iii. Freehold land is not depreciated.
iv. The estimated useful lives of items of property,
plant and equipment are as follows:
3. 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 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.
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.
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 the 5% of the
cost of the asset
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:
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.
c. 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
I nventories 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
pertaining to the said line of businesses, 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.
I nterest income is recognised using the effective
interest rate method, wherever applicable.
Interest income on overdue receivables is recognized
only on actual receipt.
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, as a result of 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 on the basis of 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 except for one line
of business, 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, in which case, the
current and deferred tax are also recognised in other
comprehensive income.
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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