2.5 Summary of Significant Accounting Policies
a) Property, Plant and Equipment
Property, Plant and Equipment are stated at cost after deducting trade discount and rebates less accumulated depreciation and impairment
losses, if any. Such cost includes purchase price, borrowing cost, non-refundable purchase taxes, any cost directly attributable to
bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from
exchange rate variations attributable to the assets.
Property, Plant and Equipment which are significant to the total cost of that item of Property, Plant and Equipment and having
different useful I ife are accounted separately.
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 I tem will flow to the entity and the cost can be measured reliably.
The Company has opted cost model as I ts accounting policy for measurement after recognition.
Depreciation on Property, Plant and Equipment is provided using Straight Line Method taking life of the assets as given in the Schedule -II of
Companies Act,2013 on 95% of value of assets.
The residual values, useful lives and methods of depreciation of Property, Plant and Equipment are reviewed at each financial year end and
adjusted prospectively, if appropriate
Gains or losses arising from de-recognition of a Property, Plant and Equipment are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is
derecognised.
Property, plant and equipment are evaluated for recoverability whenever there is any indication that their carrying amounts may not be
recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is
determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other
assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU)
is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and loss.
b) Intangible Assets
Intangible assets purchased are measured at cost as of the date of acquisition, as applicable, less accumulated amortisation and
accumulated impairment, if any.
The Company has opted cost model as its accounting policy for measurement after recognition.
Gains or losses arising from de-recognition 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 Statement of Profit and Loss when the asset is derecognised.
The Company's intangible assets comprises assets with finite useful life which are amortised on a straight-line basis over the period of
their expected useful life.
Intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying amounts may not be
recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is
determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other
assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU)
is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and loss.
c) Inventories
Inventories consist of shares held in other entities. Inventories are valued at the lower of cost or net relisable value. The cost of
inventories shall comprise all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present,
location and condition. The costs of inventories are assigned using the first in, first out (FIFO) formula. When inventories are sold, the
carrying amount of those inventories shall be recognised as an expense in the period in which the related revenue is recognised.
d) Cash and Cash Equivalents
Cash and cash equivalents comprise of cash on hand, cash at banks, short-term deposits and short-term, highly liquid investments that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
e) Financial Instruments
Financial Assets
Initial Recognition and Measurement
The company recognises a financial asset when it becomes party to the contractual provisions of the instrument. All Financial Assets are
initially recognised at fair value. Transaction costs that are directly attributable to the acquisition or issue of Financial Assets, which are
not at Fair Value through Profit or Loss, are adjusted to the fair value on initial recognition.
Where the fair value of the financial asset at initial recognition differs from the transaction price an entity account for the difference as
follows:
• As a gain or loss, if that fair value is evidenced by a quoted price in an active market for an identical asset or liability,
Is deferred in other cases. The deferred difference is recognised as a gain or loss only to the extent it arises from a change in factor
(including time) that market participants would take into account when pricing the asset or liability.
Subsequent Measurement
Financial Assets measured at Amortised Cost
A Financial Asset is measured at Amortised Cost if it is held within a business model whose objective is to hold the asset in order to collect
contractual cash flows and the contractual terms of the Financial Asset give rise on specified dates to cash flows that represent solely
payments of principal and interest on the principal amount outstanding.
Financial Assets measured at Fair Value through Other Comprehensive Income
A Financial Asset is measured a FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual
cash flows and selling Financial Assets and the contractual terms of the Financial Asset give rise on specified dates to cash flows that
represents solely payments of principal and interest on the principal amount outstanding.
Financial Assets measured at Fair Value through Profit or Loss
A Financial Asset which is not classified in any of the above categories are measured at FVTPL.
Impairment of Financial Assets
In accordance with Ind AS 109, the Company uses 'Expected Credit Loss' (ECL) model, for evaluating impairment of Financial Assets
other than those measured at Fair Value Through Profit and Loss (FVTPL).
Expected Credit Losses are measured through a loss allowance at an amount equal to:
• The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are
possible within 12 months after the reporting date); or
• Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial
instrument).
For Trade Receivables the Company applies 'simplified approach' which requires expected lifetime losses to be recognised from initial
recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade
receivables. At every reporting date these historical default rates are reviewed and changes in the forward-looking estimates are
analysed.
For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If
there is significant increase in credit risk full lifetime ECL is used.
Reclassification of Financial Assets
Financial assets are reclassified subsequent to their recognition, if the Company changes its business model for managing those
financial assets. Changes in business model are made and applied prospectively from the reclassification date which is the first day of
immediately next reporting period following the changes in business model in accordance with principles laid down under Ind AS 109 -
Financial Instruments.
Financial Liabilities
Initial Recognition and Measurement
The company recognises a financial liability when it becomes party to the contractual provisions of the instrument. All Financial Liabilities
are recognised at fair value and in case of financial liabilities classified as 'subsequently measured at amortised cost' are shown net of
directly attributable cost.
Where the fair value of the financial liability at initial recognition differs from the transaction price an entity account for the difference as
follows:
• As a gain or loss, if that fair value is evidenced by a quoted price in an active market for an identical asset or liability,
• Is deferred in other cases. The deferred difference is recognised as a gain or loss only to the extent it arises from a change in factor
(including time) that market participants would take into account when pricing the asset or liability.
Subsequent Measurement
Financial Liabilities which are classified as 'subsequently measured at amortised cost' are carried at amortised cost using the effective
interest method.
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