2.4 Material accounting policies
IND AS 1 was amended vide notification no G.S.R.242(E) dated 31st March 2023 to require disclosure of Material Accounting
Policy information from accounting periods beginning on or after 1 April 2023 instead of significant accounting policy disclosure
by amending paragraph 117, inserting paragraphs 117A to 117E and deleting paragraphs 118 to 121. Paragraph 117 of Ind AS
1 states Accounting policy information is material if, when considered together with other information included in an entity's
financial statements, it can reasonably be expected to influence decisions that the primary users of general-purpose financial
statements make on the basis of those financial statements.
a. Property, Plant and Equipment (PPE)
The Company has elected to continue with the carrying value of Property, Plant and Equipment ('PPE') recognised as of the
transition date, measured as per the Previous GAAP and use that carrying value as its deemed cost of the PPE.
Property, Plant and Equipment are stated at cost less accumulated depreciation and accumulated impairment losses except
for freehold land which is not depreciated.
Any gain or loss arising on derecognition of an item of property, plant and equipment is determined as the difference
between the net disposal proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss
when asset is derecognised.
Depreciation is provided on a straight-line basis on the economic useful lives of the assets. The useful lives have been
determined based on the technical evaluation done by management. Further, the remaining useful life has also been revised
whenever appropriate based on the evaluation. Depreciation in addition to/deductions from, owned assets is calculated
pro-rata to the period of use. The aggregate depreciation is provided as per the requirement of Part C of Schedule II to
Companies Act 2013. Assets costing up to Rs. 5,000/- are fully depreciated in the year of purchase.
Depreciation on each part of an item of property, plant and equipment is provided using the Straight Line Method (SLM)
based on the useful life of the asset as estimated by the management and is charged to the Statement of Profit and Loss
as per the requirement of Schedule II of the Companies Act, 2013 except on some assets, where useful life has been taken
based on external/internal technical evaluation as given below:
Capital work in progress includes construction stores including material in transit/equipment/services, etc. received at the site
for use in the projects. All revenue expenses incurred during the construction period, which are exclusively attributable to the
acquisition/construction of property, plant and equipment are capitalised at the time of commissioning of such assets. 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.
Freehold land is not depreciated. Leasehold improvements are amortised throughout the lease or the useful life of the
asset, whichever is lower. The useful lives, residual values of each part of an item of property, plant and equipment and
the depreciation methods are reviewed at the end of each financial year. If any of these expectations differ from previous
estimates, such change is accounted for as a change in an accounting estimate
b. Other Intangible Assets
Other Intangible assets acquired separately are measured on initial recognition at cost. After initial recognition, other
intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Software (not
being an integral part of the related hardware) acquired for internal use are treated as other intangible assets.
An item of Other Intangible asset is derecognised on disposal or when no future economic benefits are expected from its
use or disposal. Any profit or loss arising from derecognition of an other intangible asset are measured as the difference
between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and
Loss when the asset is derecognised.
Amortisation Other Intangible assets with finite lives are amortised on a Straight-Line basis over the estimated useful
economic life. The amortisation expense on other intangible assets with finite lives is recognised in the Statement of Profit
and Loss. The amortisation period and method for an other other intangible asset are reviewed at least at the end of each
reporting period. Costs relating to computer software are capitalised and amortised on the straight-line method over their
estimated useful economic life of six years.
c. Share-based payments
The fair value of options granted under the Employee Stock Option Plan is recognized as an employee benefits expense
with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of
the options. The total expense is recognized over the vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options
that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact of the revision
to original estimates, if any, in statement of profit and loss, with a corresponding adjustment to equity.
d. Leases
The Company has applied IND AS 116 using the modified retrospective approach.
The Company as a lessee
The Company's lease asset classes primarily consist of leases for land & buildings. 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.
Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU
assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted
for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease
incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease
term and useful life of the underlying asset. Right of use assets 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.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease
payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental
borrowing rate specific to the Company. Lease liabilities are remeasured with a corresponding adjustment to the related
right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the financial statements
The Company as a lessor
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease
transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All
other leases are classified as operating leases.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. The
sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease.
e. Inventories
Inventories consisting of stores, spares, raw materials, packing material, finished goods, Work in progress, and trading
material are valued at lower of cost and net realisable value after providing for obsolescence if any. However, materials held
for use in production of inventories are not written down below cost, if the finished products are expected to be sold at or
above cost.
Cost is determined on a moving weighted average basis. Net realisable value is the estimated selling price in the ordinary
course of business, less estimated cost of completion and estimated cost necessary to make the sale.
Finished goods and work-in-progress include all costs of purchases, conversion costs and other costs incurred in bringing
the inventories to their present location and condition. Cost of work-in-progress and finished goods includes material cost,
labour cost and manufacturing overheads absorbed on based one normal capacity of production.
I nventory obsolescence is based on assessment of the future uses. Obsolete and slow-moving items are subjected to
continuous technical monitoring and are valued at lower of cost and estimated net realisable value.
f. Impairment of non-financial assets
Non-financial assets other than inventories and non-current assets held for sale are reviewed at each Balance Sheet date
to determine whether there is any indication of impairment. If any such indication exists, or when annual impairment
testing for an asset is required, the company estimates the asset's recoverable amount. The recoverable amount is higher
than assets or Cash-Generating Units (CGU) fair value fewer costs of disposal and its value in use. The recoverable amount
is determined for an individual asset unless the asset does not generate cash flows that are largely independent of those
from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the
asset is considered impaired and is written down to its recoverable amount. Impairment losses of continuing operations,
including impairment on inventories, are recognised in the Statement of Profit and Loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU 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 CGU in prior years. A reversal of an
impairment loss is recognised in the Statement of Profit and Loss.
g. Revenue recognition
The Company derives revenues primarily from sale of goods comprising of Tiles, Marble and Mosaic
Revenue from contract with customers is recognised upon transfer of control of promised products or services to customers
in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.
Revenue is measured based on the transaction price, which is the consideration, adjusted for turnover/product/prompt
payment discounts to customer as specified in the contract with the customers. When the level of discount varies with
increase in levels of revenue transactions, the Company recognises the liability based on its estimate of the customer's
future purchases. If it is probable that the criteria for the discount will not be met, or if the amount thereof cannot be
estimated reliably, then discount is not recognised until the payment is probable and the amount can be estimated reliably.
The Company recognises changes in the estimated amount of obligations for discounts in the period in which the change
occurs.
Revenue from sale of goods is recognized, at a point in time when control is transferred to customer , as per the terms of the
contracts and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale
of goods. It excludes Goods and Services tax. It is measured at the amount of transaction price received or receivable, net of
returns and allowances, trade discounts and volume rebates.
The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or
over a period of time. The Company considers indicators such as how customer consumes benefits as services are rendered
or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and
alternate use of such product or service, transfer of significant risks and rewards to the customer, acceptance of delivery by
the customer, etc.
Dividend Income is accounted for when the right to receive the same is established, which is generally when shareholders
approve the dividend.
The sale of services is recognised in the accounting period in which the service is rendered.
Interest Income on financial assets measured at amortised cost is recognised on a time-proportion basis using the effective
interest method
Other income is accounted for on an accrual basis except where the receipt of income is uncertain in which case it is
accounted for on a receipt basis.
h. Foreign currency transactions
The Financial Statements of Company are presented in INR, which is also the functional currency. In preparing the financial
statements, transactions in currencies other than the entity's functional currency are recognised at the rates of exchange
prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign
currencies are translated at the rates prevailing at that date. Non-monetary items denominated in foreign currency are
reported at the exchange rate ruling on the date of transaction.
Foreign exchange gains and losses resulting from the settlement of such transactions and the translation of monetary
assets and liabilities denominated in foreign currencies at the year-end exchange rates are generally recognized in the
Statement of Profit and Loss.
Foreign exchange differences regarded as adjustments to borrowing costs are presented in the Statement of Profit and
Loss, within finance cost. All other foreign exchange gains and losses as presented in the Statement of Profit and Loss on a
net basis within other gains/(losses).
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when
the fair value is determined. The gain or loss arising from the translation of non-monetary 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 recognized in OCI or statement of profit or loss are also recognized in OCI or Statement
of Profit and Loss, respectively). Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using exchange rates on dates of initial recognition.
i. Fair Value Measurement
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, regardless of whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the
characteristics of asset and liability if market participants would take those into consideration. Fair value for measurement
and / or disclosure purposes in these Financial Statements is determined on such basis except for Inventories, Leases and
value in use of non-financial assets. Normally at initial recognition, the transaction price is the best evidence of fair value.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing
the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a
non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its
highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable
inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the
fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement
as a whole:
• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable
Financial assets and financial liabilities that are recognised at fair value on a recurring basis, the Company determines
whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting
period.
j. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity. The Company recognises a financial asset or financial liability in its balance sheet only when
the entity becomes party to the contractual provisions of the instrument.
(a) Financial assets
A financial asset inter-alia includes any asset that is cash, equity instrument of another entity or contractual rights
to receive cash or another financial asset or to exchange financial asset or financial liability under condition that are
potentially favourable to the Company.
The Company classifies financial assets as subsequently measured at amortized cost, fair value through other
comprehensive income or fair value through Profits or loss based on its business model for managing the financial
assets and the contractual cash flows characteristics of the financial asset.
Investments in subsidiaries
Investments in equity shares of subsidiaries are carried at cost less impairment.
Financial assets other than investment in subsidiaries
Financial assets of the Company comprise trade receivable, cash and cash equivalents, Bank balances, Investments
in equity shares of companies other than in subsidiaries, Investment in units of Mutual Funds, loans/ advances to
employee / related parties / others, security deposit, claims recoverable etc.
i. 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.
However, Trade receivables that do not contain a significant financing component are measured at Transaction
Price. Transaction costs of financial assets carried at fair value through profit or loss are expensed in Statement
of Profit and Loss. Where transaction price is not the measure of fair value and fair value is determined using
a valuation method that uses data from observable market, the difference between transaction price and fair
value is recognised in Statement of Profit and Loss on the date of recognition if the fair value pertains to Level
1 or Level 2 of the fair value hierarchy and in other cases spread over life of the financial instrument using
effective interest method
ii. Subsequent measurement
For purposes of subsequent measurement financial assets are classified in the below categories:
• Financial assets carried at amortized cost:
Financial assets are measured at amortized cost if the financials asset is held within a business model
whose objective is to hold financial assets in order 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. These financials assets are amortized using the
effective interest rate (EIR) method, less impairment. Amortized 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
amortization is included in finance income in the statement of profit and loss. The losses arising from
impairment are recognised in the statement of profit and loss in finance costs.
• Financial assets at fair value through other comprehensive income:
Financial assets are mandatorily measured at fair value through other comprehensive income if the
financial 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.
The Company has made an irrevocable election for its investments which are classified as equity
instruments to present the subsequent changes in fair value in other comprehensive income based on
its business model.
• Financial assets at Fair value through profit or loss
Any financial asset that does not meet the criteria for classification as at amortized cost or as financial
assets at fair value through other comprehensive income, is classified as financial assets at fair value
through profit or loss. Further, financial assets at fair value through profit or loss also include financial
assets held for trading and financial assets designated upon initial recognition at fair value through
profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of
selling or repurchasing in the near term. Financial assets at fair value through profit or loss are fair valued
at each reporting date with all the changes recognised in the Statement of profit and loss.
iii. De-recognition
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the
asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of
ownership and continues to control the transferred asset, the Company recognises its retained interest in the
asset and an associated liability for amounts it may have to pay.
iv. Impairment of financial assets
The Company assesses impairment based on the expected credit losses (ECL) model for measurement and
recognition of impairment loss, the calculation of which is based on historical data, on the financial assets that
are trade receivables or contract revenue receivables and all lease receivables.
Impairment loss allowance (or reversal) recognised during the period is recognised as expense/income in the
statement of profit and loss.
(b) Financial liabilities
The Company's financial liabilities includes borrowings, trade payable, accrued expenses and other payables.
The Company classifies all financial liabilities as subsequently measured at amortized cost, except for financial
liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabilities, shall be
subsequently measured at fair value.
i. Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs. The Company's financial liabilities include trade and
other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.
ii. Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
• Financial liabilities at amortized cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized
cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are
derecognized as well as through the EIR amortization process.
Amortized 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 amortization 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 to repurchase in the near term. This category
also includes derivative financial instruments entered into by the Company that are not designated as
hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives
are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.
iii. De-recognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as
the derecognition of the original liability and the recognition of a new liability. The difference in the respective
carrying amounts is recognized in the Statement of Profit and Loss.
(c) 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 recognized amounts and there is an intention to settle on a net basis,
to realize the assets and settle the liabilities simultaneously.
k. Employee Benefits
1. Short term employee benefits
All employee benefits payable wholly within twelve months of rendering services are classified as short-term
employee benefits. Benefits such as salaries, wages, short-term compensated absences and performance incentives,
are recognised during the period in which the employee renders related services and are measured at undiscounted
amount expected to be paid when the liabilities are settled.
2. Long term employee benefits
The cost of providing long term employee benefit such as earned leave is measured as the present value of expected
future payments to be made in respect of services provided by employee's upto the end of the reporting period. The
expected costs of the benefit is accrued over the period of employment using Projected Unit Credit Method. Actuarial
gains and losses arising from the experience adjustments and changes in actuarial assumptions are charged or
credited to the Statement of Profit or Loss in which they arise except those included in cost of assets as permitted.
The benefit is valued annually by independent actuary.
3. Post-employment benefit plan
The Company provides the following post-employment benefits:
- Defined benefit plans such as gratuity
- Defined contributions plan such as provident fund & pension fund
Defined Benefit Plans:
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method on
the basis of actuarial valuation made at the end of each balance sheet date, which recognises each period of service
as given rise to additional unit of employees benefit entitlement and measuring each unit separately to build up the
final obligation. The yearly expenses on account of these benefits are provided in the books of accounts.
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
except those included in cost of assets as permitted.
Re-measurements comprising of actuarial gains and losses arising from experience adjustments and change in
actuarial assumptions, the effect of change in assets ceiling (if applicable) and the return on plan asset (excluding
net interest as defined above) are recognised in other comprehensive income (OCI) except those included in cost
of assets as permitted in the period in which they occur. Re-measurements are not reclassified to the Statement of
Profit and Loss in subsequent periods.
Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and
settlements) is recognised in the Statement of Profit and Loss except those included in cost of assets as permitted in
the period in which they occur.
Liabilities regarding compensated absences have been classified as current/ non-current at the present value of
the defined benefit obligation at the balance sheet date as per the Actuarial valuation report and other benefits like
gratuity have been classified as current.
Defined Contribution Plans:
Eligible employees of the Company receive benefits from a provident fund which is a defined benefit plan. Both the
eligible employee and the Company make monthly contributions to the provident fund plan equal to a specified
percentage of the covered employees salary. The Company contributes a part of the contribution to the provident
fund.
Payments to defined contribution retirement benefit plans, viz., Provident Fund for certain eligible employees,
Pension Fund and Superannuation benefits are recognised as an expense when employees have rendered the service
entitling them to the contribution.
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