized in the
balance sheet in respect of gratuity plans is the
present value of the defined benefit obligation
at the end of the reporting period less the
fair value of plan assets. The defined benefit
obligation is calculated annually by actuaries
using the projected unit credit method.
The present value of the defined benefit
obligation is determined by discounting the
estimated future cash outflows by reference
to market yields at the end of the reporting
period on government bonds that have terms
approximating to the terms of the related
obligation.
The net interest cost is calculated by applying
the discount rate to the net balance of the
defined benefit obligation and the fair value of
plan assets. This cost is included in employee
benefit expense in the statement of profit and
loss.
Remeasurement gains and losses arising
from experience adjustments and changes in
actuarial assumptions are recognized in the
period in which they occur, directly in other
comprehensive income. They are included
in retained earnings in the statement of
changes in equity and in the balance sheet.
Changes in the present value of the defined
benefit obligation resulting from plan
amendments or curtailments are recognized
immediately in profit or loss. The gratuity
liability is covered through a recognized
Gratuity Fund managed by Life Insurance
Corporation of India and the contributions
made under the scheme are charged to
statement of profit and loss.
(iv) Defined contribution plans
The Company pays provident fund
contributions to publicly administered funds
as per local regulations. The Company
has no further payment obligations once
the contributions have been paid. The
contributions are accounted for as defined
contribution plans and the contributions are
recognized as employee benefit expense
when they are due.
(v) Bonus plans
The Company recognizes a liability and an
expense for bonus. The Company recognizes
a provision where contractually obliged or
where there is a past practice that has created
a constructive obligation.
f) Income taxes:
Tax expense for the year comprises current and
deferred tax.
Current Tax is the amount of tax payable on the
taxable income for the year as determined in
accordance with the applicable tax rates and the
provisions of the Income-tax Act, 1961 and other
applicable tax laws that have been enacted or
substantively enacted by the end of the reporting
period.
Deferred tax is recognised on temporary
differences between the carrying amounts of assets
and liabilities in the financial statements and the
corresponding tax bases used in the computation of
taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all
deductible temporary differences to the extent that
it is probable that taxable profits will be available
against which those deductible temporary
differences can be utilised. Such deferred tax assets
and liabilities are not recognised if the temporary
differences arise from the initial recognition
(other than in a business combination) of assets
and liabilities in a transaction that affects neither
the taxable profit nor the accounting profit. In
addition, deferred tax liabilities are not recognised
if the temporary difference arises from the initial
recognition of goodwill.
The carrying amount of deferred tax assets is
reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable
that sufficient taxable profits will be available
to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured
at the tax rates that are expected to apply in the
period in which the liability is settled or the asset
realised, based on tax rates (and tax laws) that have
been enacted or substantively enacted by the end
of the reporting period.
Tax relating to items recognized directly in equity
or other comprehensive income is recognised in
equity or other comprehensive income and not in
the statement of profit and loss.
Deferred tax assets and liabilities are offset if there
is a legally enforceable right to offset current tax
liabilities and assets, and they are related to income
taxes levied by the same tax authority, but they
intend to settle current tax liabilities and assets on
a net basis or their tax assets and liabilities will be
realized simultaneously.
g) Property, Plant and Equipment (PPE):
PPE is carried at cost less accumulated depreciation
and impairment losses, if any. The cost of PPE
comprises of purchase price, applicable duties
and taxes net of input tax credit, any directly
attributable expenditure on making the asset ready
for its intended use, other incidental expenses and
interest on borrowings attributable to acquisition
of qualifying fixed assets, upto the date the asset is
ready for its intended use.
All other repair and maintenance costs, including
regular servicing, are recognised in the statement
of profit and loss as incurred. When a replacement
occurs, the carrying value of the replaced part is
de-recognised. Where an item of PPE comprises
major components having different useful lives,
these components are accounted for as separate
items.
Leasehold improvements are stated at cost
including taxes, freight and other incidental
expenses incurred, net of input tax credits availed.
The depreciation is provided over the life estimated
by the management.
Self constructed assets (Moulds): The Company
transfers all the directly attributable expenditure
incurred towards construction of moulds including
depreciation on actual cost basis.
PPE retired from active use and held for sale are
stated at the lower of their net book value and net
realizable value and are disclosed separately.
An item of PPE is derecognised upon disposal or
when no future economic benefits are expected to
arise from the continued use of the asset. Any 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.
h) Expenditure during construction period and
intangible assets under development:
Expenditure during construction period (including
finance cost related to borrowed funds for
construction or acquisition of qualifying PPE)
is included under Capital Work-in-Progress
and the same is allocated to the respective
PPE on the completion of their construction.
Intangible Assets under development includes the
expenditure incurred for acquisition of intangible
assets.
i) Depreciation:
Depreciation is the systematic allocation of the
depreciable amount of PPE over its useful life and
is provided on the straight line method over the
useful lives as prescribed in Schedule II to the Act.
The estimated useful lives of Property, Plant and
Equipment are as follows:
j) Intangible assets and amortization:
Intangible assets acquired separately are measured
on initial recognition cost and are amortized on
straight line method based on the estimated useful
lives.
The period of amortization and amortization
method are reviewed at each financial year end.
Computer software is amortized over a period of
five years.
k) Investment property:
Investment property are the properties held to earn
rentals and/or for capital appreciation (including
property under construction for such purposes).
Investment properties are measured initially at
cost, including transaction costs. Subsequent
to initial recognition, investment properties are
measured at cost model which is in accordance
with Ind AS 40.
An investment property is derecognised upon
disposal or when the investment property is
permanently withdrawn from use and no further
economic benefits expected from disposal.
Any gain or loss arising on derecognition of the
property is included in profit or loss in the period
in which the property is derecognised.
Depreciation on building is provided over it’s
useful life of 30 years using the Straight Line
Method.
l) Impairment of assets:
Intangible assets and Property, Plant and Equipment
(PPE): Intangible assets and PPE 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.
If such assets are considered to be impaired, the
impairment to be recognized in the statement
of profit and loss is measured by the amount by
which the carrying value of the assets exceeds
the estimated recoverable amount of the asset. An
impairment loss is reversed in the statement of profit
and loss if there has been a change in the estimates
used to determine the recoverable amount. The
carrying amount of the asset is increased to its
revised recoverable amount, provided that this
amount does not exceed the carrying amount
that would have been determined (net of any
accumulated amortization or depreciation) had no
impairment loss been recognized for the asset in
prior years.”
m) Inventories:
Inventories includes Raw materials, Work-in¬
progress, Finished goods, Stores & Spares,
Packing materials and other consumables. These
are valued at lower of cost and net realizable value
(NRV). However, raw materials are considered to
be realizable at cost, if the finished products, in
which they will be used, are expected to be sold
at or above cost. Further, cost is determined on
weighted average basis.
Material in transit
Valuation of Inventories of Materials in Transit is
done at Cost.
Work-in-Progress (WIP) and Finished goods
Cost of Finished Goods and WIP includes cost
of raw materials, cost of conversion and other
costs incurred in bringing the inventories to their
present location and condition. Cost of inventories
is computed on weighted average basis. Finished
goods includes sales in transit which is valued at
lower of cost and NRV
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