2 Significant accounting policies
2.1 Basis of preparation
i The standalone financial statements are prepared on the accrual basis of accounting and in
accordance with the Indian Accounting Standards (hereinafter referred to as "the Ind AS") as
prescribed under section 133 of the Companies Act, 2013 ("the Act") (as amended) and other
relevant provisions of the Act.
ii The standalone financial statements have been prepared on a going concern basis under the
historical cost basis except for the followings:
• certain financial assets and liabilities are measured at fair value;
• assets held for sale measured at fair value less cost to sell;
• defined benefit plans plan assets measured at fair value.
iii The standalone financial statements are presented in Indian Rupees in Lakhs and all values are
rounded to the nearest in two decimal point except where otherwise stated.
The statement of cash flows has been prepared under indirect method, whereby profit or loss is
adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or
future operating cash receipts or payments and items of income or expense associated with
investing or financing cash flows. The cash flows from operating, investing and financing activities of
the Company are segregated. The Company considers all highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value to be cash equivalents.
2.2 Current and non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current
classification. An asset is treated as current when it is:
i. Expected to be realized or intended to be sold or consumed in normal operating cycle
ii. Held primarily for the purpose of trading,
iii. Expected to be realized within twelve months after the reporting period, or
iv. Cash or cash equivalent unless restricted from being exchanged or 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:
i. It is expected to be settled in normal operating cycle
ii. It is held primarily for the purpose of trading
iii. It is due to be settled within twelve months after the reporting period, or
iv. There is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation
in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
2.3 Fair value measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet
date.
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.
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.
The Company categorizes assets and liabilities measured at fair value into one of three levels as
follows:
• Level 1 — Quoted (unadjusted)
This hierarchy includes financial instruments measured using quoted prices.
• Level 2
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly or indirectly.
Level 2 inputs include the following:
a) Quoted prices for similar assets or liabilities in active markets.
b) Quoted prices for identical or similar assets or liabilities in markets that are not active.
c) Inputs other than quoted prices that are observable for the asset or liability.
d) Market - corroborated inputs.
• Level 3
They are unobservable inputs for the asset or liability reflecting significant modifications to
observable related market data or Company's assumptions about pricing by market participants.
Fair values are determined in whole or in part using a valuation model based on assumptions
that are neither supported by prices from observable current market transactions in the same
instrument nor are they based on available market data.
2.4 Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be
recovered principally through a sale transaction rather than through continuing use. This condition is
regarded as met only when the asset (or disposal group) is available for immediate sale in its present
condition subject only to terms that are usual and customary for sales of such asset (or disposal
group) and its sale is highly probable. Management must be committed to the sale, which should be
expected to qualify for recognition as a completed sale within one year from the date of
classification.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of
their carrying amount and fair value less costs to sell and are disclosed separately under the head
"Other Current Assets". once classified as held for sale are not depreciated or amortised.
2.5 Property Plant and Equipment
Property, Plant and Equipment (PPE) and intangible assets are not depreciated or amortized once
classified as held for sale.
PPE are stated at actual cost less accumulated depreciation and impairment loss. Actual cost is
inclusive of freight, installation cost, duties, taxes and other incidental expenses for bringing the
asset to its working conditions for its intended use (net of recoverable taxes) and any cost directly
attributable to bring the asset into the location and condition necessary for it to be capable of
operating in the manner intended by the Management. It includes professional fees and borrowing
costs for qualifying assets.
Subsequent expenditure related to an item of property, plant and equipment is added to its book
value only if it increases the future benefits from its previously assessed standard of performance.
All other expenses on existing property, plant and equipment, including day-to-day repair and
maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss
for the period during which such expenses are incurred.
Borrowing costs directly attributable to acquisition of property, plant and equipment which take
substantial period of time to get ready for its intended use are also included to the extent they relate
to the period till such assets are ready to be put to use.
Significant Parts of an item of PPE (including major inspections) having different useful lives and
material value or other factors are accounted for as separate components. All other repairs and
maintenance costs are recognized in the statement of profit and loss as incurred.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will
flow to the entity and the cost can be measured reliably.
Advances paid towards the acquisition of Property, plant and equipment are disclosed as "Capital
advances" under "Other Non - Current Assets" and the cost of assets not ready intended use as at
the balance sheet date are disclosed as 'Capital work-in-progress' Capital work- in- progress includes
cost of property, plant and equipment under installation / under development as at the balance
sheet date.
Depreciation
Depreciation of these PPE commences when the assets are ready for their intended use.
Depreciation is provided for on straight line method on the basis of useful life. The useful life of
property, plant and equipment are as follows: -
On assets acquired on lease (including improvements to the leasehold premises), amortization has
been provided for on Straight Line Method over the period of lease.
The estimated useful lives and residual values are reviewed on an annual basis and if appropriate,
changes in estimates are accounted for prospectively.
Depreciation on subsequent expenditure on PPE arising on account of capital improvement or other
factors is provided for prospectively over the remaining useful life.
Derecognition
An item of PPE is de-recognized 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 PPE is determined as the difference between the sales proceeds and the carrying amount of
the asset and is recognized in the Statement of Profit and Loss.
2.6 Intangible Assets
Intangible assets are stated at cost (net of recoverable taxes) less accumulated amortization and
impairment loss. Intangible assets are amortized over their respective individual estimated useful
lives on a straight-line basis, from the date that they are available for use. The estimated useful life
of an identifiable intangible asset is based on a number of factors including the effects of
obsolescence, demand, competition, and other economic factors (such as the stability of the
industry, and known technological advances), and the level of maintenance expenditures required to
obtain the expected future cash flows from the asset.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will
flow to the entity and the cost can be measured reliably.
Intangible assets comprising of goodwill and other intangible assets is amortized on a straight line
basis over the useful life of three years which is estimated by the management.
Depreciation on subsequent expenditure on intangible assets arising on account of capital
improvement or other factors is provided for prospectively over the remaining useful life.
Amortization methods and useful lives are reviewed on an annual basis and if appropriate, changes
^™in estimates are accounted for prospectively.
An intangible asset is derecognized on disposal, or when no future economic benefits are expected
from use or disposal. Gains or losses arising from de-recognition of an intangible asset, measured as
the difference between the net disposal proceeds and the carrying amount of the asset, and are
recognized in the Statement of Profit and Loss when the asset is derecognized.
2.7 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
2.7.1 Financial assets
Initial recognition and measurement
All financial assets are recognized 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 are recognized on the trade date, i.e., the date that the Company commits to purchase
or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in following categories
based on business model of the entity:
• Financial Assets at amortized cost
A financial asset is measured at amortized cost if it is held within a business model whose
objective is to hold the asset 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.
• Financial Assets at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI if it 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.
• Financial Assets and equity instruments at fair value through profit or loss (FVTPL)
A financial asset which is not classified in any of the above categories are measured at FVTPL.
• Other Equity Investments
All other equity investments are measured at fair value, with value changes recognized in
Statement of Profit and Loss, except for those equity investments for which the Company has
elected to present the value changes in 'Other Comprehensive Income'. However, dividend on
such equity investments are recognised in Statement of Profit and loss when the Company's
right to receive payment is established.
• Cash and Cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible
into known amounts 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. Cash and cash equivalents consist of balances with banks which are unrestricted
for withdrawal and usage.
Financial assets are reclassified subsequent to their recognition, if the Company changes its business
model for managing those financial assets. Changes in business model are made and applied
prospectively from the reclassification date which is the first day of immediately next reporting
period following the changes in business model in accordance with principles laid down under Ind AS
109 - Financial Instruments.
Investments in subsidiaries, Associates and Joint Ventures
The Company has accounted for its subsidiaries, Associates and Joint Ventures at cost less impairment
loss (if any). The investments in preference shares with the right of surplus assets which are in nature
of equity in accordance with Ind AS 32 are treated as separate category of investment and measured
at FVTOCI.
De-recognition
A financial asset is de-recognized only when
• The Company has transferred the rights to receive cash flows from the financial asset or
• Retains the contractual rights to receive the cash flows of the financial asset, but assumes a
contractual obligation to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, it evaluates whether it has transferred substantially all
risks and rewards of ownership of the financial asset. In such cases, the financial asset is de¬
recognized.
Where the Company has neither transferred a financial asset nor retains substantially all risks and
rewards of ownership of the financial asset, the financial asset is de-recognized if the company has
not retained control of the financial asset. Where the company retains control of the financial asset,
the asset is continued to be recognized to the extent of continuing involvement in the financial asset.
^^Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL), simplified model
approach for measurement and recognition of Impairment loss on Trade receivables or any
contractual right to receive cash or another financial asset that result from transactions that are
within the scope of Ind AS 115.
ECL impairment loss allowance (or reversal) recognized during the year is recognized as income /
expense in the statement of Profit and Loss.
2.7.2 Financial liabilities
Classification as debt or equity
Financial liabilities and equity instruments issued by the company are classified according to the
substance of the contractual arrangements entered into and the definitions of a financial liability
and an equity instrument.
Initial recognition and measurement
Financial liabilities are recognized when the company becomes a party to the contractual provisions
of the instrument. Financial liabilities are initially measured at the amortized cost unless at initial
recognition, they are classified as fair value through profit and loss.
Subsequent measurement
Financial liabilities are subsequently measured at amortized cost using the effective interest rate
method. Financial liabilities carried at fair value through profit or loss is measured at fair value with
all changes in fair value recognized in the statement of profit and loss.
• Trade and other payables
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 year. They are
recognized initially at their fair value and subsequently measured at amortized cost using the
effective interest method.
• Loans and borrowings
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.
De-recognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled
or expires.
Offsetting
Financial Assets and Financial Liabilities are offset and the net amount is presented in the balance
sheet when, and only when, the Company has a legally enforceable right to set off the amount and it
intends, either to settle them on a net basis or to realise the asset and settle the liability
simultaneously.
2.8 Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be
impaired. If any indication exists, or when annual impairment testing for an asset is required, the
Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of
an asset's or cash-generating units (CGU) fair value less costs of disposal and its value in use.
Recoverable amount is determined for an individual asset, unless the asset does not generate cash
inflows 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.
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.
Impairment losses of continuing operations, including impairment on inventories, are recognized in
the statement of profit and loss. After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
A previously recognized impairment loss (except for goodwill) is reversed only if there has been a
change in the assumptions used to determine the asset's recoverable amount since the last
impairment loss was recognized. The reversal is limited to the carrying amount of the asset.
2.9 Revenue recognition
Revenue from contracts with customers is recognized when the entity satisfies a performance
obligation by transferring a promised service to customer at an amount that reflects the
consideration to which the company expects to be entitled in exchange for those services.
• Sale of Services
Sale of services are recognized on satisfaction of performance obligation towards rendering of
such services
Contract Balances
Trade Receivables
A receivable represents the Company's right to an amount of consideration that is
unconditional.
Contract Liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the
Company has received consideration (or an amount of consideration is due) from the customer.
If a customer pays consideration before the Company transfers goods or services to the
customer, a contract liability is recognized when the payment is made or the payment is due
(whichever is earlier).
Contract liabilities are recognised as revenue when the Company performs under the contract.
• Interest income
Interest income from a financial asset is recognized using effective interest rate method.
• Other income is recognized when no significant uncertainty as to its determination or realization
exists.
2.10 Leases
As a lessee
The Company assesses whether a contract contains 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 lease term of twelve months or less (short-term leases) and low value leases.
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. The Company also assesses the
right-of- use asset for impairment when such indicators exist.
The lease liability is initially measured at the present value of the fixed lease payments including
variable lease payments that depend on an index or a rate. The lease payments are discounted using
the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing
rate of the Company.
Lease payments included in the measurement of the lease liability are made up of fixed payments
(including in substance fixed), and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased
for interest expenses. It is re-measured to reflect any reassessment or modification.
When the lease liability is re-measured, the corresponding adjustment is reflected in the right-of-use
asset or profit and loss account as the case may be.
The Company has elected to account for short-term leases using the exemption given under Ind AS
116 Instead of recognizing a right-of-use asset and lease Liability. It also applies the lease of low-
value assets recognition exemption to leases that are considered to be low value. The payments in
relation to these are recognized as an expense in the statement of profit or loss on a straight-line
basis over the lease term or on another systematic basis if that basis is more representative of the
pattern of the Company's benefit
As a lessor
Leases are classified as finance leases when substantially all of the risks and rewards of ownership
transfer from the Company to the lessee. Amounts due from lessees under finance leases are
recorded as receivables at the Company's net investment in the leases. Finance lease income is
allocated to accounting periods so as to reflect a constant periodic rate of return on the net
investment outstanding in respect of the lease.
Leases in which the Company does not transfer substantially all the risks and rewards of ownership
of an asset are classified as operating leases. Rental income from operating lease is recognised on a
straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount of the leased asset and recognised
over the lease term on the same basis as rental income.
2.11 Foreign currency transactions
Items included in the financial statements of the Company are measured using the currency of the
primary economic environment in which the entity operates ('the functional currency'). The financial
statements are presented in Indian rupee (INR), which is entity's functional and presentation
currency.
Foreign currency transactions are translated into the functional currency using the exchange rates at
the dates of the transactions. Monetary items denominated in foreign currency at the year end and
not covered under forward exchange contracts are translated at the functional currency spot rate of
exchange at the reporting date. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates are generally recognised in profit or loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented
in the consolidated statement of profit and loss, within finance costs. All other foreign
exchange gains and losses are presented in the statement of profit and loss on a net basis
within other gains/(losses).
Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rates at the dates of the initial transactions. Non-monetary
items that are measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined. Translation differences on assets and
liabilities carried at fair value are reported as part of the fair value gain or loss.
2.12 Employee Benefits
Short term employee benefits: -
Liabilities for wages and salaries, including non-monetary benefits that are expected to be
settled wholly within 12 months after the end of the year in which the employees render the
related service are recognized in respect of employees’ services up to the end of the
reporting year and are measured at the amounts expected to be paid when the liabilities are
settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
Post-employment obligations
Defined contribution plans
Provident fund benefit is a defined contribution plan under which the Company pays fixed
contributions into funds established under the Employee's Provident funds and Miscellaneous
Provisions Act, 1952. The Company has no legal or constructive obligations to pay further
contributions after payment of the fixed contribution.
The contribution paid / payable under the schemes is recognized during the period in which the
employee renders the related service.
Defined benefit plans
Gratuity
The Company provides for gratuity obligations through a defined benefit retirement plan (the
'Gratuity Plan') covering all employees. The Gratuity Plan provides a lump sum payment to vested
employees at retirement or termination of employment based on the respective employee salary
and years of employment with the Company. The Company provides for the Gratuity Plan based on
actuarial valuations in accordance with Indian Accounting Standard 19 (revised), "Employee
Benefits". The present value of obligation under gratuity is determined based on actuarial valuation
using Project Unit Credit Method, which recognizes each period of service as giving rise to additional
unit of employee benefit entitlement and measures each unit separately to build up the final
obligation.
Gratuity is recognized based on the present value of defined benefit obligation which is computed
using the projected unit credit method, with actuarial valuations being carried out at the end of each
annual reporting year. These are accounted either as current employee cost or included in cost of
assets as permitted.
Re-measurement of defined benefit plans in respect of post-employment are charged to the Other
Comprehensive Income
Leave Encashment
As per the Company's policy, leave earned during the year do not carry forward, they lapse if the
current period's entitlement is not used in full and do not entitle employees to a cash payment for
unused entitlement during service.
Termination benefits
Termination benefits are payable when employment is terminated by the Company before the
normal retirement date, or when an employee accepts voluntary redundancy in exchange for these
benefits. Termination benefits are recognized as an expense in the year in which they are incurred.
2.13 Borrowing Costs
Borrowing costs that are directly attributable to the acquisition, construction or production of
qualifying asset are capitalized as part of cost of such asset. Other borrowing costs are recognized as
an expense in the year in which they are incurred.
Borrowing costs consists of interest and other costs that an entity incurs in connection with the
borrowing of funds.
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