(a) Foreign currency translation
(i) Functional and presentation currency
These financial statements are presented in Indian Rupees (INR) amount in lakhs, unless otherwise stated,
which is also the Company's functional currency.
(ii) Transactions and balances
Transactions in foreign currencies are translated into the functional currency of the Company at the exchange
rates at the dates of the transactions or an average rate if the average rate approximates the actual rate at the
date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency
at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value
in a foreign currency are translated into the functional currency at the exchange rate when the fair value was
determined. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency
are translated at the exchange rate at the date of the transaction. Exchange differences are recognised in
statement of profit or loss.
(b) Measurement of fair values
Some of the Company's accounting policies and disclosures require the measurement of fair values.
The Company has a control framework with respect to the measurement of fair values which includes India finance
team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair
values, and reports directly to the chief financial officer.
The India finance team annually reviews and evaluates significant unobservable inputs and valuation adjustments
and if third party information, such as pricing services, is used to measure fair values, then the financial reporting
team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the
requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible.
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy,
then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest
level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during
which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
• Note 34 - financial instruments.
2.6 Material accounting policies (Continued)
(c) Financial instruments
Recognition and initial measurement
Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities
are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit
and loss (‘FVTPL'), transaction costs that are directly attributable to its acquisition or issue.
Financial assets - classification and subsequent measurement
On initial recognition, a financial asset is classified and measured at
• amortised cost;
• FVOCI - debt investment;
• FVOCI - equity investment; or
• FVTPL
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company
changes its business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as
at FVTPL:
• the asset is held within a business model whose objective is to hold assets 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 on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at
FVTPL:
• the asset is held within a business model 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 amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to
present subsequent changes in the investment's fair value in OCI (designated as FVOCI - equity investment). This
election is made on an investment-by-investment basis. At present there are no such investments.
All financial assets not classified and measured at amortised cost or FVOCI are measured at FVTPL. This includes
all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that
otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates
or significantly reduces an accounting mismatch that would otherwise arise.
Financial liabilities: Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at
FVTPL if it is classified as held-for-trading, or it is a derivative or it is designated as such on initial recognition.
Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are
recognised in profit or loss.
Derecognition
Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset
expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the
risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor
retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either
all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or
expire.
Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only
when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them
on a net basis or to realise the asset and settle the liability simultaneously.
(d) Property, plant and equipment
Recognition and measurement
Items of Property, plant and equipment are measured at cost, which includes capitalised borrowing costs, less
accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non¬
refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing
the item to its working condition for its intended use and estimated costs of dismantling and removing the item
and restoring the site on which it is located. The cost of a self-constructed item of property, plant and equipment
comprises the cost of materials and direct labour, any other costs directly attributable to bringing the item to working
condition for its intended use, and estimated costs of dismantling and removing the item and restoring the site on
which it is located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for
as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
Subsequent measurement
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the
expenditure will flow to the Company.
Depreciation
Depreciation on property, plant and equipment (other than for those class of assets specifically mentioned below) is
calculated on a straight-line basis as per the useful life prescribed and in the manner laid down under Schedule II to
the Companies Act, 2013.
The management believes that these estimated useful lives reflect fair approximation of the period over which the
assets are likely to be used.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each
financial year end and adjusted prospectively, if appropriate.
Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work in progress.
Advances given towards acquisition of property, plant and equipment outstanding at each Balance Sheet date are
disclosed as other non-current assets.
Derecognition
The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future
economic benefits are expected from its use or disposal. The consequential gain or loss is measured as the difference
between the net disposal proceeds and the carrying amount of the item and is recognized in the Statement of profit
and loss.
(e) Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the moving
weighted average basis and includes expenditure incurred in acquiring the inventories, production or conversion
costs and other costs incurred in bringing them to their present location and condition. Costs incurred in bringing
each product to its present location and condition are accounted for as follows:
• Raw materials: Cost includes cost of purchase and other costs incurred in bringing the inventories to their
present location and condition. Cost is determined on moving weighted average basis. But ‘S' type material is
valued at ‘Legal cost.
• Finished goods: Cost includes cost of direct materials and labour and a proportion of manufacturing overheads
based on the normal operating capacity, but excluding borrowing costs. Cost is determined on moving weighted
average basis. Finished goods includes appropriate proportion of overheads and wherever applicable Goods
and Service Tax.
• Traded goods: Cost includes cost of purchase and other costs incurred in bringing the inventories to their
present location and condition. Cost is determined on moving weighted average basis.
The Company makes provisions for slow-moving and non-moving inventories based on a combination of ageing,
historical usage, and expected future realisability.
As per the provisioning policy: A standard provision of 35% is made for inventory items that are aged over one year.
An additional provision may be recognised over and above the standard rate, based on management's assessment
of recoverability, irrespective of ageing, considering past trends and future saleability. Provision of 100% is made for
expired inventory.
Provisions for inventory obsolescence are recognised in the Statement of Profit and Loss under “Changes in
Inventories of Finished Goods and Stock-in-Trade” (Refer Note 25) and the carrying value of inventories is disclosed
under Note 7.
The comparison of cost and net realisable value is made on an item-by-item basis.
(f) Impairment
Impairment of financial assets
The Company recognises loss allowances for expected credit losses on financial assets measured at amortised cost.
At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit-impaired.
A financial asset is ‘credit-impaired' when one or more events that have a detrimental impact on the estimated future
cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
• significant financial difficulty of the borrower or issuer;
• a breach of contract such as a default or being significantly past due;
• the restructuring of a loan or advance by the Company on terms that the Company would not consider
otherwise;
or
• it is probable that the borrower will enter bankruptcy or other financial reorganization.
Company is providing 100% provision for the receivables aged more than 365 days.
Write off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no
realistic prospect of recovery. However, financial assets that are written off could still be subject to enforcement
activities in order to comply with the Company's procedures for recovery of amounts due.
Impairment of non-financial assets
The Company's non-financial assets, other than inventories, are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is
estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into
cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that
are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs
to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU
(or the asset).
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable
amount. Impairment losses are recognised in the statement of profit and loss. Impairment loss recognised in respect
of a CGU is allocated to reduce the carrying amounts of the assets of the CGU (or group of CGUs) on a pro rata
basis.
Assets (other than goodwill) for which impairment loss has been recognised in prior periods, are reviewed at
each reporting date to assess whether there is any indication that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
Such a reversal is made only to the extent that the asset's carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(g) Employee benefits
Short term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related
service is provided. A liability is recognised for the amount expected to be paid e.g., short-term cash bonus, if the
Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the
employee, and the amount of obligation can be estimated reliably.
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a
separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified
monthly contributions towards government administered provident fund scheme. Obligations for contributions to
defined contribution plans are recognised as an employee benefits expense in profit or loss in the periods during
which the related services are rendered by employees.
Defined benefit plans - Gratuity
The Company has defined benefit plan for post employment benefits in the form of Gratuity in accordance with the
Payment of Gratuity Act, 1972. Liability for defined benefit plan is provided on the basis of valuation, as at the Balance
Sheet date, carried out by independent actuary. The actuarial valuation method used by independent actuary for
measuring the liability is the Projected Unit Credit Method.
Other long-term employee benefits
The employees of the Company are entitled to other long-term benefit in the form of compensated absences as per
the policy of the Company. Liability for other long-term employee benefit is provided on the basis of valuation, as at
the Balance Sheet date, carried out by independent actuary. The actuarial valuation method used by independent
actuary for measuring the liability is the Projected Unit Credit Method.
Termination benefits
Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those
benefits and when the Company recognises costs for a restructuring..
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