1.2.1 Revenue Recognition
Revenue is measured at the fair value of the Consideration received or receivable. Amounts disclosed
as revenue are net of returns, trade allowances, rebates, volume discounts and Goods and Service Tax
(GST). Accumulated experience is used toestimate and provide for the sales returns.
The company recognises revenue when the amount of revenue can be reliably measured, it is probable
that future economic benefits will flow to the Company and specific criteria have been met for each of
the company's revenue items. 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.
(i) Sale of goods
Revenue is recognized upon transfer of control of promised goods to customers in an amount that
reflects the consideration expected to be received in exchange for those goods. The arrangements
with the customers generally create a single performance obligation which issatisfied at a point of
time when the obligation is discharged i.e. on sale of goods.
Revenue is measured at the fair value of the consideration received or receivable, taking into account
contractually defined terms of payment and excluding taxes and duties. Expected defective stock returns,
volume-based discounts, turnover based discounts and other pricing incentives are accounted as
reduction of revenue basis the estimate of customers' future purchases / customers' future sales to
downstream customers in the value-chain. Any changes in the estimated amount of obligations for
discounts /incentives are recognized prospectively in the period inwhich the change occurs.
The Contract with customers involves performance of a single obligation, the amount stated in the
contract is the transaction price allocated to the performance obligation.
Contract balances
Contractassets
A contract asset is the right to consideration in exchange for goods or services transferred to the
customer when that right is conditioned on something other than the passage of time. If the Company
performs by transferring goods or services to a customer before the customer pays consideration or
before payment is due, a contract asset is recognised for the earned consideration that isconditional.
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company
has received consideration (or an amount of consideration is due) from the customer. If a customer
pays consideration before the Company transfers goods or services to the customer, a contract liability
is recognised when the payment is made or the payment is due (whichever is earlier). Contract
liabilities are recognised as revenue when the Company performs under the contract.
(ii) Dividend Income
Dividend income from investments is recognized when theCompany's right to receive payment has
been established.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset to that asset's netcarrying amount on initial recognition
(iv) Other operating Revenue
Other operating revenue comprises of income from ancillary activities incidental to the operations of
the Company and is recognized when the right to receive the income is established as per the terms of
the contract
1.2.2 Employeebenefits
Retirement benefit costs and terminationbenefits
> Defined Contribution Plans
Payments to defined contribution plans i.e., Company's contribution to provident fund, employee state
insurance wherever applicable and other funds are determined under the relevant schemes and/ or
statute and charged to the Statement of Profit and Loss in the period of incurrence when the services
are rendered by theemployees.
> Defined Benefit Plans
The number of employees are below the minimum threshold for applicability of Payment of Gratuity
Act, 1972 hence, no actual valuation are done.
For defined benefit plans i.e. Company's liability towards gratuity, other retirement/ termination
benefits, the cost of providing benefits is based on the estimates made by management at the end of
each annual reporting period.
The Company presents the provision of defined benefit costs in Statement of profit and loss in the
line item 'Employee benefits expense'.
No additional liability is created during the year. The cost will be determined based on actuarial
valuations only if the additional liability is required to be made as per The Payment of Gratuity
Act, 1972.
1.2.3 Borrowing costs
Borrowing costs directly attributable to the acquisition or construction of an asset (Qualifying
Asset) that necessarily takes a substantial period of time to get ready for its intended use are
capitalized as part of the cost of the asset until such time that the assets are substantially ready
for their intended use.
Where funds are borrowed specifically to finance a project, the amount capitalized represents
the actual borrowing costs incurred. Where surplus funds are available out of money borrowed
specifically to finance project, the income generated from such current investments is deducted
from the total capitalized borrowing cost.
Where the funds use to finances project form part of general borrowings, the amount capitalized
is calculated using a weighted average of rates applicable to relevant general borrowings of the
company during the period/year. Capitalization of borrowing costs is suspended and charged to
profit and loss during the extended periods when the active development on the qualifying assets
is interrupted.
Borrowing cost includes interest expense as per Effective Interest Rate (EIR). Borrowing cost that are
not directly attributable to a qualifying asset is recognized in the statement of Profit-/Loss using the
EIR method.
EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected
life of the financial liability or a shorter period, where appropriate, to the amortized cost of a financial
liability after considering all the contractual terms of the financial instrument.
1.2.4 Income Taxes
Income tax expense comprises current tax expense and the net change in the deferred tax asset or
liability during the year. Current and deferred tax are recognized in Statement of profit or loss, except
when they relate to items that are recognized in other comprehensive income or directly in equity, in
which case, the current and deferred tax are also recognized in othercomprehensive income or directly
in equity, respectively.
Current tax
Current Income Tax expenses comprise taxes on income from operations in India. Income tax payable
in India is determined in accordance with the provisions of the Income Tax Act, 1961.
Current Tax expenses are accounted in the same period to which the revenue and expenses relate.
Provision forcurrent income tax is made for the tax liability payable on taxable income after considering
tax allowances,deductions and exemptions determined in accordance withthe applicable tax rates
and the prevailing tax laws.
Current tax assets and current tax liabilities are offset whenthere is a legally enforceable right to set
off the recognisedamounts and there is an intention to settle the asset andthe liability on a net basis.
Deferred tax
Deferred Tax is recognized on temporary differencesbetween the carrying amounts of assets and a
liability inthe financial statements and the corresponding tax base used in the computation of taxable
profit and is accountedfor using the balance sheet method. Deferred tax liabilitiesare generally
recognized for all taxable temporary differences. Deferred tax assets are generally recognizedfor all
deductible temporary differences to the extent that it is probable that taxable profits will be available
againstwhich those deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that is no longer probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the taxrates that are expected to apply in the period
in which the liability is settled or the asset realized, based on tax rates(and tax laws) that have been
enacted or substantively enacted by the end of the reporting period.
Minimum Alternative lax ("mai ") credit is recognized asan asset only when and to the extent there is
convincing evidence that the Company will pay normal income tax during the specified period. Such
asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written
down to the extent there is no longer convincing evidence to the effect that the Company will pay
normal income tax during the specified period.
1.2.5 Property, Plant and Equipment.
Freehold land is carried at historical cost and not depreciated.
All other items of property, plant and equipment are stated at historical cost less accumulated
depreciation and accumulated impairment losses. Historical cost includes purchase price and any
attributable cost of bringing the asset for its intended use. It also 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 profit or loss during the reporting period in which they are incurred.
On transition to Ind AS, the company has elected to continue with the carrying value of all of its
property, plant and equipment recognised as at 1 April 2016 measured as per the previous GAAP and
use that carrying value as the deemed cost of the property, plant and equipment.
Property, Plant and equipment which are not ready for intended use as on the balance sheet date are
disclosed as Capital Work in progress
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated on pro data basis using the Written down value method to allocate their
cost, net of their residual values, over their estimated useful lives or, in the case of certain leased
furniture, fittings and equipment, the shorter lease term.
The Company provides Depreciation based on the useful lives as prescribed under Schedule II of
companies Act, 2013.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying
amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined
by comparing proceeds with carrying amount. These are included in profit or loss within other gains/
(losses).
De-recognition of assets
An item of property, plant and equipment is derecognized upon disposal or when no future economic
benefits are expected to arise from the continuous use of the asset.
Any gain or loss arising from such disposal, retirement or de-recognition of an item of property, plant
and equipment is measured as the difference between the net disposal proceeds and the carrying
amount of the item. Such gain or loss is recognized in the statement of profit and loss.
In case of de-recognition of a revalued asset, the corresponding portion of the revaluation surplus as
is attributable to that asset is transferred to retained earnings on such de-recognition. Such transfers
to retained earnings on such recognition.
Impairment of Property plant and equipment
The carrying values of assets/cash generating units are assessed for impairment at the end of every
reporting period. If the carrying amount of an asset exceeds the estimated recoverable amount, an
impairment is recognized as expense in the statement of profit and loss. The recoverable amount is
the higher of the fair value less costs of disposal and its value in use. Value in use is arrived at by
discounting the estimated future cash flows to their present value based on an appropriate present
value factor.
An impairment loss recognized in prior periods for an asset other than goodwill is reversed if, and only
if, there has been a change in the estimates used to determine the asset's recoverable amount since
the last impairment loss was recognized. In that case, the carrying amount of the asset is increased to
its recoverable amount and reversal of an impairment loss is recognized immediately in Statement of
Profit and Loss.
1.2.6 Inventories
Cost of Materials,stores, spares and traded goods comprises cost of purchases and included taxes and
duties and is net of eligible Goods and Service Tax (GST) Input tax credits. Cost of inventories also
includes all other related costs incurred in bringing the inventories to their present location and
condition.
Inventories are valued at cost or Net Realisable Value (NRV) whichever is lower.Cost is calculated as
per Weighted Average Method
Net Realisable Value represents the estimated selling price for inventories less all estimated costs of
completion cost necessary to make the sale,
Cost of inventories are determined as follows:
Traded goods - Valued at moving average cost
Stores and Spares- Valued at moving average cost
Due allowance is estimated and made by Management for slow moving / non- Moving items of
inventories, wherever necessary, based on the technical assessment and such allowances are adjusted
against the closing inventory value.
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