Property, plant and equipment (PPE)
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 the item can be
measured reliably.
Property, plant and equipment (including capital work
in progress) is stated at cost, net of accumulated
depreciation and accumulated impairment losses, if
any. Such cost includes the cost of replacing part of the
plant and equipment and borrowing costs for long-term
construction projects if the recognition criteria are met.
When significant parts of property, plant and equipment
are required to be replaced at intervals, the Company
depreciates them separately based on their specific useful
lives. Likewise, when a major overhaul is performed, its
cost is recognised in the carrying amount of the plant and
equipment as a replacement if the recognition criteria
are satisfied. All other repair and maintenance costs
are recognised in the Statement of Profit and Loss as
incurred. The present value of the expected cost for the
decommissioning of an asset after its use is included in
the cost of the respective asset if the recognition criteria
for a provision are met. Material items such as spare parts,
stand-by equipment and service equipment are classified
as PPE when they meet the definition of PPE as specified
in Ind AS 16 - Property, Plant and Equipment.
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
labour, 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.
Freehold Land and buildings are measured at historical
cost less accumulated depreciation on buildings and
impairment losses, if any.
An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits are
expected from its use or disposal. Gains or losses arising
from derecognition of the asset are measured as the
difference between the net disposal proceeds and the
carrying amount of the asset and are recognised in the
Standalone Statement of Profit and Loss when the asset
is derecognised. If significant parts of an item of PPE
have different useful lives, then they are accounted for as
separate items (major components) of PPE.
Subsequent expenditure is capitalised only if it is probable
that the future economic benefits associated with the
expenditure will flow to the Company and the subsequent
expenditure can be measured reliably.
The Company had opted for deemed cost exemption
under Ind AS 101 on transition of Ind AS.
Expenditure during construction period:
Expenditure/ Income during construction period
(including financing cost related to borrowed funds
for construction or acquisition of qualifying PPE) is
included under Capital Work-in-Progress and the same
is allocated to the respective PPE on the completion of
their construction. Advances given towards acquisition or
construction of PPE outstanding at each reporting date
are disclosed as Capital advances under "Other non¬
current assets”.
Depreciation
Depreciation is recognised so as to write off the cost
of assets (other than freehold land and properties
under construction) less their residual values over their
useful lives.
Depreciation on plant and machinery, railway siding is
charged under straight line method and on other assets
depreciation is charged under diminishing balance
method, based on the useful life prescribed in Schedule
II to the Companies Act, 2013 except in respect of the
following categories of assets, in whose case the life of
the assets has been assessed as under based on technical
advice, taking into account the nature of the asset, the
estimated usage of the asset, the operating conditions
of the asset, past history of replacement, anticipated
technological changes, manufacturers warranties and
maintenance support, etc.
The estimated useful lives, residual values and
depreciation method are reviewed at the end of each
reporting period, with the effect of any changes in
estimate accounted for on a prospective basis.
The Company follows the process of componentization
for property, plant and equipment. Accordingly, the
Company has identified a part of an asset as a separate
component in whole asset value (beyond certain value)
and useful life of the part is different from the useful life
of the remaining asset. The useful life has been assessed
based on technical advice, taking into account the nature
of the asset / component of an asset, the estimated
usage of the asset / component of an asset on the basis
of management's best estimation of getting economic
benefits from that class of assets / components of an
asset. The Group uses its technical expertise along with
historical and industry trends for arriving the economic
life of an asset/ component of an asset.
Intangible assets
Intangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated
amortisation and accumulated impairment losses, if any.
Cost of an item of intangible assets comprises its
purchase price, including import duties and non¬
refundable purchase taxes, after deducting trade
discounts and rebates, any directly attributable cost of
preparing the asset for its intended use.
Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied in the
specific asset to which it relates, and the cost of the asset
can be measured reliably.
The useful lives of intangible assets are assessed as either
finite or indefinite.
Intangible assets with finite lives are amortised over
the useful economic life and assessed for impairment
whenever there is an indication that the intangible
asset may be impaired. The amortisation period and
the amortisation method for an intangible asset with a
finite useful life are reviewed at least at the end of each
reporting period. Changes in the expected useful life or
the expected pattern of consumption of future economic
benefits embodied in the asset are considered to modify
the amortisation period or method, as appropriate, and
are treated as changes in accounting estimates.
Intangible assets with indefinite useful lives are not
amortised, but are tested for impairment annually,
either individually or at the cash-generating unit level.
The assessment of indefinite life is reviewed annually
to determine whether the indefinite life continues to
be supportable. If not, the change in useful life from
indefinite to finite is made on a prospective basis.
A summary of the policies applied to the Company's
intangible assets is, as follows:
Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset
and are recognised in the Standalone Statement of Profit
and Loss when the assets is derecognised.
There are no Internally generated intangible assets by
the Company.
The Company had opted for deemed cost exemption
under Ind AS 101 on transition of Ind AS.
Leases
The Company assesses at contract inception whether a
contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset
for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and
measurement approach for all leases, except for short¬
term leases and leases of low-value assets. The Company
recognises lease liabilities to make lease payments and
right-of-use assets representing the right to use the
underlying assets.
Right-of-use assets
The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made
at or before the commencement date less any lease
incentives received. Right-of-use assets are depreciated
on a straight-line basis over the shorter of the lease term
and the estimated useful lives of the assets.
Certain lease arrangements include the option to extend
or terminate the lease before the end of the lease term.
The right-of-use assets and lease liabilities include these
options when it is reasonably certain that the option will
be exercised.
If ownership of the leased asset transfers to the Company
at the end of the lease term or the cost reflects the
exercise of a purchase option, depreciation is calculated
using the estimated useful life of the asset.
Lease Liabilities
At the commencement date of the lease, the Company
recognises lease liabilities measured at the present value
of lease payments to be made over the lease term. The
lease payments include fixed payments (including in
substance fixed payments) less any lease incentives
receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under
residual value guarantees.
In calculating the present value of lease payments, the
Company uses its incremental borrowing rate at the
lease commencement date because the interest rate
implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and reduced
for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the
lease payments (e.g., changes to future payments resulting
from a change in an index or rate used to determine such
lease payments) or a change in the assessment of an
option to purchase the underlying asset).
Lease liabilities are subsequently measured at amortised
cost using the effective interest method.
Short-term leases and leases of low-value assets
The Company has elected not to recognise ROU and
lease liabilities for short-term leases that have a lease term
of 12 months or lower and leases of low-value assets.
The Company recognises the lease payments associated
with these leases as an expense over the lease term. The
related cash flows are classified as Operating activities in
the Statement of Cash Flows.
Impairment of non-financial assets
The Company assesses at each reporting date whether
there is an indication that an asset may be impaired.
If any indication exists, or when annual impairment
testing for an asset is required, the Company estimates
the asset's recoverable amount. An asset's recoverable
amount is the higher of an asset's or cash-generating
unit's (CGU) fair value less costs of disposal and its
value in use. The recoverable amount is determined for
an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from
other assets or Company's of assets. Where the carrying
amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written
down to its recoverable amount. In assessing value in use,
the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of money
and the risks specific to the asset.
The Company bases its impairment calculation on
detailed budgets and forecast calculations which are
prepared separately for each of the Company's cash¬
generating units to which the individual assets are
allocated. Impairment losses of continuing operations,
including impairment on inventories, are recognised in the
Standalone Statement of Profit and Loss.
For assets, an assessment is made at each reporting
date to determine whether there is an indication that
previously recognised impairment losses no longer exist
or have decreased. If such indication exists, the Company
estimates the asset's or CGU's recoverable amount. A
previously recognised impairment loss is reversed only
if there has been a change in the assumptions used to
determine the asset's recoverable amount since the last
impairment loss was recognised. The reversal is limited
so that the carrying amount of the asset does not exceed
its recoverable amount, nor exceed the carrying amount
that would have been determined, net of depreciation,
had no impairment loss been recognised for the asset in
prior years. Such reversal is recognised in the Standalone
Statement of Profit and Loss.
Intangible assets with indefinite useful lives are tested for
impairment annually at the CGU level, as appropriate, and
when circumstances indicate that the carrying value may
be impaired.
After impairment, depreciation is provided on the revised
carrying amount of the asset over its remaining useful life.
Investments in subsidiaries
Investment in subsidiaries Investments in subsidiaries are
carried at cost less accumulated impairment losses, if any.
Where an indication of impairment exists, the carrying
amount of the investment is assessed. Where the carrying
amount of an investment is greater than its estimated
recoverable amount, it is written down immediately to
its recoverable amount and the difference is transferred
to the Statement of Profit and Loss. On disposal of
investment, the difference between the net disposal
proceeds and the carrying amount is charged or credited
to the Statement of Profit and Loss.
Government grants and subsidies
Grants and subsidies from the government are recognised
when there is reasonable assurance that (i) the Company
will comply with the conditions attached to them, and (ii)
the grant/subsidy will be received.
When the grant or subsidy relates to revenue, it is
recognised as income on a systematic basis in the
Standalone Statement of Profit and Loss over the periods
necessary to match them with the related costs, which
they are intended to compensate. Where the grant relates
to an asset, it is deducted while calculating carrying
amount of the asset. The grant is recognised in the
Standalone Statement of Profit and Loss over the life of
the depreciable asset as a reduced depreciation expense.
When the Company receives grants of non-monetary
assets, the asset and the grant are recorded at fair value
amounts and released to the Standalone Statement of
Profit and Loss over the expected useful life in a pattern
of consumption of the benefit of the underlying asset i.e.
by equal annual instalments.
Inventories
Inventories are valued at the lower of cost and net
realisable value after providing for obsolescence and
other losses, where considered necessary. Cost includes
all charges in bringing the goods to the point of sale,
including octroi and other levies, transit insurance and
receiving charges. Net realisable value represents the
estimated selling price for inventories less all estimated
costs of completion and costs to be incurred in marketing,
selling and distribution. Work-in-progress and finished
goods include appropriate proportion of overheads. The
methods of determining cost of various categories of
inventories are as follows:
Revenue recognition
Revenue from contracts with customers is recognised
when control of the goods or services are transferred to
the customer at an amount that reflects the consideration
to which the Company expects to be entitled in
exchange for those goods or services. The Company has
generally concluded that it is the principal in its revenue
arrangements, because it typically controls the goods or
services before transferring them to the customer.
Sale of goods:
Revenue from sale of goods is recognised on the basis
of approved contracts regarding the transfer of control
of promised goods to a customer for an amount that
reflects the consideration to which the entity expects to
be entitled in exchange for those goods. Revenue from
sale of goods is recognised at the point in time when
control of the goods is transferred to the customer, which
is generally on dispatch/ delivery of the goods.
Revenue towards satisfaction of a performance obligation
is measured at the amount of transaction price (net of
variable consideration) allocated to that performance
obligation. The transaction price of goods sold is net
of variable consideration and outgoing taxes on sale.
The variable consideration includes incentives, volume
rebates, discounts etc. It is estimated at contract
inception considering the terms of various schemes with
customers and constrained until it is highly probable
that a significant revenue reversal in the amount of
cumulative revenue recognised will not occur when the
associated uncertainty with the variable consideration
is subsequently resolved. It is reassessed at end of each
reporting period.
As the period between the date on which the Company
transfers the promised goods to the customer and the
date on which the customer pays for these goods is
generally one year or less, no financing components
are considered.
The Company considers whether there are other promises
in the contract that are separate performance obligations
to which a portion of the transaction price needs to
be allocated.
Revenue from services contracts: It is recognised upon
transfer of control of promised services to customers
for an amount that reflects the consideration which
the Company expects to receive in exchange for those
services. Revenue is recognised at point in time based
on agreements / arrangements with the customers
when the services are performed and there are no
unfulfilled obligations.
Revenue from sale of power: It is recognised upon on
transfer of control of electricity to the customer, typically
upon transmission of power to the grid in accordance
with the terms of the power purchase agreement. Power
generated for captive consumption is not recognized as
revenue. Revenue from sale of surplus power is measured
at the tariff rates agreed under applicable arrangements.
Other operating revenue: It would include revenue arising
from Company's operating activity i.e either its principal
or ancillary revenue generating activities but which is
not revenue activity from sale of goods or rendering
of services.
Retirement and other employee benefits
Short-term employee benefits:
Short-term employee benefit obligations are measured
on an undiscounted basis and are expensed as the related
service is provided. A liability is recognised for the amount
expected to be paid 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 obligation can be estimated reliably
Defined contribution plans:
A defined contribution plan is a post-employment benefit
plan where the Company's legal or constructive obligation
is limited to the amount that it contributes to a separate
legal entity. Retirement benefit in the form of Provident
Fund, Employees State Insurance Corporation (ESIC)
and Superannuation Schemes are defined contribution
schemes. The Company has no obligation, other than
the contribution payable to the respective funds. The
Company recognises contribution payable to the scheme
as an expenditure, when an employee renders the related
service. If the contribution payable to the scheme for
service received before the balance sheet date exceeds
the contribution already paid, the deficit payable to the
scheme is recognised as a liability after deducting the
contribution already paid. If the contribution already paid
exceeds the contribution due for services received before
the balance sheet date, then excess is recognised as an
asset to the extent that the pre-payment will lead to, for
example, a reduction in future payment or a cash refund.
Defined benefit plans:
Gratuity liability is a defined benefit obligation and is
provided for on the basis of actuarial valuation done on
projected unit credit method at the balance sheet date.
Re-measurements, comprising of actuarial gains and
losses, the effect of the asset ceiling, excluding amounts
included in net interest on the net defined benefit
liability and the return on plan assets (excluding amounts
included in net interest on the net defined benefit
liability), are recognised immediately in the balance sheet
with a corresponding debit or credit to remeasurements
of the net defined benefits reserve under reserves and
surplus, through Other Comprehensive Income in the
period in which they occur. Re-measurements are not
reclassified to Standalone Statement Profit and Loss in
subsequent periods.
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 plan when the
settlement occurs.
Other long-term employee benefits:
The Company treats accumulated leaves expected to
be carried forward beyond twelve 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 end of each financial year. The Company
presents the leave as current liability in the balance
sheet, to the extent it does not have an right at the end
of the reporting period to defer the settlement for at
least twelve months after the reporting period. Where
the Company has legal and contractual right to defer the
settlement for the period beyond 12 months, the same is
presented as non-current liability. Actuarial gains/losses
are immediately taken to the Standalone Statement of
Profit and Loss and are not deferred.
Taxes
Income Tax
Income tax expense comprises current and deferred
tax. It is recognised in profit or loss except to the extent
that it relates to a business combination, or items
recognised directly in equity or in Other comprehensive
income. The Company has determined that interest and
penalties related to income taxes, including uncertain
tax treatments, do not meet the definition of income
taxes, and therefore accounted for them under Ind AS 37
Provisions, of and Contingent Assets.
Current Taxes: Current tax comprises the expected
tax payable or receivable on the taxable income or loss
for the year and any adjustment to the tax payable or
receivable in respect of previous years. The amount of
current tax payable or receivable is the best estimate
of the tax amount expected to be paid or received that
reflects uncertainty related to income taxes, if any. It
is measured using tax rates enacted or substantively
enacted at the reporting date.
Current tax assets and liabilities are offset only if there
is a legally enforceable right to set off the recognised
amounts, and it is intended to realise the asset and settle
the liability on a net basis or simultaneously.
Deferred tax
Deferred tax is recognised in respect of temporary
differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
corresponding amounts used for taxation purposes.
Deferred tax is also recognised in respect of carried
forward tax losses and tax credits. Deferred tax is not
recognised for:
• temporary differences on the initial recognition of
assets or liabilities in a transaction that:
• is not a business combination; and
• at the time of the transaction (i) affects neither
accounting nor taxable profit or loss and (ii) does
not give rise to equal taxable and deductible
temporary differences
• temporary differences related to investments in
subsidiaries to the extent that the Company is able
to control the timing of the reversal of the temporary
differences and it is probable that they will not reverse
in the foreseeable future; and
• taxable temporary differences arising on the initial
recognition of goodwill.
Deferred tax assets are recognised for unused tax losses,
unused tax credits and deductible temporary differences
to the extent that it is probable that future taxable profits
will be available against which they can be used. Future
taxable profits are determined based on the reversal of
relevant taxable temporary differences. If the amount of
taxable temporary differences is insufficient to recognise
a deferred tax asset in full, then future taxable profits,
adjusted for reversals of existing temporary differences,
are considered, based on the business plans for individual
subsidiaries in the Company. Deferred tax assets are
reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax
benefit will be realised; such reductions are reversed when
the probability of future taxable profits improves.
Deferred tax is measured at the tax rates that are
expected to apply to the period when the asset is realised
or the liability is settled, based on the laws that have been
enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax
consequences that would follow from the manner in
which the Company expects, at the reporting date,
to recover or settle the carrying amount of its assets
and liabilities.
Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same
tax authority on the same taxable entity, or on different
tax entities, but they intend to settle current tax liabilities
and assets on a net basis or their tax assets and liabilities
will be realised simultaneously
Segment reporting:
An operating segment is a component of the Company
that engages in business activities from which it may
earn revenues and incur expenses, whose operating
results are regularly reviewed by the Company's Chief
Operating Decision Maker to make decisions ("CODM”)
for which discrete financial information is available. Based
on the management approach as defined in Ind AS
108, the CODM evaluates the Company's performance
and allocates resources based on an analysis of various
performance indicators by business segments and
geographic segments.
Earnings per share
Basic -share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding
during the year. The weighted average number of equity
shares outstanding during the period is adjusted for
events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation
of shares) that have changed the number of equity
shares outstanding, without a corresponding change
in resources.
For the purpose of calculating diluted earnings per share,
the net profit or loss for the year attributable to equity
shareholders and the weighted average number of shares
outstanding during the year are adjusted for the effects of
all dilutive potential equity shares.
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