2 SIGNIFICANT ACCOUNTING POLICIES
a Basis of Preparation
These financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India ('Indian
GAAP') to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, as applicable. The financial
statements have been prepared under the historical cost convention on accrual basis, except for certain financial instruments which are
measured at fair value.
b Use of Estimates
The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements
and reported amounts of income and expense during the year. Examples of such estimates include provisions for doubtful receivables,
provision for income taxes, the useful lives of depreciable Property, Plant and Equipment and provision for impairment. Future results
could differ due to changes in these estimates and the difference between the actual result and the estimates are recognised in the
period in which the results are known / materialise.
c Property, Plant and Equipment
Property, Plant and Equipment are stated at cost, less accumulated depreciation / amortisation. Costs include all expenses incurred to
bring the asset to its present location and condition.
Property, Plant and Equipment exclude computers and other assets individually costing Rs. 5,000 or less which are not capitalised
except when they are part of a larger capital investment programme.
d Depreciation and amortization
In respect of Property, Plant and Equipment (other than freehold land and capital work-in-progress) acquired during the year,
depreciation/amortisation is charged on a straight line basis so as to write-off the cost of the assets over the useful lives.
e Impairment of assets
At each balance sheet date, the management reviews the carrying amounts of its assets included in each cash generating unit to
determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of impairment. Recoverable amount is the higher of an asset's net selling price and
value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its
disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value
of money and the risks specific to the asset. Reversal of impairment loss is recognised as income in the statement of profit and loss.
f Leases
Assets taken on lease by the Company in its capacity as lessee, where the Company has substantially all the risks and rewards of
ownership are classified as finance lease. Such a lease is capitalised at the inception of the lease at lower of the fair value or the present
value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between
the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are recognised
as operating leases. Lease rentals under operating leases are recognised in the statement of profit and loss on a straight-line basis.
g Investment
Long-term investments are stated at cost, less provision for other than temporary diminution in value. Current investments comprising
investments in mutual funds, government securities and bonds are stated at the lower of cost and fair value.
h Inventories
Raw materials are carried at the lower of cost and net realisable value. Cost is determined on a weighted average basis. Purchased
goods-in-transit are carried at cost. Work-in-progress is carried at the lower ofcost and net realisable value. Stores and spare parts are
carried at lower of cost and net realisable value. Finished goods produced or purchased by the Company are carried at lower of cost
and net realisable value. Cost includes direct material and labour cost and a proportion of manufacturing overheads.
i Cash and cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amount of cash that are subject
to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash
equivalents.
j Revenue recognition
Revenue from the sale of products are recognised upon delivery, which is when title passes to the customer. Revenue is reported net of
discounts. Revenue from sale of services are recognised upon completion of services.
Dividend is recorded when the right to receive the dividend is established. Interest income is recognised on time proportion basis taking
into account the amount outstanding and the rate applicable.
k Employee Benefits
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.
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 Foreign currency transactions
Income and expense in foreign currencies are converted at exchange rates prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities other than net investments in non-integral foreign operations are translated at the exchange rate
prevailing on the balance sheet date and exchange gains and losses are recognised in the statement of profit and loss. Exchange
difference arising on a monetary item that, in substance, forms part of an enterprise's net investments in a non-integral foreign
operation are accumulated in a foreign currency translation reserve.
ri Taxation
Current income tax expense comprises taxes on income from operations in India and in foreign jurisdictions. Income taxpayable in India
is determined in accordance with the provisions of the Income Tax Act, 1961. Tax expense relating to foreign operations is determined
in accordance with tax laws applicable in countries where such operations are domiciled.
Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which gives rise to future economic benefits in the form
of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal
income tax after the tax holiday period. Accordingly, MAT is recognised as an asset in the balance sheet when the asset can be
measured reliably and it is probable that the future economic benefit associated with it will fructify.
Deferred tax expense or benefit is recognised on timing differences being the difference between taxable income and accounting
income that originate in one period and is likely to reverse in one or more subsequent periods. Deferred tax assets and liabilities are
measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income
tax provision arising in the same tax jurisdiction for relevant tax paying units and where the Company is able to and intends to settle the
asset and liability on a net basis.
The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on
income levied by the same governing taxation laws.
|