of an item of property, plant and equipment shall be
recognised as an asset only if it is probable that future
economic benefits associated with the item will flow
to the entity and the cost of the item can be measured
reliably. Cost comprises the purchase price and other
directly attributable cost of bringing the assets to its
working condition for the intended use. Subsequent
costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits
associated with the item will flow to the Company
and the cost of the item can be measured reliably. All
other costs including repairs and maintenance costs
are charged to the statement of profit and loss as and
when incurred.
Capital work-in-progress is stated at cost less any
recognised impairment loss.
Gains or losses arising from the disposal of property,
plant and equipment are measured as the difference
between the net proceeds from disposal and the
carrying amount of the asset and are recognised in
the statement of profit and loss.
Depreciation on Property, Plant and Equipment
i. Depreciable amount of Property, plant and
equipment is the cost of an asset less its
estimated residual value.
ii. Property, Plant and Equipment is depreciated
on the straight-line method as per the useful
life prescribed in Schedule II to the Companies
Act, 2013 or technical estimate made by the
Company and is recognised in the statement of
profit and loss.
iii. Freehold land is not depreciated.
iv. The estimated useful lives of items of property,
plant and equipment are as follows:
vii. The depreciation method, estimated useful life
and residual value are reviewed at the end of
each financial year.
viii. Residual value is considered at 5% of the cost of
the asset capitalized
b. Intangible assets
i. Intangible assets are initially measured at
cost. Such intangible assets are subsequently
measured at cost less accumulated amortization
and impairment losses if any.
ii. The intangible assets, that are not yet ready
for their intended use are carried at cost and
are reflected under intangible assets under
development. Direct costs associated in
developing the intangible assets are capitalized
when the following criteria are met, otherwise,
it is recognised in profit and loss as incurred.
- it is technically feasible and requisite
resources are available to complete the
intangible asset so that it will be available
for use,
- management intends to complete the
intangible asset and put it to use,
- there is ability to use the intangible asset,
- there is an identifiable asset that will
generate expected future economic
benefits and there is an ability to measure
reliably the expenditure attributable to the
intangible asset during its development.
iii. Intangible assets are amortized on straight-line
basis over the useful life prescribed in Schedule
II to the Companies Act, 2013 or technical
estimate made by the Company. Following are
the useful lives of intangible assets:
i. Summary of material accounting policies
a. Property, plant and equipment
Property, plant and equipment other than capital work-
in-progress are stated at cost, net of accumulated
depreciation and impairment losses, if any. The cost
v. Depreciation on additions to assets is provided
from the month of addition.
vi. Individual assets whose cost does not exceed
' 5,000/- are fully depreciated in the month
of addition.
iv. The estimated useful life of the intangible assets
is reviewed at the end of each financial year and
the amortization method is revised to reflect the
changed pattern if any.
I impairment of property, plant and equipment,
investment property and intangible assets
Property, plant and equipment, investment property
and intangible 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. The
recoverable amount is determined for the asset or the
cash-generating unit (CGU) to which the asset belongs
in case the assets do not generate independent
cash flows.
Each CGU represents the smallest group of assets that
generates cash inflows that are largely independent
of the cash inflows from other assets or CGU. For
the purpose of impairment testing, the recoverable
amount is the higher of the fair value less cost to
sell and the value-in-use. Value in use is based on
the estimated future cash flows, discounted to their
present value using a pre-tax discount rate that
reflects current market assessments of the time value
of the money and the risks specific to the asset or CGU.
If such asset or CGU is considered to be impaired, the
impairment loss is recognised if the carrying amount
of an asset or CGU exceeds its estimated recoverable
amount. Impairment losses are recognised in the
statement of profit and loss. An impairment loss
recognised in respect of a CGU is allocated to reduce
the carrying amounts of the assets of the CGU on a
pro-rata basis.
d. Leases
At the inception of a contract, the Company assesses
whether 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.
As a lessee
The Company recognises a right-of-use asset and a
lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability
adjusted for any lease payments made at or before
the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle
and remove the underlying asset or to restore the
underlying asset or the site on which it is located, less
any lease incentives received.
The right-of-use asset is subsequently depreciated
using the straight-line method from the commencement
date to the end of the lease term unless the lease
transfers ownership of the underlying asset to the
Company by the end of the lease term or the cost of
the right-of-use asset reflects that the Company will
exercise a purchase option. In that case, the right-of-
use asset will be depreciated over the useful life of the
underlying asset, which is determined on the same
basis as those of property, plant and equipment. In
addition, the right-of-use asset is periodically reduced
by impairment losses, if any, and adjusted for certain
re-measurements of the lease liability.
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the Company's
incremental borrowing rate.
The Company determines its incremental borrowing
rate by obtaining interest rates from various external
financing sources that reflect the terms of the lease
and the type of the asset leased.
Lease payments included in the measurement of the
lease liability comprise the following:
- fixed payments, including in-substance fixed payments;
- variable lease payments that depend on an index or
a rate, initially measured using the index or rate as at
the commencement date;
- amounts expected to be payable under a residual
value guarantee; and
- the exercise price under a purchase option that
the Company is reasonably certain to exercise,
lease payments in an optional renewal period if
the Company is reasonably certain to exercise an
extension option, and penalties for early termination
of a lease unless the Company is reasonably certain
not to terminate early.
The lease liability is measured at amortised cost using
the effective interest method. It is re-measured when
there is a change in future lease payments arising
from a change in an index or rate, if there is a change
in the Company's estimate of the amount expected
to be payable under a residual value guarantee, if
the Company changes its assessment of whether it
will exercise a purchase, extension or termination
option or if there is a revised in-substance fixed
lease payment.
When the lease liability is re-measured in this way,
a corresponding adjustment is made to the carrying
amount of the right-of-use asset or is recorded in
profit or loss if the carrying amount of the right-of-
use asset has been reduced to zero.
The Company presents right-of-use assets and lease
liabilities separately on the face of the balance sheet.
As a lessor
When the Company acts as a lessor, it determines at
lease inception whether each lease is a finance lease
or an operating lease.
To classify each lease, the Company makes an
overall assessment of whether the lease transfers
substantially all of the risks and rewards incidental
to ownership of the underlying asset. If this is the
case, then the lease is a finance lease; if not, then
it is an operating lease. As part of this assessment,
the Company considers certain indicators such as
whether the lease is for the major part of the economic
life of the asset.
Short-term leases
The Company has elected not to recognise right-of-use
assets and lease liabilities for short-term leases. The
Company recognises the lease payments associated
with these leases as an expense on a straight-line
basis over the lease term.
e. Investments
Investments in subsidiaries and associate are
accounted at cost less accumulated impairment loss,
if any.
f. Inventories
Inventories are measured at the lower of cost and the
net realizable value. Costs includes cost of purchase
and other costs incurred in bringing the inventories to
the present location and condition, net of discounts and
rebates and are determined on a weighted average
basis. Net realizable value represents the estimated
selling price of inventories in the ordinary course of
business, less the estimated costs necessary to make
the sale.
g. Foreign currency
Foreign currency transactions
Transactions in foreign currencies are recorded at the
exchange rate prevailing at the date of transaction.
Exchange gain/loss on settlement of foreign currency
transactions are recognised in the statement of profit
and loss.
All monetary assets and liabilities denominated in
foreign currency are translated into the functional
currency at the end of the accounting period at the
prevailing exchange rates as on the reporting date
and the resulting exchange gain/loss is recognised in
the statement of profit and loss.
h. Revenue recognition
The Company recognizes revenue when (or as) a
performance obligation is satisfied, i.e. when 'control'
of the goods or services underlying the particular
performance obligation is transferred to the customer.
Revenue from sale of products or services is
recognised upon transfer of control of promised
products or services to customers in an amount that
reflects the consideration expected to be received in
exchange for those products or services.
Revenue is measured based on the transaction price,
which is the consideration, adjusted for discounts,
sales commission and incentives if any, as specified in
the contract with the customer. Revenue also excludes
taxes collected from customers.
The Company has assessed its revenue arrangements
based on the substance of the transaction and
business model against specific criteria to determine
if it is acting as principal or agent.
Revenue from professional/technical services and
renewal of service packs is recorded on a net basis
as the level of inventory risk, to which the Company
is exposed to, in these arrangements is negligible.
i. Other income
Dividend from investments is recognised when the
right to receive the payment is established and when
no significant uncertainty as to measurability or
collectability exists.
Rental income under operating leases is recognised
in the statement of profit and loss on a straight-line
basis over the term of the lease.
Interest income is recognised using the effective
interest rate method, wherever applicable.
Interest income on overdue receivables is recognized
only receipt basis.
j. Employee benefits
i. Short-term employee benefits
Short-term employee benefits are determined
as per the Company’s policy/scheme on an
undiscounted basis and are recognised as
expense as the related services are provided.
Short-term employee benefit liabilities are
recognised for the amount expected to be paid,
if the Company has a present legal obligation to
pay, considering past service provided by the
employee, and the amount of obligation can be
estimated reliably.
ii. Defined benefit plan
A defined benefit plan is a post-employment
benefit plan other than a defined-contribution
plan. The Company's obligation in respect of
defined benefit plans is calculated separately
for each plan by estimating the amount of future
benefit that employees have earned in the
current and prior periods.
The Company's gratuity plan is unfunded,
the defined benefit obligation of which is
determined annually by a qualified actuary
using the projected unit credit method as at
each balance sheet date. Re-measurement of
defined benefit obligation, which comprises of
actuarial gains and losses are recognised in
other comprehensive income in the period in
which they occur. The Company determines the
net interest expenses on the net defined benefit
obligation, considering any changes in the net
defined benefit liability during the period as a
result of contribution and benefit payments. Net
interest expenses related to defined benefit plan
are recognised in finance cost in the statement
of profit and loss.
iii. Defined contribution plan
A defined contribution plan is a post-employment
benefit plan under which an entity pays fixed
contributions to a separate entity and will
have no legal or constructive obligation to pay
further amounts. The Company makes monthly
contributions towards Government administered
schemes such as the provident fund and
employee state insurance scheme. Obligations
for contributions to defined contribution plans
are recognised as an employee benefit expense
in the statement of profit and loss in the periods
during which the related services are rendered
by the employees.
iv. Long-term employee benefits
The Company's obligation in respect of long-term
employee benefits other than post-employment
benefits is the amount of future benefit that
employees have earned in return for their service
in the current and prior periods. The obligation
is measured based on an annual independent
actuarial valuation using the projected unit
credit method as at each balance sheet date.
k. Warranties
The Original Equipment Manufacturer ("OEM")
warrants the products distributed by the Company
and these are assurance warranties provided in
the normal course of business relating to product
performance. The Company generally, does not
independently warrant the products it distributes and
hence management considers that any provision for
warranties or claims is not required.
l. Current and deferred tax
Income tax expense comprises current tax expense
and the net change in the deferred tax asset or
liability during the year. Current and deferred taxes
are recognised in the statement of profit and loss,
except when they relate to items that are recognised
in other comprehensive income or directly in equity,
in which case, the current and deferred tax are also
recognised in other comprehensive income or directly
in equity respectively.
i. Current tax comprises of the expected tax
payable on the taxable income for the year and
any adjustments to the tax payable in respect
of previous years. The amount of current tax
for the year is determined in accordance with
the applicable tax rates which reflects the best
estimate of the tax amount expected to be paid
or received after considering the uncertainty,
if any, related to income taxes. It is measured
using the tax rates enacted by the reporting date
in accordance with the provisions of the Income-
tax Act, 1961. The Company offsets current tax
assets and current tax 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 realize the asset and settle the
liability simultaneously.
ii. Deferred tax is recognised on temporary
differences between the carrying amounts of
assets and liabilities for financial reporting
purpose and the corresponding amounts used
for taxation purposes. Deferred tax liabilities
are recognised for all taxable temporary
differences. Deferred tax assets are recognised
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.
iii. Deferred tax assets - unrecognised or
recognised are reviewed at each reporting date
and are recognised/reduced to the extent that it
is probable/no longer probable respectively that
the related tax benefit will be realised.
iv. Deferred tax assets and liabilities are measured
using substantively enacted tax rates expected
to apply to taxable income in the years in which
the temporary differences are expected to be
received or settled.
v. Deferred tax assets and liabilities are offset
if there is legally enforceable right to offset
current tax liabilities and assets, and they relate
to income taxes levied by the same taxation
authority on the same taxable entity, but they
intend to settle current tax liabilities and assets
on a net basis, or their tax assets and liabilities
will be realised simultaneously.
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