3. Material Accounting Policy information
a. Property, Plant and Equipment:
Measurement at recognition:
Property, Plant & Equipment (PPE) are stated at cost, net of tax/duty credit availed, if any, after reducing
accumulated depreciation and accumulated impairment losses, if any. The cost of PPE comprises of its purchase
price or its construction cost (net of applicable tax credit, if any), any cost directly attributable to bring the asset to
the location and condition necessary for it to be capable of operating in the manner intended by the management.
Direct costs are capitalized until the asset is ready for use.
Subsequent measurement
Subsequent expenditures relating to property, plant and equipment are capitalised only when it is probable that
future economic benefits associated with these will flow to the Company and the cost of the item can be measured
reliably.
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.
Depreciation
Depreciation is provided on the cost of Property, Plant and Equipment less their estimated residual value, using the
straight-line method over the useful life of PPE as stated in the Schedule II to the Companies Act, 2013 or based on
interna] technical evaluation. The management believes that the useful lives as assessed best represent the period
over which management expects to use these assets.
‘Based on technical evaluation, the Management believes that the useful lives as given above best represent the
period over which Management expects to use these assets. Hence, the useful life for these assets is different from
the useful livesas prescribed under PartCof Schedule II of the Companies Act2013.
The estimated useful lives, residual values and depreciation method are reviewed on an annual basis and if
necessary, changes in estimates are accounted for prospectively.
Depreciation on additions/deletions to PPE during the year is provided for on a pro-rata basis with reference to the
date of additions/deletions.
Leasehold Land are depreciated on a straight-line basis over the lease term.
• IntangibleAssets:
Intangible assets with finite useful life acquired separately, are recognized only if it is probable that future economic
benefits that are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably.
The intangible assets are recorded at cost and are carried at cost less accumulated amortization and accumulated
impairment losses, if any.
Intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of an intangible asset are determined as the difference
between the net disposal proceeds and the carrying amount of the asset and recognized in the Statement of Profit
and Loss when the asset is derecognized.
Intangible assets are amortized on Straight Line Method from the date they are available for use, over the useful
economic lives of the assets as estimated by the Management as under:
• Capital Work in Progress (CWIP):
The cost of the assets not ready for intended use at the balance sheet date is shown as CWIP. CWIP is stated at
cost, net of accumulate impairment loss, if any.
b. Inventories:
Inventories are valued at lower of cost and net realizable value after providing for impairment and other losses,
where considered necessary. The basis of determining the value of each class of inventory is as follows:
c. Employee Benefit:
Short Term Employee Benefits
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short term employee
benefit. The Company measures the expected cost of such absences as the additional amount that it expects to
pay as a result of the unused entitlement that has accumulated at the reporting date. Short-term employee benefits
are expensed as the related service is provided. A liability is recognized for the amount expected to be paid 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.
Post-Employment Benefits
(I) Defined Contribution Plan
Retirement benefit in the form of Provident Fund and Superannuation fund, a defined contribution scheme and the
contributions are charged to the statement of profit and loss for the year when the contributions to the government
funds are due. The Company has no obligation other than the contribution payable to provident fund authorities and
superannuation fund.
(ii) Defined Benefit Plan
The employees' gratuity fund scheme is the Company's defined benefit plan. The present value of the obligation
under the said defined benefit plan is determined on the basis of actuarial valuation from an independent actuary
using the Projected Unit Credit Method. The gratuity benefit of the Company is administered by a trust formed for
this purpose through the group gratuity LIC scheme. Re measurements comprising of actuarial gain and losses,
the effect of the asset ceiling and the return on plan assets (excluding amount included in net interest on the net
defined benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit to
retained earnings through other comprehensive income in the period in which they occur.
Re-measurements are not reclassified to the statement of profit and loss in subsequent periods.
Past service cost is recognized in the statement of profit & loss in the period of plan amendment.
Net interest is calculated by applying the discounted rate to the net defined benefit liability or asset.
(iii) Other Long Term Employee Benefits
The Company treats accumulated leave expected to be carried forward beyond 12 months, as long-term employee
benefit for measurement purposes. Such long-term compensated absences are provided for based on the
actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately
taken to the statement of profit and loss and are not deferred.
d. Financial Instruments:
Afinancial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual
provisions of the instruments.
Initial Recognition:
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and
financial liabilities at Fair Value through Profit or Loss) are added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized in the
Statement of Profit and Loss.
Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortized cost, fair value through other
comprehensive income (“FVTOCI”) or fair value through profit or loss (“FVTPL”) on the basis of following:
• the company's business model for managing the financial assets; and
• the contractual cash flow characteristics of the financial assets.
Amortized Cost:
Afinancial asset shall be classified and measured at amortized cost, if both of the following conditions are met:
• the financial asset is held within a business model whose objective is to hold financial assets 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.
Fair Value through Other Comprehensive Income (FVTOCI):
Afinancial asset shall be classified and measured at FVTOCI, if both of the following conditions are met:
• the financial asset 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.
Fair Value through Profit or Loss (FVTPL):
• A financial asset shall be classified and measured at FVTPL unless it is measured at amortized cost or at
FVTOCI.
• All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value,
depending on the classification of the financial assets.
Impairment of financial assets:
In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) mode! for measurement and
recognition of impairment loss on the following financial assets and credit risk exposure. Financial Assets are
measured at amortized cost e.g., deposits, trade receivables and bank balance
Simplified Approach
The Company follows 'simplified approach' for recognition of impairment loss allowance on Trade Receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it
recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial
recognition
General Approach
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that
whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not
increased significantly, 12-months ECL is used to provide for impairment loss. However, if credit risk has increased
significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that
there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing
impairment loss allowance based on 12-months ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a
financial instrument. The 12-months ECL is a portion of the lifetime ECL which results from default events that are
possible within 12 months after the reporting date.
Derecognition of financial assets:
The Company derecognizes a financial asset when the contractual right to receive the cash flows from the asset
expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to
another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and
continues to control the transferred asset, the Company recognizes its retained interest in the asset and an
associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of
ownership of a transferred financial asset, the Company continues to recognize the financial asset and also
recognizes a collateralized borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum
of the consideration received and receivable and the cumulative gain or loss that had been recognized in other
comprehensive income and accumulated in equity is recognized in profit or loss if such gain or loss would have
otherwise been recognized in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g., when the Company retains an option to
repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset
between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the
basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying
amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no
longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive
income is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on
disposal of that financial asset. A cumulative gain or loss that had been recognized in other comprehensive income
is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis
of the relative fair values of those parts.
Derecognition of Financial Liabilities:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying
amounts is recognized in the Statement of Profit and Loss.
Offsetting:
Financial assets and financial liabilities are offset, and the net amount is reported in the Balance Sheet where there
is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or
realize the asset and settle the liability simultaneously.
e. Income Taxes:
Income tax expense represents the sum of the current tax and deferred tax. It is recognized in the statement of profit
and loss except to the extent items recognized directly in equity or in OCI.
i. Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from 'profit before tax' as
reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in
otheryearsand items that are never taxable or deductible. The Company's current tax is calculated using tax rates
and laws that have been enacted or substantively enacted by the end of the reporting period.
ii. Deferred Tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the
Financial Statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax
liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally
recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be
available against which those deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed attheendofeach reporting period and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset
to be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of
its assets and liabilities.
iii. Current and Deferred Tax Expense for the Year
Current and deferred tax expense is recognized in the Statement of Profit and Loss, except when they relate to
items that are recognized in other comprehensive income or directly in equity, in which case, the current and
deferred tax are also recognized in other comprehensive income or directly in equity respectively.
iv. Offsets
The Company offsets tax assets and liabilities, where it has a legally enforceable right to set off the recognised
amounts and where it intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously.
f. Revenue from contracts with customers and other income:
The Company derives Revenue primarily from sale of manufactured products being “Tungsten Carbides Products”.
Revenues from sale of goods or services are recognized upon transfer of control of the goods or services to the
customer in an amount that reflects the consideration which the company expects to receive in exchange for those
goods or services.
Revenue is measured at the transaction price of the consideration received or receivable duly adjusted for variable
consideration & customer's right to return the goods and the same represents amounts receivable for goods and
services provided in the normal course of business. Revenue also excludes taxes collected from customers. Any
retrospective revision in prices is accounted for in the yearof such revision.
Revenue is recognized at a point in time on accrual basis as per the terms of the contract, when there is no
uncertainty as to measurement or collectability of consideration. When there is uncertainty as to measurement or
ultimate collectability, revenue recognition is postponed until such uncertainty is resolved.
The contract asset or a contract liability is recognized when either party to a contract has performed, depending on
the relationship between the entity's performance and the customer's payment. When the company has a present
unconditional right to consideration, it is recognized separately as a receivable.
Sale of products excludes amounts of indirect taxes on sales.
When sales discount and rebate arrangements result in variable consideration, appropriate estimates are made
and estimated variable consideration is recognised as a deduction from revenue at the point of sale (to the extent
that it is highly probable that a significant reversal in the amount of cumulative revenue recognised wilt not be
required). The Company typically uses the expected value method for estimating variable consideration, reflecting
that such contracts have similar characteristics and a range of possible outcomes.
i. Interest Income
Interest on investments is booked on a time proportion basis taking into account the amounts invested and the rate
of interest.
ii. Dividend Income
Dividend income is recognized when the right to receive the same is established.
iii. Other Income
Other income is recognized on accrual basis except when realization of such income is uncertain
g. Foreign Currency Transactions
• The functional currency of the Company is Indian rupee. These financial statements are presented in Indian
rupees.
• Transactions in foreign currencies are initially recorded at the spot exchange rate on the date the transaction.
Monetary items denominated in foreign currencies outstanding at the end of the reporting period, are translated at
the rates of exchange prevailing at the reporting date. Differences arising on settlement of such transaction and on
translation of monetary assets and liabilities denominated in foreign currencies at period end exchange rate are
recognised in profit or loss.
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 measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss
arising on translation of non-monetary items measured at fair value is treated in tine with the recognition of the gain
or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is
recognised in OCI, or profit or loss are also recognised in OCI or profit or loss, respectively).
h. Earnings Per Share:
Basic earnings per share is computed by dividing the profit / (loss) after tax with the weighted average number of
equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after
tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating
to the dilutive potential equity shares, with the aggregate of weighted average number of equity shares considered
for deriving basic earnings per share and the weighted average number of equity shares which could have been
issued on the conversion of all dilutive potential equity shares.
i. Statement of cashflows
Cash flows are reported using the indirect method, whereby profit before tax 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 item of income or expenses associated with investing or financing cash flows. The cash flows are segregated
into operating, investing and financing activities.
j. Segment Reporting:
The Company identifies primary segments based on the dominant source, nature of risks and returns and the
internal organization and management structure. The operating segments are the segments for which separate
financial information is available and for which operating profit / loss amounts are evaluated regularly by the Chief
Operating Decision Making officer (CODM) in deciding howto allocate resources and in assessing performance.
The Company operates in one reportable business segments i.e., “Tungsten Carbides Products’'.
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