a) Revenue recognition
Sales are disclosed net of sales returns, GST and other taxes.
Revenue from contracts with customers is recognised on satisfaction of performance obligation, when control of
the goods is passed to customer. The point at which control passes is determined based on terms of agreement
with customer or as per general industry / market practice.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price net
of variable considerations on account of various discounts and schemes offered by the Company as part of the
contract allocated to that performance obligation.
Transaction price is the amount of consideration to which the Company expects it to be entitled in exchange for
transferring goods or services to a customer.
Income from operations includes revenue earned on account of job work income which is accounted as per the
due terms agreed with the customers.
Other income is comprised primarily of interest income, dividend income, export benefits, sale of wind generated
power and gain/loss on investments. Interest income is recognized using the effective interest method. Dividend
income is recognized when the right to receive payment is established. Export benefits available under prevalent
schemes are accounted on entitlement basis. Income from sale of wind generated power is accounted on accrual
basis on confirmation of units generated and supplied to the State Electricity Board as per the agreement.
b) Foreign currency transactions
Transactions in foreign currencies are initially recorded by the Company at the rate of exchange prevailing on the
date of the transaction.
Monetary assets and monetary liabilities denominated in foreign currencies remaining unsettled at the end of the
year are converted at the exchange rate prevailing on the reporting date.
Differences arising on settlement or conversion of monetary items are recognised in Statement of Profit or Loss.
c) Employee benefits
Employee benefits include salaries, wages, contribution to provident fund, gratuity, leave encashment towards
un-availed leave, and other compensated absences.
i) Defined benefit obligation plans
Gratuity
The Company operates a defined benefit gratuity plan which requires contributions to be made to a fund
separately administered by the Life Insurance Corporation of India (LIC). The cost of providing benefits
under the defined benefit plan is determined using the projected unit credit method. The service cost and
the net interest cost are charged to the Statement of Profit and Loss. Actuarial gains and losses arise due
to re-measurement as result of the actual experience and the assumed parameters and changes in the
assumptions used for valuation are recognised in the Other Comprehensive Income (OCI).
Provident fund
The Company's contribution to provident fund, administered through a company managed trust, is recognised
as an expense in the Statement of Profit and Loss.
ii) Defined contribution plan
The contribution to Pension fund, ESIC and Labour Welfare fund are recognised as an expense in the
Statement of Profit and Loss.
iii) Compensated absences
The Company has a policy to allow accumulation of leave by employees up to certain days. The excess
leave will be encashed. Remaining accumulated leave liability as at the year-end is provided as per actuarial
valuation. The cost of providing benefits under the defined benefit plan is determined using the projected unit
credit method. Actuarial gains and losses arise due to difference in the actual experience and the assumed
parameters and also due to changes in the assumptions used for valuation. The Company recognizes these
actuarial gains and losses in the Statement of Profit and Loss, as income or expense.
iv) Short Term Employee Benefits
Short term benefits payable before twelve months after the end of the reporting period in which the employees
have rendered service are accounted as expense in statement of profit and loss.
d) Property, plant and equipment
Property, plant and equipment are recorded at cost of acquisition / construction less accumulated depreciation
and impairment losses, if any. Cost comprises of the purchase price net of eligible input tax credit, and any
attributable cost of bringing the assets to its working condition for its intended use including borrowing costs for
long term construction project if the capitalisation criteria are met. Capitalisation of borrowing costs in the carrying
amount of property, plant and equipment ceases when the item is in the location and condition necessary for it to
be operating in the manner intended by the Company.
Components of an asset are separated where their value is significant in relation to the total value of the asset
and where those components have different useful lives to the remainder of the asset. Where a component is
replaced or restored, the carrying amount of the old component will be derecognised and value of new component
/ restoration cost will be added. Where the carrying value of the derecognised/replaced component is not known,
a best estimate will be determined by reference to the current cost.
The cost and related accumulated depreciation are eliminated from the financial statements upon sale or
retirement or impairment of the asset and the resultant gains or losses are recognized in the Statement of Profit
and Loss. Assets to be disposed off are reported at the lower of the carrying value or the fair value less cost to
sell. Freehold land is carried at historical cost and not depreciated.
e) Intangible assets
Intangible assets are stated at cost less provisions for amortisation and impairments. Software licenses fees are
charged to statement of profit and loss when incurred. Intangible assets are de-recognised either on their disposal
or where no future economic benefits are expected from their use.
Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference
between disposal proceeds and carrying amount of the asset and are recognised as income or expense in the
Statement of Profit and Loss.
f) Depreciation / amortisation on property, plant & equipment and intangible assets
Depreciation / Amortisation on Property, Plant & Equipment and Intangible Assets (other than freehold land and
capital work-in-progress) is charged on a Straight Line Basis so as to write off the original cost of the assets over
the useful lives.
The management, based on internal technical evaluation, believes that the useful lives as given above best
represent the period over which the assets are expected to be used. The useful life of the Property, Plant &
Equipment has been adopted based on Technical Evaluation and in other cases, as prescribed under the
Companies Act, 2013.
Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year
end.
Depreciation on PPE added during the year is provided on pro rata basis from the month of addition. Depreciation
on sale / disposal of PPE is provided pro-rata up to the preceding month of disposal/discarding.
g) Capital work-in-progress
Assets under construction wherein assets are not ready for use in the manner as intended by the management
are shown as Capital Work-In-Progress.
Directly attributable expenditure comprises of revenue expenses incurred in connection with project implementation
during the period upto ready for use in the manner as intended by the management and are treated as part of
the project costs and capitalized. Such expenses are capitalized only if the project to which they relate, involve
substantial expansion of capacity or upgradation.
h) Leases
i) Company as a lessee
Right-of-use assets and lease liabilities for leases where the lease term ends within 12 months of the lease
commencement date i.e. Short Term Leases are not recognised in Balance sheet. The Company has elected
to recognise the lease payments associated with Short Term Leases as an expense on straight-line basis.
ii) 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.
Lease income from operating lease is recognised in the Statement of profit and loss on straight line basis
over the lease term.
i) Fair value measurement
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, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
j) Impairments of non-current assets
Non-financial 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 to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognized in the statement of profit and loss
is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount
of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the
estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised
recoverable amount, provided that this amount does not exceed the carrying amount that would have been
determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for
the asset in prior years.
k) Inventories
All Inventories are valued at the lower of cost and net realisable value.
Raw materials, Packing Materials and Stores and consumables are valued at lower of cost determined on
weighted average basis and net realisable value.
Work in Process includes material lying at reactors/tanks on which process is continued as on date. Work in
Process is valued at raw material cost considered on moving weighted average method and other parameters, as
estimated and certified by the management.
Semi-Finished goods has been identified as such depending upon stage of completion of finished goods
technically determined by the management. Semi-Finished goods are valued at raw materials cost as calculated
above plus weighted average cost of production including appropriate proportion of cost of conversion to the
extent of process, which is estimated and certified by the management.
Finished Goods are valued at lower of cost and net realisable value.
l) Trade receivables
Trade receivables that do not contain a significant financing component, are measured and carried at its
transaction price i.e. original invoice amount less any provisions for doubtful debts. Provisions are made where
there is evidence of a risk of non-payment, taking into account ageing, previous experience and general economic
conditions. When a trade receivable is determined to be uncollectable it is written off, firstly against any provision
available and then to the Statement of Profit and Loss.
m) Cash and cash equivalents
Cash and cash equivalents include cash at bank and cash in hand and highly liquid interest-bearing securities
with maturities of three months or less from the date of inception/acquisition.
In the cash-flow statement, cash and cash equivalents are shown net of bank overdrafts, which are included as
current borrowings in liabilities on the balance sheet.
n) Borrowing costs
Borrowing costs directly attributable to the acquisition and/or construction of an asset that necessarily takes a
substantial period of time to get ready for its intended use are capitalised as part of the cost of the asset. All other
borrowing costs are expensed in the period in which they are incurred.
o) Taxation
i) Current income tax
Income tax expense is recognized in the statement of profit and loss except to the extent that it relates
to items recognized directly in equity/OCI, in which case it is recognized in other comprehensive income.
Current income tax for current and prior periods is recognized at the amount expected to be paid to or
recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively
enacted on the reporting date. The Company offsets current tax assets and current tax liabilities, where it
has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net
basis, or to realize the asset and settle the liability simultaneously.
ii) Deferred tax
Deferred income tax assets and liabilities are recognized for all temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets
are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the
related tax benefit will be realized.
Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted
or substantively enacted on the reporting date and are expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates
on deferred income tax assets and liabilities is recognized as income or expense in the period that includes
the enactment or the substantive enactment date.
p) Financial instruments
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual
provisions of the financial instrument.
i) Financial assets
a. Initial recognition and measurement
Except for Trade Receivables that do not contain a significant financing component, 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 established by
regulation or convention in the market place (regular way trades) are recognised on the trade date i.e.,
the date that the Company commits to purchase or sell the asset.
b. Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in three categories:
i) Financials assets at amortised cost
A financial asset is subsequently measured at amortised 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.
After initial measurement, debt instruments are subsequently measured at amortised cost using
the effective interest rate method, less impairment, if any.
ii) Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income
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.
The Company has made an irrevocable election for its investments which are classified as equity /
debt instruments to present the subsequent changes in fair value in other comprehensive income
based on its business model.
The fair value is measured adopting valuation techniques as per prevailing valuation guidelines,
to the extent applicable, as at the reporting date.
iii) Financial assets at fair value through profit or loss
Financial assets which are not classified in any of the above categories are subsequently fair
valued through profit or loss.
c. Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on financial
assets measured at amortised cost, lease receivables, trade receivables, other contractual rights to
receive cash or other financial asset. For trade receivables, the Company measures the loss allowance
at an amount equal to lifetime expected credit losses. Further, for the purpose of measuring lifetime
expected credit loss allowance for trade receivables, the Company has used practical expedience as
permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision
matrix which takes into account historical credit loss experience and adjusted for forward-looking
information.
d. De-recognition of financial assets
A financial asset is primarily derecognised when:
1. the right to receive cash flows from the asset has expired, or
2. the Company has transferred its rights to receive cash flows from the asset; and
(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.
On derecognition of a financial asset in its entirety (other than investments in equity instruments at
FVOCI), the differences between the carrying amounts measured at the date of derecognition and the
consideration received is recognised in the Statement of Profit and Loss.
ii) Financial liabilities
a. Initial recognition and measurement
The Company's financial liabilities include trade and other payables, loans and borrowings including
bank overdrafts, financial guarantee contracts and derivative financial instruments.
Financial liabilities are classified, at initial recognition, as at fair value through profit and loss or as those
measured at amortised cost.
b. Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as follows:
i) Financial liabilities at fair value through profit and loss
Financial liabilities at fair value through profit and loss include financial liabilities held for trading.
The Company has not designated any financial liabilities upon initial recognition at fair value
through profit and loss.
ii) Financial liabilities measured at amortised cost
After initial recognition, interest bearing loans and borrowings are subsequently measured at
amortised cost using the effective interest rate method except for those designated in an effective
hedging relationship.
c. De-recognition of financial liabilities
A financial liability (or a part of a financial liability) is derecognized from the Company's balance sheet
when the obligation specified in the contract is discharged or cancelled or expires.
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