C. Material Accounting Policies
A summary of the material Accounting Policies applied in the
preparation of the Financial Statements are as given below.
These Accounting Policies have been applied consistently
to all periods presented in the Financial Statements.
1. Property, Plant & Equipment
1.1. Initial Recognition and Measurement
An item of Property, Plant and Equipment is
recognized as an Asset if and only if 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.
Items of Property, Plant and Equipment
are measured at Cost less Accumulated
Depreciation/Amortization and Accumulated
impairment losses. Cost includes expenditure
that is directly attributable to bringing the
asset, inclusive of non-refundable taxes &
duties, to the location and condition necessary
for it to be capable of operating in the manner
intended by management.
When parts of an item of property, plant and
equipment have different useful lives, they are
recognized separately.
Items of spare parts, stand-by equipment and
servicing equipment which meet the definition of
Property, Plant and Equipment are capitalized.
1.2. Subsequent Costs
Subsequent expenditure is recognized as an
increase in the carrying amount of the asset
when it is probable that future economic
benefits deriving from the cost incurred will flow
to the enterprise and the cost of the item can be
measured reliably.
The cost of replacing part of an item of Property,
Plant and Equipment is recognized in the
carrying amount of the item if it is probable that
the future economic benefits embodied within
the part will flow to the Company and its cost
can be measured reliably. The carrying amount
of the replaced part is derecognized. The costs
of the day-to-day servicing of Property, Plant
and Equipment are recognized in Statement of
Profit or Loss as and when incurred.
1.3. Derecognition
Property, Plant and Equipment are derecognized
when no future economic benefits are expected
from their use or upon their disposal. Gains and
Losses on disposal of an item of Property, Plant
and Equipment are determined by comparing
the proceeds from disposal with the carrying
amount of Property, Plant and Equipment,
and are recognized in the Statement of
Profit and Loss.
1.4. Depreciation
Assets are depreciated using straight line method
over the estimated useful life of the asset as
specified in Part “C” of Schedule II of Companies
Act, 2013 except for Plant & Machinery (other
than Laboratory Equipments, Fire Fighting
Equipments and Tools &Equipments) whose
estimated useful life is taken as 13 years (Triple
Shift) after retaining residual life of 5% of original
cost. Assets residual values and useful lives are
reviewed at each financial year end considering
the physical condition of the assets.
Depreciation on additions to/deductions from
Property, Plant & Equipment during the year is
charged on pro-rata basis from/up to the date on
which the asset is available for use/disposed.
Where it is probable that future economic
benefits deriving from the cost incurred will
flow to the enterprise and the cost of the
item can be measured reliably, subsequent
expenditure on a PPE along-with its unamortized
depreciable amount is charged off prospectively
over the revised useful life determined by
technical assessment.
In circumstance, where a property is abandoned,
the cumulative capitalized costs relating to the
property are written off in the same period.
2. Capital Work-in-Progress
The cost of self-constructed assets includes the cost
of materials & direct labour, any other costs directly
attributable to bringing the assets to the location
and condition necessary for it to be capable of
operating in the manner intended by management
and borrowing costs.
Expenses directly attributable to construction of
property, plant and equipment incurred till they
are ready for their intended use are identified
and allocated on a systematic basis on the cost of
related assets.
3. Intangible Assets and Intangible Assets under
Development
3.1. Initial recognition and measurement
An Intangible Asset is recognized if and only if
it is probable that the expected future economic
benefits that are attributable to the asset will
flow to the company and the cost of the asset
can be measured reliably.
Intangible assets that are acquired by the
Company, which have finite useful lives, are
recognized at cost. Subsequent measurement
is done at cost less accumulated amortization
and accumulated impairment losses. Cost
includes any directly attributable incidental
expenses necessary to make the assets ready
for its intended use.
Expenditure on development activities is
capitalized only if the expenditure can be
measured reliably, the product or process is
technically and commercially feasible, future
economic benefits are probable and the Company
intends to and has sufficient resources to complete
development and to use or sell the asset.
Expenditure incurred which are eligible for
capitalizations under intangible assets are
carried as intangible assets under development
till they are ready for their intended use.
3.2. Subsequent Costs
Subsequent expenditure is recognized as an
increase in the carrying amount of the asset
when it is probable that future economic
benefits deriving from the cost incurred will flow
to the enterprise and the cost of the item can be
measured reliably.
3.3. Derecognition
An Intangible Asset is derecognized when no
future economic benefits are expected from their
use or upon their disposal. Gains and Losses
on disposal of an item of Intangible Assets are
determined by comparing the proceeds from
disposal with the carrying amount of Intangible
Assets and are recognized in the Statement of
Profit and Loss.
3.4. Amortization
Intangible Assets having definite life is
amortized on straight line method in their
useful lives. Useful life of Computer Software is
estimated at five years.
4. Borrowing Cost
Borrowing costs that are directly attributable to the
acquisition, construction, exploration, development or
erection of qualifying assets are capitalized as part
of cost of such asset until such time the assets are
substantially ready for their intended use. Qualifying
assets are assets which take a substantial period
of time to get ready for their intended use or sale.
Capitalization of borrowing costs ceases when
substantially all the activities necessary to prepare
the qualifying assets for their intended uses are
complete. Borrowing costs consist of:
(a) interest expense calculated using the effective
interest method as described in Ind AS 109 -
‘Financial Instruments’,
(b) finance charges in respect of finance leases
recognized in accordance with Ind AS
116 - ‘Leases’,
(c) exchange differences arising from foreign
currency borrowings to the extent that they are
regarded as an adjustment to interest costs and,
(d) other costs that an entity incurs in connection
with the borrowing of funds. Income earned on
temporary investment of the borrowings pending
their expenditure on the qualifying assets is
deducted from the borrowing costs eligible for
capitalization.
All other borrowing costs are charged to revenue as
and when incurred.
5. Statement of Cash Flows
Cash Flow Statement has been prepared in
accordance with the Indirect method prescribed in Ind
AS 7 ‘Statement of Cash Flows’.
6. Inventories
Inventories are valued at the lower of cost and net
realisable value. Cost includes cost of purchase, cost
of conversion and other costs incurred in bringing the
inventories to their present location and condition.
Costs of purchased inventory are determined after
deducting rebates and discounts. Net realisable value
is the estimated selling price in the ordinary course of
business, less estimated costs of completion and the
estimated costs necessary to make the sale.
Spare parts other than those capitalized as Property,
Plant and Equipment are carried as inventory.
The diminution in the value of obsolete, unserviceable
and surplus stores & spares is ascertained on review
and provided for.
7. Cash and Cash Equivalent
Cash and cash equivalent in the Balance Sheet
comprises Cash at Banks, Cash on Hand and Short¬
Term Deposits with an original maturity of three
months or less, which are subject to insignificant risk
of change in value.
8. Government Grants
Government grants are recognized where there is a
reasonable assurance that the grant will be received
and the Company will comply with all attached
conditions. When the government grant relates to the
property, plant & equipment, the same is recognized
as Deferred Government Grant and amortized in the
Statement of Profit & Loss over the expected useful
life of related assets. In case of grant received for
specific assets, the asset is disclosed by deducting
that grant in arriving at the carrying amount of that
assets. Government grants that compensate the
Company for expenses incurred are recognized in the
statement of profit and loss, as income or deduction
from the relevant expense, on a systematic basis in
the periods in which the expense is recognized.
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