2.4 Material accounting policies
A Property, plant and equipment
An item of property, plant and equipment is recognized as
an asset if it is probable that the future economic benefits
associated with the item will flow to the Company and its
cost can be measured reliably. This recognition principle
is applied to the costs incurred initially to acquire an
item of property, plant and equipment and also to costs
incurred subsequently to add to, replace part of, or service
it. All other repair and maintenance costs, including
regular servicing, are recognized in the statement of profit
and loss as incurred. When a replacement occurs, the
carrying value of the replaced part is de-recognized. Where
an item of property, plant and equipment comprises
major components having different useful lives, these
components are accounted for as separate items.
Property, plant and equipment are stated at cost, less
accumulated depreciation and impairment. Cost includes
all direct costs and expenditures incurred to bring the
asset to its working condition and location for its intended
use. Trial run expenses (net of revenue) are capitalized.
Borrowing costs incurred during the period of construction
is capitalized as part of cost of the qualifying assets.
The gain or loss arising on disposal of an asset is
determined as the difference between the sale proceeds
and the carrying value of the asset, and is recognized in the
statement of profit and loss.
Capital work-in-progress comprises cost of fixed assets
that are not yet ready for their intended use at the year end.
B Depreciation and amortisation of property, plant and
equipment and intangible assets
Depreciation or amortization is provided so as to write
off, on a straight line basis, the cost of property, plant and
equipment and other intangible assets, including those held
under finance leases to their residual value. These charges
are commenced from the dates the assets are available for
their intended use and are spread over their estimated
useful economic lives or, in the case of leased assets, over
the lease period, if shorter. The estimated useful lives of
assets and residual values are reviewed regularly and, when
necessary, revised. No further charge is provided in respect
of assets that are fully written down but are still in use.
Depreciation on assets under construction commences
only when the assets are ready for their intended use.
The estimated useful lives for the current and comparative
periods are determined with reference to Schedule II to
the Companies Act, 2013. Depreciation methods, useful
lives and residual values are reviewed at each financial
year-end and adjusted if appropriate.
Freehold land is stated at cost and is not depreciated.
C Intangible assets
(i) Intangible assets are stated at cost less accumulated
amortization or impairment. Intangible assets are
amortized on their estimated useful life of assets.
(ii) Stripping costs
The Company separates two different types
of stripping costs that are incurred in surface
mining activity:
(a) Developmental stripping costs and
(b) Production stripping costs
Developmental stripping costs which are incurred in
order to obtain access to quantities of mineral reserves
that will be mined in future periods are capitalized as
part of mining assets. Capitalization of developmental
stripping costs ends when the commercial production
of the mineral reserves begins.
Production stripping costs are incurred to raw
granite in the form of inventories and/or to improve
access to deeper levels of material. Production
stripping costs are accounted for as inventories to
the extent the benefit from production stripping
activity is realized in the form of inventories.
The Company recognizes a stripping activity asset
in the production phase if, and only if, all of the
following are met:
(i) It is probable that the future economic benefit
(improved access to the mine) associated with
the stripping activity will flow to the Company
(ii) The Company can identify the component ofthe
mine for which access has been improved and
(iii) The costs relating to the improved access to
that component can be measured reliably
Such costs are presented within mining assets
(Intangible Assets). After initial recognition,
stripping activity assets are carried at cost less
accumulated amortization and impairment. The
Stripping activity assets are amortized based on cost
of inventory produced compared with expected cost.
D Right-of-use Assets
The Company’s lease asset classes primarily consist of
leases for Land and Buildings, Retail Outlets, Vehicles
and Plant & Machinery. The Company assesses whether a
contract is or contains a 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 the right to 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.
(i) As a Lessee
At the date of commencement of the lease, the
Company recognises 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 term of twelve months or less (short
term leases) and leases of low value assets. For
these short term and leases of low value assets,
the Company recognises the lease payments as an
operating expense on a straight line basis over the
term of the lease.
The right-of-use assets are initially recognised 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,
if any. 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 lease liability is initially measured at the
present value of the future lease payments.
The lease payments are discounted using the
interest rate implicit in the lease or, if not readily
determinable, using the incremental borrowing
rates. The lease liability is subsequently remeasured
by increasing the carrying amount to reflect
interest on the lease liability, reducing the carrying
amount to reflect the lease payments made.
A lease liability is remeasured upon the occurrence
of certain events such as a change in the lease term
or a change in an index or rate used to determine
lease payments. The remeasurement normally also
adjusts the leased assets. Lease liability and ROU
asset have been separately presented in the Balance
Sheet and lease payments have been classified as
financing cash flows.
(ii) 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. When the Company is
an intermediate lessor, it accounts for its interests
in the head lease and the sublease separately. The
sublease is classified as a finance or operating lease by
reference to the ROU asset arising from the head lease.
For operating leases, rental income is recognized on a
straight line basis over the term of the relevant lease.
E Provision for decommissioning, site restoration and
environmental costs
Under Ind AS, cost of an item of property, plant and
equipment or intangible assets includes the initial
estimate of the costs of dismantling and removing the
item and restoring the site on which it is located, the
obligation for which an entity incurs either when the
item is acquired or as a consequence of having used the
item during a particular period for purposes other than
to produce inventories during that period. Such cost of
decommissioning, restoration or similar liability is to be
added to or deducted from the cost of the asset to which it
relates; the adjusted depreciable amount of the asset is then
depreciated prospectively over its remaining useful life.
The Company has liabilities related to restoration
of mines and other related works, which are due
upon the closure of certain of its production sites.
Such liabilities are estimated case-by-case based on
available information, taking into account applicable local
legal requirements. The estimation is made using existing
technology, at current prices, and discounted using a
discount rate where the effect of time value of money
is material. The effect of the time value of money on the
restoration and environmental costs liability is recognized
in the statement of profit and loss.
F Impairment
(i) Financial assets (including receivables)
A financial asset not carried at fair value is assessed
at each reporting date to determine whether there
is objective evidence that it is impaired. A financial
asset is impaired if objective evidence indicates that
a loss event has occurred after the initial recognition
of the asset, and that the loss event had a negative
effect on the estimated future cash flows of that asset
that can be estimated reliably.
Objective evidence that financial assets are impaired
can include default or delinquency by a debtor,
restructuring of an amount due to the Company
on terms that the Company would not consider
otherwise, indications that a debtor or issuer will
enter bankruptcy, or the disappearance of an active
market for a security.
"In accordance with Ind-AS 109, the Company
applies expected credit loss (ECL) model for
measurement and recognition of impairment loss
for trade receivables."
ECL impairment loss allowance (or reversal)
recognized during the period is recognized as expense/
income in the statement of profit and loss. This amount
is reflected in a separate line in the statement of profit
and loss as an impairment gain or loss.
(ii) Non-financial assets :
The carrying amounts of the Company’s non¬
financial assets, other than inventories and deferred
tax assets are reviewed at each reporting date
to determine whether there is any indication of
impairment. If any such indication exists, then the
asset’s recoverable amount is estimated each year at
the same time.
The recoverable amount of an asset or cash¬
generating unit is the greater of its value in use and
its fair value less costs to sell. 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. For
the purpose of impairment testing, assets that cannot
be tested individually are grouped together into the
smallest group of assets that generates cash inflows
from continuing use that are largely independent of
the cash inflows of other assets or groups of assets
(the “cash-generating unit, or CGU").
The Company’s corporate assets do not generate
separate cash inflows. If there is an indication
that a corporate asset may be impaired, then the
recoverable amount is determined for the CGU to
which the corporate asset belongs.
An impairment loss is recognized if the carrying
amount of an asset or its CGU exceeds its estimated
recoverable amount. Impairment losses are
recognized in the statement of profit and loss.
Impairment losses recognized in respect of CGUs are
allocated to reduce the carrying amounts of the other
assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of assets, impairment
losses recognized in prior periods is assessed at each
reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is
reversed if there has been a change in the estimates used
to determine the recoverable amount. An impairment
loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that
would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized.
G Financial instruments
(i) Financial assets
All financial assets are initially recognized at fair
value except trade receivables that do not contain
a significant financing component are measured
at transaction price. Transaction costs that are
directly attributable to the acquisition or issue of
financial assets, which are not at fair value through
profit or loss, are adjusted to the fair value on initial
recognition. Purchase and sale of financial assets are
recognised using trade date accounting.
The Company derecognises a financial asset when
the contractual rights to the cash flows from the
asset expire, or it transfers the rights to receive the
contractual cash flows on the financial asset in a
transaction in which substantially all the risks and
rewards of ownership of the financial asset are
transferred. Any interest in transferred financial
assets that is created or retained by the Company is
recognised as a separate asset or liability. Financial
assets and liabilities are offset and the net amount
presented in the balance sheet when, and only when,
the Company has a legal right to offset the amounts
and intends either to settle on a net basis or to realise
the asset and settle the liability simultaneously.
They are presented as current assets, except for those
maturing later than 12 months after the reporting
date which are presented as non-current assets.
Financial assets are measured initially at fair value
plus transaction costs and subsequently carried at
amortized cost using the effective interest method,
less any impairment loss.
The Company’s financial assets include security
deposits, cash and cash equivalents, trade receivables
and deposits with banks. Cash and cash equivalents
comprise cash balances and call deposits with
original maturities of three months or less.
Investment in subsidiaries:
The Company has accounted for its investments in
subsidiaries at cost.
(ii) Financial liabilities
All financial liabilities are recognized at fair value
and in case of loans, net of directly attributable cost.
Fees of recurring nature are directly recognised in
the Statement of Profit and Loss as finance cost.
Financial liabilities are carried at amortized cost using
the effective interest method. For trade and other
payables maturing within one year from the balance
sheet date, the carrying amounts approximate fair
value due to the short maturity of these instruments.
The Company derecognises a financial liability
when its contractual obligations are discharged or
cancelled or expired.
Financial assets and liabilities are offset and the
net amount presented in the statement of financial
position when, and only when, the Company has a
legal right to offset the amounts and intends either
to settle on a net basis or to realise the asset and
settle the liability simultaneously.
The Company financial liabilities include Loans and
borrowings and trade and other payables.
H Cash and bank balances:
Cash and bank balances consist of:
(i) Cash and cash equivalents - which includes cash
in hand, deposits held at call with banks and other
short term deposits which are readily convertible
into known amounts of cash, are subject to an
insignificant risk of change in value and have
maturities of less than three months from the date
of such deposits. These balances with banks are
unrestricted for withdrawal and usage.
For the purpose of presentation in the statement
of cash flows, cash and cash equivalents consists of
cash and short-term deposits, as defined above, net
of outstanding bank overdraft but including other
short-term, highly liquid investments with original
maturities of three months or less that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of change in value.
(ii) Other bank balances - which includes balances
and deposits with banks that are restricted for
withdrawal and usage.
I Employee benefits
(i) Short term employee benefits:
Short-term employee benefit obligations are
measured on an undiscounted basis and are
expensed as the related service is provided. A
liability is recognized for the amount expected to be
paid towards bonus if the Company has a present
legal or constructive obligation to pay this amount
as a result of past service provided by the employee
and the obligation can be estimated reliably.
(ii) Post -employment benefits:
Defined contribution plans:
Provident Fund
Eligible employees of the Company receive benefits from
provident fund, which is a defined contribution plan.
Both the eligible employees and the Company make
monthly contributions to the Government administered
provident fund scheme equal to a specified percentage
of the eligible employee’s salary. Employer contribution
is charged to statement of profit and loss. Amounts
collected under the provident fund plan are deposited
with in a Government administered provident fund. The
Company has no further obligation to the plan beyond
its monthly contributions.
Employee state Insurance Scheme
Eligible employees of the Company are covered under
“Employees State Insurance Scheme Act 1948", which
are also defined contribution schemes recognized and
administered by Government of India.
The Company's contributions to these schemes are
recognized as expense in statement of profit and loss
during the period in which the employee renders the
related service. The Company has no further obligation
under these plans beyond its monthly contributions.
Defined benefit plans:
The Company provides for gratuity, a defined benefit
plan (“the Gratuity Plan") covering the eligible
employees of the Company. The Gratuity Plan
provides a lump-sum payment to vested employees
at retirement, death, incapacitation or termination
of employment, of an amount based on the respective
employee’s salary and the tenure of the employment
with the Company. Liability with regard to the
Gratuity Plan is determined by actuarial valuation,
performed by an independent actuary, at each
balance sheet date using the projected unit credit
method. The defined benefit plan is administered
by a trust formed for this purpose through the
Company gratuity Scheme.
The Company recognizes the net obligation of a defined
benefit plan as a liability in its balance sheet. Gains
or losses through re-measurement of the net defined
benefit liability are recognized in other comprehensive
income and are not reclassified to profit and loss in the
subsequent periods. The actual return of the portfolio of
plan assets, in excess of the yields computed by applying
the discount rate used to measure the defined benefit
obligation is recognized in other comprehensive income.
The effect of any plan amendments is recognized in the
statement of profit and loss.
Other long-term employee benefits
The liabilities for compensated absences which
are not expected to occur within twelve months are
measured as the present value of expected future
payments to be made in respect of services provided
by employees up to the end of the reporting period
using projected unit credit method. Remeasurements
as a result of experience adjustments and changes
in actuarial assumptions are recognized in other
comprehensive income and are not reclassified to
profit and loss in the subsequent periods.
Company uses updated assumptions to determine
current service cost and net interest for the
remainder of the period after a plan amendment,
curtailment or settlement; and recognise in profit
or loss as part of past service cost, or a gain or loss
on settlement, any reduction in surplus, even if that
surplus was not previously recognised because of
the impact of the asset ceiling.
J Inventories
Inventories are valued at lower of cost and net realizable
value. Cost of raw materials, Stores and Spares, Consumables,
Packing materials and traded goods are valued at Cost on
First-In-First-Out (FIFO) basis. Cost includes expenditures
incurred in acquiring the inventories and other costs incurred
in bringing them to their existing location and condition on
normal operating capacity. The cost of finished goods and
work in progress includes raw materials, direct labour, other
direct costs and appropriate portion of variable and fixed
overhead expenditure, computed on normal capacity.
Net realizable value is the estimated selling price in
the ordinary course of business, less the estimated
costs of completion and the estimated costs necessary
to make the sale.
The company assess the valuation of Inventories at each
reporting period and write down the value for different
finished goods based on their quality classes and ageing.
Inventory provisions are provided to cover risks arising
from slow-moving items, discontinued products, and
net realizable value lower than cost. The process for
evaluating these write-offs often requires to make
subjective judgments and estimates, based primarily on
historical experience, concerning prices at which such
inventory will be able to be sold in the normal course of
business, to the extent each of these factors impact the
Company’s business.
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