Note 26: Significant Accounting Policies
26.1 Property, Plant and Equipment (PPE)
i) Property, Plant and Equipment are stated at cost of acquisition net of accumulated depreciation/ amortization and impairment losses if any, except free hold land which is carried at cost less impairment losses if any. The cost comprises purchase prices, (Including import duties and non-refundable purchase taxes after deducting discounts and rebates) borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use.
ii) The Company identifies the significant parts of plant and equipment separately which are required to be replaced at intervals. Such parts are depreciated separately based on their specific useful lives. The cost of replacement of significant parts is capitalized and the carrying amounts of replaced parts are derecognized. When each major inception/ overhauling is performed, its cost is recognized in the carrying amount of the item of property, plant and equipment as a replacement if the recognition criteria are satisfied. Any remaining carrying amount of the cost of the previous inspection/ overhauling (as distinct from physical parts) is de- recognized
iii) Other expenses on fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts that does not meet the capitalization criteria in accordance with IND AS 16 are charged to the Statement of Profit and Loss for the period during which such expenses are incurred.
iv) PPEs are eliminated from the financial statements on disposal or when no further benefit is expected from its use or disposal. Gains or losses arising from disposal of plant, property and equipment are measured as the difference between the net disposal proceeds and the carrying amount of such assets are recognized in the statement of profit and loss.
v) Depreciation for plant and machinery has been provided on Straight line method and for all other assets Written down value method has been followed.
vi) The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each reporting date and adjusted prospectively, if appropriate.
vii) Upon first- time adoption of IND AS, the company has elected to measure all its property, plant, equipment at the Previous GAAP carrying amount as its deemed cost on the date of transition to IND AS i.e., 1 st April, 2016.
26.2 Capital Work in progress
Capital work in progress includes cost of property, plant and equipment under installation, under development including related expenses and attributable interest as at reporting date.
26.3 Current or Non-Current classification
An asset or liability is classified as current if it satisfies any of the following conditions:
i) Asset or liability is expected to be realized in the company’s normal settlement cycle.
ii) Asset is intended for sale or consumption.
iii) Asset or liability is held primarily for the purpose of trading.
iv) Asset or liability is expected to be realized or settled within twelve months after reporting period.
26.4 Intangible assets
i) Intangible assets, if any, are amortized over their useful life as determined in accordance with the extant provision of the Companies act 2013
26.5 Inventories
i) Inventories are valued at cost or net realizable value whichever is lower. Cost includes the cost incurred in bringing the inventories to their present location and condition.
ii) Raw materials, stores and spares are valued at cost or net realizable value whichever is lower. Cost includes the cost incurred in bringing the inventories to their present location and condition.
iii) For valuation of finished goods / stock-in-process, cost includes material, direct labor, overheads (other than abnormal amount of wasted materials, storage costs, selling and administrative overheads) wherever applicable.
26.6 Revenue Recognition
i) Revenue is recognized to the extent that is probable that the economic benefits will flow to the company and the revenue can be reliably measured.
ii) Sale of products is recognized when the significant risk and reward of ownership of the goods have been passed to the buyer as per the terms of contract. Revenue is measured at fair value of the consideration received or receivable, net of any discounts taxes or duties collected on behalf of the government which are levied on sales such as VAT, GST, etc.
iii) Dividend income, if any, is recognized when the company’s right to receive dividend is established by the reporting date.
iv) Interest income from financial assets is recognized at the effective interest rate applicable on initial recognition.
v) Scrap sales is recognized at the fair value of consideration received or receivable upon transfer of significant risk and rewards. It comprises of invoice value of goods and after deducting applicable taxes on sale.
vi) Export sales for exports are accounted on the basis of date of bill of landing
vii) Export incentives are accounted for an export of goods of the entitlements can be estimated with reasonable accuracy and conditions precedents to claims arefulfilled.
26.7 Employee Benefits
i) Short-term employee benefits viz., salaries and wages are recognized as expense at the undiscounted amount in the statement of profit and loss for the year in which the related service is rendered.
ii) Defined contribution plan viz., contribution to provident fund is recognized as an expense in the statement of profit and loss for the year in which the employees have rendered services. The company contributes to provident fund administered by the Government on a monthly basis at 12% of employee’s basic salary. There is no other obligation other than the above defined contribution plan.
iii) Defined Benefit Plan.
Gratuity:
a. The Company’s Liability is actuarially determined (Using the projected unit credit method) at the end of each year. Actuarial losses/Gains are recognized in the other comprehensive income in the year in which they arise. Remeasurementrecognized in other comprehensive income reflected immediately in retained earnings and is not reclassified to profit or loss.
iv) Other employee benefits :
Leave Encashment:
As per policy of the company unavailed leave, casual leave/ earned leave cannot be carried forward or encashed and hence there is no additional cost. The company recognizes the cost as expense as and when the employee avails paid leave.
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