3. Material accounting policies
3.1 Property, plant and equipment
A. Recognition and measurement
Items of property, plant and equipment are
measured at cost, which includes capitalized
borrowing costs, less accumulated depreciation
and accumulated impairment losses, if any.
The cost of an item of property, plant and
equipment shall be recognised as an asset if, and
only if it is probable that future economic benefits
associated with the item will flow to the Company
and the cost of item can be measured reliably.
Cost of an item of property, plant and equipment
comprises its purchase price, including import
duties and non-refundable purchase taxes, after
deducting trade discounts and rebates, any directly
attributable cost of bringing the item to its working
condition for its intended use and estimated costs
of dismantling and removing the item and restoring
the site on which it is located.
The cost of a self-constructed item of property,
plant and equipment comprises the cost of
materials and direct labor, any other costs directly
attributable to bringing the item to working
condition for its intended use, and estimated costs
of dismantling and removing the item and restoring
the site on which it is located.
If significant parts of an item of property, plant
and equipment have different useful lives, then
they are accounted for as separate items (major
components) of property, plant and equipment.
Any gain or loss on disposal of an item of property,
plant and equipment is recognized in profit or loss.
Advances paid towards the acquisition of fixed
assets, outstanding at each balance sheet date are
shown under long-term loans and advances. The
cost of fixed assets not ready for its intended use
at each balance sheet date are disclosed as capital
work-in-progress.
Borrowing costs directly attributable to the
acquisition, construction or production of those
fixed assets that necessarily take a substantial
period to get ready for their intended use, are
capitalized. Other borrowing costs are accounted
as an expense in the standalone statement of profit
and loss.
B. Subsequent expenditure
Subsequent expenditure is capitalized only if it
is probable that the future economic benefits
associated with the expenditure will flow to the
Company.
C. Depreciation
Depreciation is calculated on cost of items of
property, plant and equipment less their estimated
residual values over their estimated useful lives
using the straight-line method, and is generally
recognised in the profit or loss. Leasehold
improvements are amortized over the lease term or
useful lives of assets, whichever is lower. Freehold
land is not depreciated.
The estimated useful lives of items of property,
plant and equipment are as follows:
The useful life of items of property, plant and
equipment is in line with the Schedule II of the
Companies Act 2013.
Transition to Ind AS
The cost of property, plant and equipment at 1 April
2018, the Company's date of transition to Ind AS,
was determined with reference to its carrying value
recognized as per the previous GAAP (deemed
cost), as at the date of transition to Ind AS.
3.2 Intangible assets
The cost of an intangible asset shall be recognised
as an asset if, and only if it is probable that future
economic benefits associated with the item will
flow to the Company and the cost of item can be
measured reliably.
Intangibles assets are stated at cost less
accumulated amortization and impairment.
Intangible assets are amortized over their
respective individual estimated useful lives on a
straight-line basis, commencing from the date the
asset is available to the Company for its use and is
included in amortization in profit or loss.
Amortization method, useful lives and residual
values are reviewed at the end of each financial
year and adjusted, if appropriate.
Subsequent expenditure is capitalized only when it
increases the future economic benefits embodied
in the specific asset to which it relates. All other
expenditure is recognized in profit or loss as
incurred.
The cost of intangible assets not ready for its
intended use at each balance sheet date are
disclosed as intangible assets under development.
Transition to Ind AS
The cost of Intangible assets at 1 April 2018,
the Company's date of transition to Ind AS, was
determined with reference to its carrying value
recognised as per the previous GAAP (deemed
cost), as at the date of transition to Ind AS.
3.3 Employee benefits
Short-term employee benefits
Employee benefits payable wholly within twelve
months of receiving employee services are
classified as short-term employee benefits. These
benefits include salaries and wages, bonus and
ex-gratia. 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 e.g., under short-term cash 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 amount
of obligation can be estimated reliably.
Post-employment benefits
Defined contribution plans
A defined contribution plan is a post-employment
benefit plan under which an entity pays fixed
contributions into a separate entity and will
have no legal or constructive obligation to pay
further amounts. The Company makes specified
monthly contributions towards Government
administered provident fund scheme. Obligations
for contributions to defined contribution plans
are recognized as an employee benefit expense
in profit or loss in the periods during which the
related services are rendered by employees.
Prepaid contributions are recognised as an asset
to the extent that a cash refund or a reduction in
future payments is available.
Defined benefit plans
A defined benefit plan is a post-employment
benefit plan other than a defined contribution plan.
The Company's net obligation in respect of defined
benefit plan is calculated by estimating the amount
of future benefit that employees have earned in
the current and prior periods and discounting that
amount and deducting the fair value of any plan
assets, if any.
The calculation of defined benefit obligation is
performed annually by a qualified actuary using the
projected unit credit method. When the calculation
results in a potential asset for the Company, the
recognised asset is limited to the present value
of economic benefits available in the form of any
future refunds from the plan or reductions in future
contributions to the plan ('the asset ceiling').
Re-measurements of the net defined benefit
liability, which comprise actuarial gains and losses,
the return on plan assets (excluding interest) and
the effect of the asset ceiling (if any, excluding
interest), are recognized in other comprehensive
income (OCI). The Company determines the net
interest expense on the net defined benefit liability
for the period by applying the discount rate used
to measure the defined benefit obligation at
the beginning of the annual period to the then-
net defined benefit liability, taking into account
any changes in the net defined benefit liability
during the period as a result of contributions and
benefit payments. Net interest expense and other
expenses related to defined benefit plans are
recognized in profit or loss.
When the benefits of a plan are changed or
when a plan is curtailed, the resulting change in
benefit that relates to past service ('past service
cost' or 'past service gain') or the gain or loss on
curtailment is recognised immediately in profit or
loss. The Company recognises gains and losses on
the settlement of a defined benefit plan when the
settlement occurs.
Other long term employee benefits
The employees can carry-forward a portion of the
unutilized accrued compensated absences and
utilize it in future service periods or receive cash
compensation on termination of employment. Since
the compensated absences do not fall due wholly
within twelve months after the end of the period
in which the employees render the related service
and are also not expected to be utilized wholly
within twelve months after the end of such period,
the benefit is classified as a long-term employee
benefit. The Company records an obligation for
such compensated absences in the period in which
the employee renders the services that increase
this entitlement. The obligation is measured on the
basis of independent actuarial valuation using the
projected unit credit method. Remeasurements are
recognized in profit and loss in the period in which
they arise.
3.4 Investments
Non-current investments are carried at cost less
any other than temporary diminution in value,
determined separately for each investment.
Current investments are carried at lower of cost
and fair value. The comparison of cost and fair value
is done separately in respect of each category of
investments.
The acquisition cost of investments acquired, or
partly acquired by the issue of shares or other
securities, is the fair value of the securities issued.
Profit or loss on sale of investments, if any, is
determined separately for each investment.
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