a. Recognition and Measurement
Property, Plant and Equipment are stated at cost less accumulated
depreciation and accumulated impairment loss based on cost model.
Cost comprises the purchase price and any attributable cost of bringing
the asset to its working condition for its intended use. Such cost includes
the cost of replacing part of the plant and equipment and borrowing costs
for long-term construction projects if the recognition criteria are met.
Cost also includes non-refundable taxes and duties, freight and other
direct or allocated expenses during construction period, net of any
income earned.
Subsequent costs
Subsequent expenditure related to an item of Property, Plant and
Equipments are added to its book value only if it increases the future
benefits from the existing asset beyond its previously assessed
standard of performance. When significant parts of plant and equipment
are required to be replaced at intervals, the Company depreciates them
separately based on their specific useful lives. All other repair and
maintenance costs are recognised in Statement of Profit and Loss as
incurred.
Derecognition
An item of Property, Plant and Equipment is derecognized upon disposal
or when no future economic benefits are expected to arise from the
continued use of the asset. The cost and related accumulated
depreciation are eliminated from the financial statements upon sale or
retirement of the asset and the resultant gains or losses are recognized
in the Statement of Profit and Loss.
Advances paid towards the acquisition of Property, Plant and Equipment
outstanding at each Balance Sheet date is classified as capital
advances under other non-current assets and the cost of assets not
ready to use before such date are disclosed under ‘Capital work-in¬
progress'.
b. Depreciation:
Depreciation on property, plant and equipment is calculated on a
straight-line basis using the rates arrived at based on the useful lives
estimated by the management based on technical assessment. The
management believes that depreciation rates currently used fairly reflect
its estimate of the useful lives of property, plant and equipment.
3.2 Intangible Assets
Intangible assets that are acquired by the company, which have finite
useful lives are measured at cost less accumulated amortization and
accumulated impairment losses. Cost includes expenditure that is
directly attributable to the acquisition of the intangible asset.
Amortization of intangible asset with finite useful lives
Amortization is recognized in the statement of profit and loss on a
straight line basis over the estimated useful lives of intangible assets
from the date that they are available to use based on the estimates
made by the management w.r.t the useful life and residual value.
Estimated useful life:
a) Software is amortised over 3 years
Amortization methods, useful lives and residual values are reviewed at
each reporting date and adjusted prospectively, if appropriate.
a. Recognition and Measurement
Investment property is property (land or building or part of a building)
held to earn rental income and/or for capital appreciation and not for
use in production, supply of goods or services, administrative
purposes, or sale in the ordinary course of business.
Investment property is stated at cost less accumulated depreciation
and accumulated impairment losses, in accordance with the cost
model prescribed under Ind AS 40.
Cost comprises:
• purchase price
• directly attributable expenditure (such as legal fees, property transfer
taxes, brokerage, and registration charges)
• any other costs directly attributable to bringing the asset to the
condition necessary for its intended use
Borrowing costs directly attributable to acquisition or construction of
investment property are capitalised in accordance with Ind AS 23. Any
income earned during the construction period is adjusted against the
cost of the asset.
Subsequent Costs
Subsequent expenditure related to investment property is added to its
carrying amount only when it is probable that future economic benefits
associated with the item will flow to the Company and the cost can be
measured reliably.
All other repairs and maintenance costs are recognised in the Statement of
Profit and Loss as incurred.
Derecognition
An item of investment property is derecognised upon disposal or when no
future economic benefits are expected from its use or disposal.
The difference between the net disposal proceeds and the carrying amount is
recognised as a gain or loss in the Statement of Profit and Loss in the
period of derecognition.
b. Depreciation
Depreciation on investment property (buildings) is provided on a
straight-line basis over the estimated useful lives prescribed under
Schedule II of the Companies Act, 2013 or based on technical
assessment by management, whichever is appropriate.
• Land is not depreciated
• Useful lives, residual values, and depreciation methods are reviewed at
each reporting date and adjusted prospectively, if required.
3.4 Inventories
Inventories are valued at lower of cost and net realizable value and for
this purpose cost is determined on weighted average basis. The
aforesaid items are valued below cost if the finished products in which
they are to be incorporated are expected to be sold at a loss.
Cost includes direct material cost, direct labour cost, non-refundable
taxes and duties, freight, other direct expenses and an appropriate
proportion of variable and fixed overhead expenditure.
Cost of the purchased inventory are determined after deducting
rebates and discounts. Provision is made for obsolete, non-moving and
defective stocks, wherever necessary.
3.5 Impairment of Non-Financial Asset
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 of
the Company. 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.
3.6 Employee benefits - Retirement benefit costs and termination
benefits3.6.1 Defined Contribution Plans
Payment to defined contribution retirement benefit plans i.e. Provident
Fund, Employee state insurance are recognised as an expense in the
Statement of Profit and Loss when an employees have rendered
service entitling them to the contributions.
3.6.2 Defined Benefit Plans
The Company has a defined benefit gratuity plan. Every employee who
has completed five years or more of service gets a gratuity on post
employment at 15 days salary (last drawn salary) for each completed
year of service as per the rules of the Company. The aforesaid liability is
provided for on the basis of an actuarial valuation on projected unit
credit method made at the end of the financial year. The scheme is
unfunded.
Remeasurement, comprising actuarial gains and losses and the return
on plan assets (excluding net interest), is reflected immediately in the
balance sheet with a charge or credit recognised in other
comprehensive income (OCI) in the period in which they occur.
Remeasurement recognised in other comprehensive income is
reflected immediately in retained earnings and is not reclassified to
Statement of Profit and Loss.
Past service cost is recognised in Statement of profit and loss in the
period of a plan amendment. Net interest is calculated by applying the
discount rate at the beginning of the period to the net defined benefit
liability or asset. Defined benefit cost are categorised as follows:
• Service cost (including current service cost, as well as gains and losses
on curtailments and settlement)
• Net interest expense or income
• Remeasurement
The company presents the first two components of defined benefit cost
in profit or loss in the line item ‘employee benefit expense'. Curtailment
gains or losses are accounted for as past service cost.
The retirement benefit obligation recognised in the Balance Sheet
represents the actual deficit or surplus in the company's defined benefit
plans. Any surplus resulting from this calculation is limited to the
present value of any economic benefits available in the form of refunds
from the plans or reductions in future contributions to the plans.
3.6.3 Short term benefits
The costs of all short-term employee benefits (that are expected to be
settled wholly within 12 months after the end of the period in which the
employees render the related service) are recognised during the period
in which the employee renders the related services. The accruals for
employee entitlements of benefits such as salaries, bonuses and
annual leave represent the amount which the Company has a present
obligation to pay as a result of the employees' services and the
obligation can be measured reliably. The accruals have been
calculated at undiscounted amounts based on current salary levels at
the Balance Sheet date.
3.7 Financial Instruments3.7.1 Financial Assetsa) Initial Recognition and Measurement
All financial assets are initially recognized at fair value except trade
receivables which do not contain a significant financing component are
measured at transaction price according to Ind AS 115. Transaction
costs of financial assets not at Fair Value through Profit or Loss are
added to the fair value of financial asset. Purchase and sale of financial
assets are recognised using trade date accounting.
b) Subsequent Measurement
For purposes of subsequent measurements, 'debt instrument' is
measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold
assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows
that are solely payments of principal and interest (SPPI) on the principal
amount outstanding.
This category is the most relevant to the company. After initial
measurement, such financial assets are subsequently measured at
amortised cost using the effective interest rate (EIR) method.
Amortised 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 amortisation is included in finance income in the profit or
loss. The losses arising from impairment are recognised in the profit or
loss. This category generally applies to trade and other receivables.
c) Impairment of financial assets
The Company assesses at each Balance Sheet date whether there is
objective evidence that a financial asset or a group of financial assets is
impaired. A financial asset or a group of financial assets is impaired and
impairment losses are incurred only if there is objective evidence of
impairment as a result of one or more events that occurred after the
initial recognition of the asset (a ‘loss event') and that loss event (or
events) has an impact on the estimated future cash flows of the
financial asset or group of financial assets that can be reliably
estimated.
n accordance with Ind-AS 109 - Financial Instruments, the Company
follows ‘simplified approach' for recognition of impairment loss
allowance on trade receivables which do not contain a significant
financing component.
The application of simplified approach does not require the Company to
track changes in credit risk. Rather, it recognises impairment loss
allowance based on lifetime Expected Credit Losses at each Balance
Sheet date, right from its initial recognition.
d) Derecognition of Financial Assets
A financial asset (or, where applicable, a part of a financial asset or part
of a group of similar financial assets) is primarily derecognised (i.e.
removed from the Company's balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the
asset or has assumed an obligation to pay the received cash flows in
full without material delay to a third party under a ‘pass-through'
arrangement; and either:
(a) the Company has transferred substantially all the risks and rewards of
the asset, or
(b) the Company has neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred control of the asset.
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