2.1 Statement of compliance
These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the
Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of the Companies Act, 2013 as amended
from time to time and other relevant provisions of the Companies Act, 2013.
2.2 Basis of preparation and presentation
The financial statements have been prepared under the historical cost convention on accrual basis, except for certain financial
instruments and provision for employee defined benefit plans which are measured at fair value.
2.3 Functional and presentation currency
The financial statements are presented in Indian Rupees(INR), which is also the Company's functional currency. All amounts
have been rounded off to the nearest Crore, unless otherwise indicated.
2.4 Current and Non current classification
The Company presents assets and liabilities in balance sheet based on current/non-current classification.
An asset is stated as current when it is -
a. Expected to be realised or intended to be sold or consumed in normal operating cycle
b. Held primarily for the purpose of trading
c. Expected to be realized within twelve months after the reporting period or
d. Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months
after the reporting period.
All other assets are classified as non-current assets.
Similarly a liability is classified as current if -
a. It is expected to be settled in normal operating cycle
b. It is held primarily for the purpose of trading
c. It is due to be settled within twelve months after the reporting period or
d. There is no unconditional right to differ the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
The Company has ascertained its operating cycle as twelve months for the purpose of current/non current classification of
its assets and liabilities.
2.5 Property, Plant and Equipment (PPE)2.5.1. Measurement and Presentation
On transition to Ind AS, the Company had elected to continue with the carrying value of all of its property plant and
equipment recognised as at April 1, 2016, measured as per the previous GAAP, and use that carrying value as the
deemed cost of such property plant and equipment.
Freehold land is carried at Historical cost. Property, plant and equipment are stated at historical cost less depreciation
and accumulated impairment, if any. Cost includes its purchase price, import duties, non refundable purchase taxes
and expenditure directly attributable for bringing the said asset to its working condition and location for its intended
use, including relevant borrowing costs and any expected cost of decommissioning.
The cost of a self constructed item of property, plant and equipment comprises the cost of material, direct labour and
any other costs and expenditure directly attributable for bringing the said asset to its working condition and location
for its intended use, including relevant borrowing costs and any expected cost of decommissioning.
Material items such as spare parts, stand by equipment and service equipments are classified as PPE when they meet
the definition of PPE as specified in Ind AS 16. Subsequent expenditure on PPE is capitalized only if it is probable
that the future economic benefits associated with the expenditure will flow to the Company.
2.5.2. Depreciation/ Amortization
i) Depreciation on fixed assets put to commercial use has been provided to the extent of depreciable assets on
written down value method at the rates and in the manner prescribed in schedule II of the Companies Act, 2013
over their useful life except on fixed assets installed at Gujarat factory & Windmills installed at Chavaneshwar,
wherein depreciation is provided on straight line method in the manner prescribed in schedule II of Companies
Act,2013 over their useful life.
ii) Lease hold land is amortized over the period of lease.
iii) Depreciation on addition/disposal is provided on a pro rata basis.
v) The residual values and useful lives are reviewed and adjusted if appropriate at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount
is greater than the estimated recoverable amount.
2.5.3. Disposal
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. Any gain or loss arising on derecognition
of the asset is included in the Statement of Profit or Loss when the asset is derecognised.
2.6 Intangible assets2.6.1. Measurement and Presentation
On transition to Ind AS, the Company had elected to continue with the carrying value of all its intangible assets
recognized as at 1st April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost
of intangible assets.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible
assets are carried at cost less accumulated amortization and impairment, if any.
2.6.2 Amortization
i) Computer software are amortized over period of 5 years.
ii) Windmill rights are amortized over period of 10 years.
iii) Amortization on addition is provided on a pro rata basis.
2.7 Foreign currency transactions
Transactions in foreign currencies initially are recorded at the exchange rate as on the date of transactions as provided in
IND AS 21. Realized gain and losses as well as exchange differences arising on translation (at year end exchange rates)
of monetary assets and liabilities outstanding at the end of the year are recognized in the statement of profit and loss.
Non monetary items that are measured in terms of historical costs in foreign currency are translated using the exchange
rate as at the date of initial transactions as provided in IND AS 21.
2.8 Financial Instruments2.8.1. Financial Assets2.8.1.1 Classification
The Company classifies its financial assets in the following measurement categories:
(a) those to be measured subsequently at fair value (either through other comprehensive income, or
through profit or loss), and
(b) those measured at amortised cost.
The classification depends on the entity's business model for managing the financial assets and the contractual
terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in statement of profit and loss or
other comprehensive income. For investments in debt instruments, this will depend on the business model
in which the investment is held. For investments in equity instruments, this will depend on whether the
Company has made an irrevocable election at the time of initial recognition to account for equity investment
at fair value through other comprehensive income. The Company reclassifies debt investments when and
only when its business model for managing those assets changes.
2.8.1.2 Initial Measurements
At the initial recognition, the Company measures the financial assets at its fair value plus in the case of a
financial assets not at the fair value through profit or loss, transaction costs that are directly attributable to
the acquisition of financial asset. Transaction cost of a financial asset carried at fair value through profit or
loss are expensed in profit or loss.
2.8.1.3 Subsequent Measurement
(i) Debt instruments
Subsequent measurement of debt instruments depends on the Company's business model for managing
the asset and the cash flow characteristics of the asset. There are three measurement categories in
to which the Company classifies its debt instruments :
Amortised cost : Assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest are measured at amortised cost. A gain or loss
on a debt investment that is subsequently measured at amortised cost and is not part of a hedging
relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income
from these financial assets is included in finance income using the effective interest rate method.
Fair value through other comprehensive income (FVOCI): Assets that are held for collection of
contractual cash flows and for selling the financial assets, where the asset's cash flow represent solely
payments of principal and interest , are measured at FVOCI. Movements in the carrying amount are
taken through OCI except for the recognition of impairment of gains or losses, interest revenue and
foreign exchange gains and losses which are recognised in profit and loss. When the financial asset
is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity
to profit or loss and recognised in other gains/ (losses). Interest income from these financial assets is
included in other income using the effective interest rate method.
Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are
measured at fair value through profit or loss. Gain or loss on the debt investment that is subsequently
measured at fair value through profit or loss is recognised in profit or loss and presented net in the
statement of profit and loss in the period in which it arises. Interest income from these financial assets
is included in other income.
(ii) Equity Instruments
The Company subsequently measures all equity instruments at fair value. Where the Company's
management has elected to present fair value gains and losses on equity investments in OCI, there
is no subsequent reclassification of fair value gains and losses to profit or loss. Dividend from such
investments are recognised in profit or loss as other income when the Company's right to receive
payments is established.
Changes in the fair value of a financial assets at fair value through profit or loss are recognised in other
income. Impairment losses (and reversal of impairment losses) on equity investments measured at
FVOCI are not reported separately from other changes in fair value.
2.8.1.4 Derecognition of financial assets
A financial asset is derecognised only when
- The Company has transferred the rights to receive cash flow from the financial asset or
- retains the contractual rights to receive the cash flows of the financial assets but assumes a contractual
obligation to pay cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially
all risks and rewards of ownership of the financial asset.
Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset,
financial assets is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of
ownership of the financial asset, the financial asset is derecognised if the Company has not retained control
of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be
recognised to the extent of continuing involvement in the financial asset.
2.8.2. Financial Liabilities2.8.2.1 Classification
The Company classifies its financial liabilities in the following measurement categories:
(a) those to be measured subsequently at fair value through profit and loss account ;
(b) those measured at amortised cost.
2.8.2.2 Dereognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled
or expires.
2.8.2.3 Offsetting
Financial assets and financial liabilities are offset and the net amount is presented in the balance
sheet when, and only when, the Company has a legally enforceable right to set off the amount
and It intends, either to settle them on a net basis or to realise the asset and settle the liability
simultaneously.
2.8.3 Derivatives
The Company enters into certain derivative contracts to hedge risks which are not designated as hedges.
Such contracts are accounted at fair value through profit or loss and are included in profit and loss account.
2.9 Inventories
Inventories are valued as follows :
i) Raw material is valued at lower of weighted average cost & net realizable value. However material held for use in the
production of inventories are not written down below cost, if the finished product in which they will be incorporated are
expected to be sold at or above cost. Cost comprises of its purchase price, non refundable purchase taxes and any
directly attributable expenses related to inventories.
ii) Work in Progress is valued at weighted average cost.
iii) Finished goods are valued at lower of weighted average cost and net realizable value. Cost for this purpose includes
direct cost and attributable overheads .
iv) Traded goods are valued at weighted average cost or net realizable value whichever is lower.
v) Stores & spares are valued at weighted average cost after providing for obsolescence and other losses, where considered
necessary.
vi) Scrap and rejected material is valued at net realizable cost.
Net realizable value is estimated selling price in the ordinary course of the business, less the estimated costs of completion
and the estimated costs necessary to make the sale.
2.10 Trade receivable
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of
business. If collection is due within one year, they are classified as current assets.
Commercial receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest rate method, less provision for impairment. A provision for impairment for trade receivables is recognised when there is
objective evidence that the Company will not be able to collect all amounts due under the original terms of receivables. When
receivable is deemed uncollectible it is written off. Any subsequent recovery of previous written off amounts is recognised
in the income statement.
2.11 Impairment of assets2.11.1 Impairment of Financial Assets
The Company recognises loss allowances for expected credit losses on
- Financial assets measured at amortised cost and
- Financial assets measured at FVOCI- debt investments
At each reporting date, Company assesses whether financial assets carried at amortised cost are credit impaired.
Financial asset is 'credit impaired' when one or more events that have a detrimental impact on the estimated future
cashflows of the financial assets have occurred.
In accordance with Ind AS 109- Financial instruments, 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 recognises impairment loss allowance based on lifetime credit loss at each
reporting date, right from its initial recognition.
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no
realistic prospect of recovery. This is generally the case when Company determines that the debtor does not have
assets or sources of income that could generate sufficient cashflows to repay the amounts subject to write off.
However, the financial assets that have written off could still be subject to enforcement activities in order to comply
with the Company's procedures of recovery of amounts due.
2.11.2 Impairment of Non-Financial Assets
An impairment loss is the amount by which the carrying amount of an asset or a cash generating unit exceeds its
recoverable amount. The recoverable amount of an asset or a cash generating unit is the higher of its fair value
less cost of disposal and its value in use. Fair value is the price that would be received for sale of an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date. Value in use is
based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate.
The Company assesses at end of each reporting period whether there is any indication that an asset is impaired. In
assessing whether there is any indication that an asset may be impaired, the Company considers external as well
as internal source of information. If any such indication exits, the Company estimates the recoverable amount for
the individual asset. If and only if the recoverable amount of an asset is less than its carrying amount, the carrying
amount of an asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or
loss unless the asset is carried at revalued amount in accordance with another Standard.
If it is not possible to estimate the recoverable amount of the individual asset, the Company determines the recoverable
amount of the cash generating unit to which the asset belongs (the asset's cash generating unit). A cash generating
unit is the smallest identifiable group of asset that generates cash inflows that are largely independent of the cash
inflows from other assets or group of assets. The Company recognises impairment loss for a cash generating unit if
and only if the recoverable amount of the cash generating unit is less than the carrying amount of cash generating
unit. The Company allocates impairment loss of cash generating units first to the carrying amount of goodwill allocated
to the cash generating unit, if any, and then, to the other assets of the cash generating units pro-rata on the basis of
the carrying amount of each asset in the cash generating units. These reductions in carrying amount shall be treated
as impairment losses on individual assets and recognised accordingly.
2.12 Cash and cash equivalents :
Cash and cash equivalents in the balance sheet comprise cash on hand and balance with banks and deposits which are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
2.13 Borrowings
Borrowings are recognised initially at fair value net of transaction cost incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of transaction cost) and the redemption value is recognised in
the income statement over the period of borrowings using the effective interest rate method.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer their settlement for at
least 12 months after the end of reporting period.
Fees paid for availing loan facilities are recognised as transaction cost of the loan to the extent that it is probable that some
or all of the facilities will be drawn down. In this case fees are deferred until the draw down occurs to the extent there is no
evidence that it is probable that some or all of the facilities will be drawn down.
Financial guarantee contracts issued by the Company are those contracts that requires a payment to be made to reimburse
the holder for a loss it incurred because the specified debtor fails to make a payment when due in accordance with the terms
of debt instrument. Financial guarantee contracts are recognised as a liability at fair value, adjusted for transaction costs
that are directly attributable to the issuance of guarantee. Subsequently, the liability is measured at the higher of the amount
of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative
amortization.
2.14 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from
supplier. Trade payable are classified as current liabilities if payment is due within one year or less.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method.
2.15 Income tax2.15.1 Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively
enacted, at the reporting date.
Current income tax relating to the items recognised outside profit or loss is recognised outside profit or loss (either in
other comprehensive income or equity). Current tax items are recognised in correlation to the underlying transaction
either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
2.15.2 Deferred tax
Deferred tax is provided using the balance sheet method on temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities
are recognised for all taxable temporary differences.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits
and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary difference and carry forward of unused tax credits and unused
tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has
become probable that the future taxable profits will allow the deferred tax assets to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
assets is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantially
enacted at the reporting date. Deferred tax items are recognised in correlation to the underlying transaction either in
OCI or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists
to set off current tax assets against current tax liability and the deferred tax assets relate to the same taxable entity
and same taxation authorities.
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