A. Material Accounting Policies Information
These financial statements have been prepared in accordance with Indian Accounting Standards
(Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act), read with the Companies
(Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act.
The standalone financial statements are presented in Indian Rupees (?) which is the functional
currency of the Company and all values are rounded to the nearest crores, except where
otherwise indicated.
Entity specific disclosure of material accounting policies where Ind AS permits options is disclosed
hereunder.
The company has assessed the materiality of the accounting policy information which involves
exercising judgements and considering both qualitative and quantitative factors by taking into
account not only the size and nature of the item or condition but also the characteristics of the
transactions, events or conditions that could make the information more likely to impact the
decisions of the users of the financial statements.
Entity’s conclusion that an accounting policy is immaterial does not affect the disclosure
requirements set out in the accounting standards.
The company adopted Ind AS from 1st April 2017. Accounting Policies have been consistently
applied except where a newly-issued Accounting Standard is initially adopted or a revision to an
existing Accounting Standard requires a change in the Accounting Policy hitherto adopted.
1.1 Basis of preparation and compliance
The financial statements are prepared in accordance with the historical cost convention except
for certain items that are measured at fair values at the end of each reporting period, as explained
in the Accounting Policies set out below. The financial statements are prepared on a ‘going
concern’ basis using accrual concept except for the statement of cash flow.
Historical cost is generally based on fair value of the consideration given in exchange for goods
and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date, regardless of whether
that price is directly observable or estimated using another valuation technique. In estimating the
fair value of an asset or a liability, the Company takes into account the characteristics of the asset
or liability that the market participants would take into account when pricing the asset or liability at
the measurement date, assuming the market participants act in their economic best interest. Fair
value for measurement and/or disclosure purposes in these financial statements is determined
on such basis and measurements that have some similarities to fair value but are not fair value,
such as net realisable value in Ind AS-2 - Inventories or Value in Use in Ind AS 36 - Impairment
of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level
1,2, or 3 based on the degree to which the inputs to the fair value measurements are observable
and the significance of the inputs to the fair value measurement in its entirety, as described
hereunder:
Level 1 -Quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date.
Level 2 -Other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
Level 3 - Unobservable inputs for the asset or liability.
Transactions and balances with values below the rounding off norm adopted by the Company
have been reflected as ‘--' in these financial statements.
1.2 Current / Non-Current classification
For the purpose of Current / Non-Current classification, the Company has reckoned its normal
operating cycle as twelve months based on the nature of products and the time between
the acquisition of assets or inventories for processing and their realisation in cash and cash
equivalents.
1.3 Property, Plant and Equipment (PPE)
An item of PPE that qualifies for recognition as an Asset is measured on initial recognition at cost.
Following initial recognition, PPEs are carried at their cost less accumulated depreciation and
accumulated impairment losses, if any.
The initial estimate of the costs of dismantling and removing the item and restoring the site on
which it is located, the obligation for which an entity incurs either when the item is acquired or
as a consequence of having used the item during a particular period for purposes other than to
produce inventories during that period.
Borrowing Costs (net of interest earned on temporary investments of those borrowings) directly
attributable to the acquisition, construction or production of qualifying assets are capitalised as a
part of the cost of the assets till the assets are substantially ready for their intended use.
(i) The Company identifies and determines the cost of each part of an item of PPE separately,
if the part has a cost which is significant in relation to the total cost of that item of PPE and
has useful life that is materially different from that of the remaining item.
(ii) Items such as spare parts, stand-by equipment and servicing equipment that meet the
definition of PPE are capitalised at cost. Costs in nature of repairs and maintenance are
recognised in the Statement of Profit and Loss as and when incurred. All upgradation /
enhancements are charged off as revenue expenditure unless they bring significant
additional benefits.
(iii) Capital Advances and Capital Work-in-Progress :
Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as
capital work in progress. Such assets are classified to the appropriate categories of PPE
when completed and ready for intended use. Depreciation on these assets commence
when the assets are ready for their intended use which is generally on commissioning.
(iv) 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, as specified
under Schedule II, using the straight-line method. The estimated useful lives and residual
values are reviewed at the end of each reporting period and changes, if any, are treated as
changes in accounting estimate.
1.4 Revenue Recognition
Revenue is recognised at a point in time at the transaction prices, upon transfer of control of
the products to customers. Transfer of control happens, when the products are delivered to the
common carrier.
The company considers the terms of the contract and its customary business practices to
determine the transaction price. The transaction price is the amount of consideration to which
the company expects to be entitled in exchange for transferring promised goods to a customer,
excluding amount collected on behalf of third parties (for example taxes collected on behalf of
government).
The company recognises the volume discounts and pricing incentives to customers as a
reduction of revenue based on the actual underlying performance obligation that corresponds to
the progress by the customer / indentor towards earning the discount / incentive.
Interest income from a financial asset is recognised when it is probable that the economic
benefits will flow to the company and the amount of income can be measured reliably. Interest
income is accrued on a time basis, by reference to the principal outstanding and using effective
interest rate method.
1.5 Inventories
Inventories are valued at lower of cost and net realisable value. Materials and other items
intended for use in the production of inventories are not written-down below cost, if the finished
goods in which they will be incorporated or expected to be sold at or above cost. Cost includes
taxes and duties (other than taxes and duties for which input credit is available), freight and other
direct expenses. Stocks of Raw Materials, Stores, Spares, and Chemicals, Fuels and Others
are valued at cost on weighted average basis. Finished Goods / Work-in-Process are valued at
cost on weighted average basis or net realizable value, whichever is less and the cost includes
material, direct labour, overheads (other than administrative overheads that do not contribute to
bring the inventories to the present location and condition and selling costs) incurred in bringing
the inventory to their present location and condition. Net realisable value is the estimated selling
price less estimated cost of completion and estimated costs necessary to make the sale.
Obsolete, slow moving and defective inventories are periodically identified and provision is made
where necessary.
1.6 Government grants
Government Grants are not recognised until there is reasonable assurance that the Company
will comply with the conditions attaching to them and that the grants will be received.
Government Grants that are receivable as compensation for expenses or losses incurred or for
the purpose of giving immediate financial support to the Company with no future related costs are
recognised in the Statement of Profit and Loss in the period in which they become receivable.
Export Benefits are recognized as Income in the year of exports. Entitlements pending realisation
are disclosed under Other Financial Assets.
1.7 Employee Benefits
a. Short Term Employee Benefits
All employee benefits payable wholly within twelve months after the end of the annual
reporting period of rendering the service are classified as Short Term Employee Benefits
and they are recognised in the period in which the employee renders the related service.
The Company recognises the undiscounted amount of Short Term Employee Benefits
expected to be paid in exchange for services rendered as a liability (accrued expense)
after deducting any amount already paid.
b. Post Employment Benefits
i. Defined Contribution Plans
Payments to Defined Contribution Retirement Benefit Plans are recognised as an
expense when employees have rendered service entitling them to the contributions.
Contributions to Provident Fund and Superannuation Fund are treated as Defined
Contribution Plans, since funded with Provident Fund Commissioner (as per the
provisions of the Employees’ Provident Fund and Miscellaneous Provisions Act,
1952) and Life Insurance Corporation of India, respectively.
ii. Defined Benefit Plans
For Defined Benefit Retirement Plans, the cost of providing defined benefits
is determined using the Projected Unit Credit Method with actuarial valuations
being carried out at each annual reporting date. The Defined Benefit Obligations
recognised in the Balance Sheet represent the present value of the Defined Benefit
Obligations as reduced by the fair value of plan assets, if applicable. Any Defined
Benefit Asset (negative defined benefit obligations resulting from this calculation) is
recognised representing the present value of available refunds and reductions in
future contributions to the plan. Gratuity and Retirement Benefit Schemes operated
by the Company are treated as Defined Benefit Plans.
All expenses represented by current service cost, past service cost, if any, and
net interest on the defined benefit liability / asset are recognised in the Statement
of Profit and Loss. Re-measurements of the net defined benefit liability / asset
comprising actuarial gains and losses and the return on the plan assets (excluding
amounts included in net interest on the net defined benefits liability / asset, are
recognised in Other Comprehensive Income and taken to ‘retained earnings’. (Such
re-measurements are not reclassified to the Statement of Profit and Loss in the
subsequent periods)
The Company presents the above liability / asset as current and non-current in the
Balance Sheet as per actuarial valuation by the independent Actuary. However, the
liability towards gratuity, if any, is considered as current as the Company expects to
contribute this amount to the gratuity fund within the next twelve months.
c. Other Long-term Employee Benefits
Entitlement to annual leave and sick leave are recognised when they accrue to employees.
Annual leave/ sick leave can be availed or encashed either during service or on retirement
subject to a restriction on the maximum number of accumulation of leave. The Company
determines the liability for such accumulated leave using the Projected Unit Credit Method
with actuarial valuation being carried out at each annual reporting date. The liability is
not funded. The Company presents the above liability as current and non-current in the
Balance Sheet as per actuarial valuation by the independent Actuary.
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