3 Significant accounting policies
3.1 Current versus non-current classification
The Company presents assets and liabilities in the balance sheet
based on current/ non- current classification. An asset as current
when it is:
• Expected to be realized or intended to sold ox consumed in
normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realized within twelve months after the
reporting period, or
• Cash or cash equivalent unless restricted from being
exchanged of used to settle a liability for at least twelve
months after the reporting period
• All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in normal operating cycle
• It is held primarily for the purpose of trading
• It is due to be settled within twelve months after the reporting period,
or
• There is no unconditional right to defer the settlement of the liability
for at
Least twelve months after the reporting period
The Company classifies all other liabilities as non-current. Deferred tax
assets and liabilities are classified as non-current assets and liabilities.
3.2 Fair value measurement
Fair value is the price that would be received to sell an asset or settle a
liability in an ordinary transaction between market participants at the
measurement date. The fair value of an asset or a liability is measured
using the assumption that market participants would use when
pricing an asset or liability acting in their best economic interest. The
fair value of plants and equipment as at transition date have been
taken based on valuation performed by an independent technical
expert. The Company used valuation techniques, which were
appropriate in circumstances and for which sufficient data were
available considering the expected loss/ profit in case of financial
assets or liabilities.
3.3 Property, plant and equipment
On transition to IND AS, the Company has adopted optional
exception under IND AS 16 to measure Property, Plant and
Equipment at fair value. Consequently, the fair value has been
assumed to be deemed cost of Property, Plant and Equipment on the
date of transition Subsequently Property, Plant and Equipment are
carried at cost less accumulated depreciation and accumulated
impairment losses, if any. Cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognized 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 the replaced part is derecognized.
All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.
Assets are depreciated to the residual values on a straight-line basis
over the estimated useful lives based on technical estimates which is
different from one specified in Schedule II of the Companies Act,
2013. Assets residual values and useful lives are reviewed at each
financial year end considering the physical condition of the assets and
benchmarking analysis or whenever there are indicators for review of
residual value and useful life. Free hold land is not depreciated.
• Computer, Printer & Office Equipment 3-5 Years
• Furniture, Fittings and Electric Installations 10 Years
• Plant and Machinery 15 Years
The 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 the Statement of Profit and Loss on the date of
disposal or retirement.
3.4 Research & Development cost
Research costs are expensed as incurred. Development expenditures on
an individual project are recognized as an intangible asset when the
company can demonstrate:
- The technical feasibility of completing the intangible assets so that the
asset will be available for use or sale
- Its intention to complete and its ability and intention to use or sell the
asset
- How the asset will generate future economic benefits
- The availability of resources to complete the asset
- The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an
asset, the asset is carried at cost less any accumulated amortization
and accumulated impairment losses. Amortisation of the asset begins
when development is complete and the asset is available for use. It is
amortised over the period of expected future benefit. Amortisation
expense is recognized in the statement of profit and loss.
3.5 Trade receivables
A receivable is classified as a 'trade receivable' if it is in respect to the
amount due from customers on account of goods sold or services
rendered in the ordinary course of business. Trade receivables are
recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less provision for
impairment. For some trade receivables the Company may obtain
security in the form of guarantee, security deposit or letter of credit
which can be called upon if the counter party is in default under the,
terms of the agreement.
3.6 Investments in Subsidiaries
Subsidiaries are those entities (including special purpose entities) in
which the Company has an interest of more than one half of the
voting rights or otherwise has power to govern the financial and
operating policies. Then existence and effect of potential voting rights
that are presently exercisable or presently convertible are considered
when assessing whether the company controls another entity.
Investment in subsidiaries is shown at cost. Where the carrying
amount of the investment is greater than its estimated recoverable
amount it is written down immediately to its recoverable amount and
the difference is transferred to the statement of profit and loss. On
disposal of the investment, the difference between the net disposal
proceeds and the carrying amounts is charge or credited to profit or
loss.
3.7 Trade and other payables
A payable is classified as 'trade payable' if it is in respect of the
amount due on account of goods purchased or services received in the
normal course of business. These amounts represent liabilities for
goods and services provided to the Company prior to the end of
financial year which are unpaid. Trade and other payables are
presented as current liabilities unless payment is not due within 12
months after the reporting period. They are recognised initially at
their fair value and subsequently measured at amortized cost using
the effective interest method.
3.8 Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash on hand
and at bank, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less that
axe readily convertible to a known amount of cash and are subject to an
in significant risk of changes in value and are held for the purpose of
meeting short-term cash commitments.
For the purpose of the statement of cash flows, cash and cash equivalents
consist of cash and short-term deposits, as defined above, net of
outstanding bank overdrafts as they are considered an integral part of the
company's cash management.
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