C. Significant Accounting Policies
A summary of the significant Accounting Policies applied in the preparation of the
Financial Statements are as given below. These Accounting Policies have been applied
consistently to all periods presented in the Financial Statements.
1. Property, Plant & Equipment
1.1. Initial Recognition and Measurement
An item of Property, Plant and Equipment is recognized 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.
Items of Property, Plant and Equipment are measured at Cost less Accumulated
Depreciation/Amortization and Accumulated impairment losses. Cost includes
expenditure that is directly attributable to bringing the asset, inclusive of non-
refundable taxes & duties, to the location and condition necessary for it to be capable
of operating in the manner intended by management.
When parts of an item of property, plant and equipment have different useful
lives, they are recognized separately.
Items of spare parts, stand-by equipment and servicing equipment which meet the
definition of Property, Plant and Equipment are capitalized.
1.2. Subsequent Costs
Subsequent expenditure is recognized as an increase in the carrying amount of the
asset when It is probable that future economic benefits deriving from the cost
incurred will flow to the enterprise and the cost of the item can be measured reliably.
The cost of replacing part of an item of Property, Plant and Equipment is
recognized in the carrying amount of the item if it is probable that the future
economic benefits embodied within the part will flow to the Company and its cost
can be measured reliably. The carrying amount of the replaced part is derecognized.
The costs of the day-to-day servicing of Property, Plant and Equipment are recognized
in Statement of Profit or Loss as and when incurred.
1.3. Derecognition
Property, Plant and Equipment are derecognized when no future economic
benefits are expected from their use or upon their disposal. Gains and Losses on
disposal of an item of Property, Plant and Equipment are determined by
comparing the proceeds from disposal with the carrying amount of Property, Plant
and Equipment, and are recognized in the Statement of Profit and Loss.
1.4. Depreciation
Assets are depreciated using straight line method overthe estimated useful life of the
asset as specified in Part "C" of Schedule II of Companies Act, 2013 except for Plant
& Machinery, after retaining residual life of 5% of original cost. Assets residual
values and useful lives are reviewed at each financial year end considering the
physical condition of the assets.
Depreciation on additions to/deductions from Property, Plant & Equipment during
the year is charged on pro-rata basis from/up to the date on which the asset is
available for use/disposed.
Where it is probable that future economic benefits deriving from the cost incurred
will flow to the enterprise and the cost of the item can be measured reliably,
subsequent expenditure on a PPE along-with its unamortized depreciable amount
is charged off prospectively over the revised useful life determined by technical
assessment.
In circumstance, where a property is abandoned, the cumulative capitalized costs
relating to the property are written off in the same period.
2. Capital Work-in-Progress
The cost of self-constructed assets includes the cost of materials & direct labour, any
other costs directly attributable to bringing the assets to the location and condition
necessary for it to be capable of operating in the manner intended by management
and borrowing costs.
Expenses directly attributable to construction of property, plant and equipment
incurred till they are ready for their intended use are identified and allocated on a
systematic basis on the cost of related assets.
3. Intangible Assets and Intangible Assets under Development
3.1. Initial recognition and measurement
An Intangible Asset is recognized if and only if it is probable that the expected future
economic benefits that are attributable to the asset will flow to the company and
the cost of the asset can be measured reliably.
Intangible assets that are acquired by the Company, which have finite useful lives, are
recognized at cost. Subsequent measurement is done at cost less accumulated
amortization and accumulated impairment losses. Cost includes any directly
attributable incidental expenses necessaryto make the assets ready for its intended
use.
Expenditure on development activities is capitalized only if the expenditure can be
measured reliably, the product or process is technically and commercially feasible,
future economic benefits are probable and the Company intends to and has sufficient
resources to complete development and to use or sell the asset.
Expenditure incurred which are eligible for capitalizations under intangible assets are
carried as intangible assets under developmenttill they are ready for their intended
use.
3.2. Subsequent Costs
Subsequent expenditure is recognized as an increase in the carrying amount of the
asset when it is probable that future economic benefits deriving from the cost
incurred will flow to the enterprise and the cost of the item can be measured reliably.
3.3. Derecognition
An Intangible Asset is derecognized when no future economic benefits are expected
from their use or upon their disposal. Gains and Losses on disposal of an item of
Intangible Assets are determined by comparing the proceeds from disposal with the
carrying amount of Intangible Assets and are recognized in the Statement of Profit
and Loss.
3.4. Amortization
Intangible Assets having definite life is amortized on straight line method in their
useful lives. Useful life of Computer Software is estimated at five years.
4. Borrowing Cost
Borrowing costs that are directly attributable to the acquisition, construction,
exploration, development or erection of qualifying assets are capitalized as part of cost
of such asset until such time the assets are substantially ready for their intended
use. Qualifying assets are assets which take a substantial period of time to get ready
for their intended use or sale. Capitalization of borrowing costs ceases when
substantially all the activities necessary to prepare the qualifying assets for their
intended uses are complete. Borrowing costs consist of:
(a) interest expense calculated using the effective interest method as described in Ind
AS 109 - 'Financial Instruments',
(b) finance charges in respect of finance leases recognized in accordance with Ind
AS 116-'Leases',
(c) exchange differences arising from foreign currency borrowings to the extent
that they are regarded as an adjustment to interest costs and,
(d) other costs that an entity incurs in connection with the borrowing of funds. Income
earned on temporary investment of the borrowings pending their expenditure on the
qualifying assets is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are charged to revenue as and when incurred.
5. Statement of Cash Flows
Cash Flow Statement has been prepared in accordance with the Indirect method
prescribed in Ind AS 7 'Statement of Cash Flows'.
6. Inventories
Inventories are valued at the lowerof cost and net realizable value. Cost includes cost
of purchase, cost of conversion and other costs incurred in bringing the inventories to
their present location and condition. Costs of purchased inventory are determined
after deducting rebates and discounts. Net realizable value is the estimated selling
price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.
Spare parts other than those capitalized as Property, Plant and Equipmentare carried
as inventory.
The diminution in the value of obsolete, unserviceable and surplus stores & spares is
ascertained on review and provided for.
7. Cash and Cash Equivalent
Cash and cash equivalent in the Balance Sheet comprises Cash at Banks, Cash on Hand
and Short-Term Deposits with an original maturity of three months or less, which are
subject to insignificant risk of change in value.
8. Government Grants
Government grants are recognised where there is a reasonable assurance that the grant
will be received and the Company will comply with all attached conditions. When the
government grant relates to an asset, the asset is disclosed by deducting that grant in
arriving at the carrying amount of that asset. Government grants that compensate the
Company for expenses incurred are recognised in the statement of profit and loss, as
income or deduction from the relevant expense, on a systematic basis in the periods in
which the expense is recognised.
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