3 MATERIAL ACCOUNTING POLICIES
a Basis of Preparation
These financial statements are prepared in accordance with the provisions of the Companies Act, 2013 (''the Act''),
guidelines issued by the Securities and Exchange Board of India (SEBI) and Indian Accounting Standard (Ind AS) under
the historical cost convention on accrual basis except for certain financial instruments which are measured at fair
values, defined benefit liability / (asset) which is recognized at the present value of defined benefit obligation less fair
value of plan assets. The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian
Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.
Accounting policies have been consistently applied except where a newly-issued accounting standard is initially
adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. The
material accounting policy information used in preparation of the audited condensed interim financial statements have
been discussed in the respective notes.
b Use of estimates and Judgements
The preparation of financial statements in conformity with the recognition and measurement principles of Ind AS
requires management of the Company to make estimates and judgements that affect the reported balances of assets
and liabilities, disclosures of contingent liabilities as at the date of financial statements and the reported amounts of
income and expenses for the periods presented.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and future periods are affected.
The Company uses the following critical accounting estimates in preparation of its financial statements.
(i) Useful lives of property, plant and equipment
Property, plant and equipment and Intangible Assets represent a significant proportion of the assets of the Group.
Depreciation is derived after determining an estimate of an asset's expected useful life and the expected residual
value at the end of its life. The useful lives and residual values of Company's assets are determined by management
at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based
on historical experience with similar assets as well as anticipation of future events, which may impact their life,
such as changes in technology.
(ii) Provision for income tax and deferred tax assets
The Company uses estimates and judgements based on the relevant rulings in the areas of allocation of revenue,
costs, allowances and disallowances which is exercised while determining the provision for income tax. A deferred
tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the
deductible temporary differences and tax losses can be utilised. Accordingly, the Company exercises its judgement
to reassess the carrying amount of deferred tax assets at the end of each reporting period.
The Company has unrecognised deferred tax assets arising from brought forward tax losses and unabsorbed
depreciation. These deferred tax assets have not been recognised in the financial statements due to the
uncertainty regarding the availability of sufficient future taxable profits against which these
assets can be utilised. The Company assesses the recoverability of its deferred tax assets at each reporting period.
Based on current projections and the historical performance, it is not considered probable that sufficient future
taxable profits will be available within the foreseeable future to fully utilise these tax losses and unabsorbed
depreciation.
c Property, Plant and Equipment
All items of Property, plant and equipment held for use in the production or supply of goods or services, or for
administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated
impairment losses. Cost of acquisition is inclusive of freight, duties, taxes and other incidental expenses. When
significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them
separately based on their specific useful lives. Freehold land is not depreciated.
Capital work in progress is stated at cost, net of impairment loss, if any. Cost includes purchase price, taxes and duties,
labour cost and other directly attributable costs incurred upto the date when the asset is ready for its intended use.
Such Capital work in progress are classified to the appropriate categories of property, plant and equipment when
completed and ready for intended use. Depreciation of these assets, on the same basis as-other property assets,
commences when the assets are ready for their intended use.
Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under
construction) less their residual values over their useful lives, using the written down value method. The estimated
useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect
of any changes in estimate accounted for on a prospective basis.
Depreciation is charged on a pro-rata basis at the written-down value method over estimated economic useful lives of
its property, plant and equipment generally in accordance with that provided in the Schedule II to the Act as provided
below and except in respect of moulds and dies which are depreciated over their estimated useful life of 1 to 7 years,
wherein, the life of the said assets has been assessed based on technical advice, taking into account the nature of the
asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated
technological changes, manufacturers warranties and maintenance support, etc.
An item of property, plant and equipment 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 property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount
of the asset and is recognised in profit or loss. The useful lives for various property, plant and equipment are given
below:
* Based on technical evaluation, the Management believes that the useful lives as given above best represent the
period over which the Management expects to use these assets. Hence, the useful lives for these assets is different
from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.
d Leases
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification
of a lease requires significant judgement. The Company uses significant judgement in assessing the lease term
(including anticipated renewals) and the applicable discount rate.
The Company assesses whether a contract 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. 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 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 low value leases. For these short-term and low value leases, the Company recognizes the lease
payments as an operating expense on a straight-line basis over the term of the lease.
The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered
by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by
an option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether
the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a
lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise
the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease
term if there is a change in the non-cancellable period of a lease.
The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a
portfolio of leases with similar characteristics.
e Impairment
At the end of each reporting period, the Company assesses, whether there is any indication that an asset may be
impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). Recoverable amount is the higher of fair value less costs of disposal and value in
use.
When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of
allocation can be identified, corporate assets are also allocated to individual cashgenerating units, or otherwise they
are allocated to the smallest Company of cash-generating units for which a reasonable and consistent allocation basis
can be identified.
In assessing value in use, the estimated future cash flows are 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 asset. In
determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions
can be identified, an appropriate valuation model is used.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared
separately for each of the Company's cash generating unit (CGU).
If the recoverable amount of an asset (or cashgenerating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cashgenerating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss. When an impairment loss subsequently reverses, the carrying amount of the
asset (or a cashgenerating unit) is increased to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is
recognised immediately in profit or loss.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at
least annually, and whenever there is an indication that the asset may be impaired. In assessing value in use, the
estimated future cash flows are 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 asset for which the estimates of future
cash flows have not been adjusted.
The books of accounts of the company doesn't carry any impairment of assets during the reporting period, hence this
accounting standard does not have financial impact on the financial statements of the company.
f Financial instruments
A financial instrument is any contract that gives rise to asset of one entity and a financial liability or equity instrument
of another entity. Financial instruments also include derivative contracts such as foreign currency forward contracts,
cross currency interest rate swaps, interest rate swaps and currency options; and embedded derivatives in the host
contract.
Financial Assets
Initial recognition and measurement
All financial assets are recognised 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.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or
convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the company
commits to purchase or sell the asset.
Classifications
The Company classifies its financial assets as subsequently measured at either amortised cost or fair value through
other comprehensive income (FVOCI) or fair value through Profit and Loss Account (FVTPL) on the basis of either
Company's business model for managing the financial assets or Contractual cash flow characteristics of the financial
assets.
Business model assessment
The company makes an assessment of the objective of a business model in which an asset is held at an instrument level
because this best reflects the way the business is managed and information is provided to management.
Debt instruments at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met:
- It is held within a business model whose objective is to hold assets in order to collect contractual cash flows.
- The contractual terms of the financial asset represent contractual cash flows that are solely payments of principal
and interest.
After initial measurement, such financial assets are subsequently measured at amortised cost using the Effective
Interest Rate ('EIR') method. Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance income in
the profit or loss. The losses arising from impairment are recognised in the profit or loss.
Debt instrument at fair value through Other Comprehensive Income (FVOCI)
Debt instruments with contractual cash flow characteristics that are solely payments of principal and interest and held
in a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets
are classified to be measured at FVOCI.
Debt instrument at fair value through profit and loss (FVTPL)
Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVOCI, is classified
as at FVTPL.
In addition, the company may elect to classify a debt instrument, which otherwise meets amortized cost or FVOCI
criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or
recognition inconsistency referred to as 'accounting mismatch').
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the
profit and loss.
Equity Instruments
All equity instruments in scope of Ind AS 109 are measured at fair value and all changes in fair value are recorded in
FVTPL. On initial recognition an equity investment that is not held for trading, the Company may irrevocably elect to
present subsequent changes in fair value in OCI and fair value changes on the instrument, excluding dividends, are
recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of
investment. However, the Company may transfer the cumulative gain or loss within equity. This election is made on an
investment-by-investment basis.
All other Financial Instruments are classified as measured at FVTPL
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is
primarily derecognised (i.e. removed from the company's balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either
(a) the company has transferred substantially all the risks and rewards of the asset, or (b) the company has neither
transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the
asset.
When the company has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither
transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the
company continues to recognize the transferred asset to the extent of the company's continuing involvement. In that
case, the company also recognizes an associated liability. The transferred asset and the associated liability are
measured on a basis that reflects the rights and obligations that the company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum amount of consideration that the company could be required
to repay.
On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount
allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new
asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in OCI is
recognised in profit or loss.
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at
amortised cost and at FVOCI.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether
there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased
significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly,
lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a
significant increase in credit risk since initial recognition, then the entity revert to recognizing impairment loss
allowance based on 12 month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial
instrument. The 12 -month ECL is a portion of the lifetime ECL which results from default events on a financial
instrument that are possible within 12 months after the reporting date.
With regard to trade receivable, the Company applies the simplified approach as permitted by Ind AS 109, Financial
Instruments, which requires expected lifetime losses to be recognised from the initial recognition of the trade
receivables.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss,
amortised cost, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of amortised cost, net of directly attributable
transaction costs.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial Liabilities measured at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the
EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through
the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for
trading if they are incurred for the purpose of repurchasing in the near term.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the
initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair
value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not
subsequently transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All
other changes in fair value of such liability are recognised in the statement of profit or loss.
Financial guarantee contracts
Financial guarantee contract issued by the Company is contracts that require a payment to be made to reimburse the
holder for a loss it incurs because, the specified debtor fails to make a payment when due in accordance with the terms
of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for
transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured
at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109, and the
transaction amount recognised less cumulative amortisation.
Derecognition of financial liabilities
The company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
Reclassification of financial assets
The company determines classification of financial assets and liabilities on initial recognition. After initial recognition,
no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets
which are debt instruments, a reclassification is made only if there is a change in the business model for managing
those assets. Changes to the business model are expected to be infrequent. The company's senior management
determines change in the business model as a result of external or internal changes which are significant to the
company's operations. Such changes are evident to external parties. A change in the business model occurs when the
company either begins or ceases to perform an activity that is significant to its operations. If the company reclassifies
financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the
immediately next reporting period following the change in business model. The company does not restate any
previously recognized gains, losses (including impairment gains or losses) or interest.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a
currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or
to realise the asset and settle the liability simultaneously.
g Investment Property
Investment property is a property held to earn rentals and capital appreciation. Investment property is measured
initially at cost, including transaction costs. Subsequent to initial recognition, investment property is measured in
accordance with Ind AS 16's requirements for cost model.
Investment properties are derecognised either when they have been disposed of or when they are permanently
withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net
disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.
h Employee Benefits
(i) Post-employment benefit plans
Contributions to defined contribution retirement benefit schemes are recognised as expense when employees have
rendered services entitling them to such benefits.
For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with
actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the
statement of profit and loss for the period in which they occur. Past service cost is recognised immediately to the
extent that the benefits are already vested, or amortised on a straight-line basis over the average period until the
benefits become vested.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit
obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to the present value of available refunds and reductions in future contributions
to the scheme.
(ii) Other employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered
by employees is recognised during the period when the employee renders the service. These benefits include
compensated absences such as paid annual leave, overseas social security contributions and performance incentives.
Compensated absences which are not expected to occur within twelve months after the end of the period in which the
employee renders the related services are recognised as an actuarially determined liability at the present value of the
defined benefit obligation at the balance sheet date.
i Revenue recognition
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the
customer at an amount that reflects the consideration entitled in exchange for those goods or services. the Company is
generally the principal as it typically controls the goods or services before transferring them to the customer.
Generally, control is transferred upon shipment of goods to the customer or when the goods is made available to the
customer, provided transfer of title to the customer occurs and the Company has not retained any significant risks of
ownership or future obligations with respect to the goods shipped.
Revenue from rendering of services is recognised over time by measuring the progress towards complete satisfaction of
performance obligations at the reporting period.
Revenue is measured at the amount of consideration which the Company expects to be entitled to in exchange for
transferring distinct goods or services to a customer as specified in the contract, excluding amounts collected on behalf
of third parties (for example taxes and duties collected on behalf of the government).
Consideration is generally due upon satisfaction of performance obligations and a receivable is recognised when it
becomes unconditional.
j Employee benefits
Short term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount
expected to be paid 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 obligation can be estimated reliably.
Accumulated compensated absences which are expected to be settled wholly within twelve months after the end of
the period in which the employees render the related service are treated as short-term benefits. The Company
measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused
entitlement that has accumulated at the reporting date.
Defined contribution plans
Obligations for contributions to defined contribution plans are expensed as the related service is provided.
Defined benefit plans
The company's net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the
amount of future benefit that employees have earned in the current and prior periods, discounting that amount and
deducting the fair value of any plan assets.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit
credit method. When the calculation results in a potential asset for the company, the recognised asset is limited to the
present value of economic benefits available in the form of any future refunds from the plan or reductions in future
contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable
minimum funding requirements.
Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets
(excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in Other
Comprehensive Income. Net interest expense (income) on the net defined liability (assets) is computed by applying the
discount rate, used to measure the net defined liability (asset), to the net defined liability (asset) at the start of the
financial year after taking into account any changes as a result of contribution and benefit payments during the year.
Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past
service or the gain or loss on curtailment is recognised immediately in profit or loss. The company recognises gains and
losses on the settlement of a defined benefit plan when the settlement occurs.
Other long-term employee benefits
The Company's net obligation in respect of long-term employee benefits is the amount of future benefit that
employees have earned in return for their service in the current and prior periods. That benefit is discounted to
determine its present value. Re-measurements are recognised in profit or loss in the period in which they arise.
k Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as
reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in
other years and items that are never taxable or deductible. The Company's current tax is calculated using tax rates and
laws that have been enacted or substantively enacted by the end of the reporting period.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction
either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and establishes provisions where
appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
(i) When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss.
(ii) In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in
joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and
any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry forward of unused tax credits and unused
tax losses can be utilised, except:
(i) When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss.
(ii) In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests
in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be available against which the temporary
differences can be utilised.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction
either in other comprehensive income or directly in equity.
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 liabilities and assets 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.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of
its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other
comprehensive income or directly in equity respectively.
Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net profit
or loss for the year. Current tax is measured at the amount expected to be paid to the tax authorities in accordance
with the taxation laws prevailing in the respective jurisdictions. Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities 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 difference arises from the initial recognition (other than in a business
combination or for transactions that give rise to equal taxable and deductible temporary differences) 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 liabilities and assets 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. The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Company expects, at the end of the reporting date, to
recover or settle the carrying amount of its assets and liabilities. Current and deferred tax are recognised in profit or
loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which
case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is
included in the accounting for the business combination. Current tax assets and current tax liabilities are offset when
there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and
the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable
right to set off assets against liabilities representing current tax and where the deferred tax assets and the deferred tax
liabilities relate to taxes on income levied by the same governing taxation laws.
l Foreign currency transactions
Transactions in foreign currencies are translated into the Company's functional currency at the exchange rates at the
dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the
exchange rate at the reporting date. Nonmonetary 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 items that are measured based on historical cost in a foreign currency are translated at the exchange
rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss.
The gain or loss arising on translation of nonmonetary items measured at fair value is treated in line with the
recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair
value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).
m Inventories
Inventories comprising Raw materials, work-inprogress, stores and spares, loose tools, traded goods and finished goods
are stated at the lower of cost and net realisable value. Costs of inventories are determined on a moving average.
Finished goods and work-in-progress include appropriate proportion of manufacturing overheads at normal capacity
and where applicable, duty. Net realisable value represents the estimated selling price for inventories less all estimated
costs of completion and costs necessary to make the sale.
|