3. Significant Accounting Policies
3.1 Revenue recognition
Revenue from sale of goods and services is measured at the fair value of the consideration received or receivable, net of
estimated customer returns, rebates and other similar allowances.
Sale of goods
Revenue from the sale of goods is recognised the significant risks and rewards of ownership of the goods have passed to the
buyer, usually on delivery of the goods and it is probable that the economic benefits associated with the transaction will flow
to the Company
Rendering of services
Revenue from rendering of services recognised when services are rendered and related cost are incurred.
Dividend and interest income
Dividend income from investments is recognised when the shareholder's right to receive payment has been established
(provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured
reliably).
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.
3.2 Foreign currencies
In preparing the Standalone financial statements, transactions in currencies other than the entity's functional currency are
recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary
items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried
at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair
value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences on monetary items are recognised in profit or loss in the period in which they arise.
3.3 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those
assets, until such time as the assets are substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets
is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
3.4 Employee benefits
Defined benefit plans
The Company has an obligation towards a defined benefit retirement plan covering eligible employees through Group Gratuity
Scheme of Life Insurance Corporation of India. The Company accounts for the liability for the gratuity benefits payable in
future based on an independent actuarial valuation carried out using Projected Unit Credit Method considering discounting
rate relevant to Government Securities at the Balance Sheet Date.
Defined benefit costs in the nature of current and past service cost and net interest expense or income are recognized in the
statement of profit and loss in the period in which they occur. Actuarial gains and losses on measurement is reflected
immediately in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which
they occur and is reflected immediately in retained earnings and not reclassified to profit or loss. Past service cost is
recognized in profit and loss in the period of a plan amendment.
Defined Contribution plan
The Company recognize contribution payable to a defined contribution plan as an expenses in the Statement of profit and
loss when the employee render services to the Company during the reporting period.
Compensated Absences
Provisions for Compensated Absences and its classifications between current and non-current liabilities are based on
independent actuarial valuation. The actuarial valuation is done as per the projected unit credit method as at the reporting
date.
Short term employee benefits:
They are recognized at an undiscounted amount in the Statement of Profit and Loss for the year in which the related services
are rendered.
3.5 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax. Current and deferred tax are recognised
in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity,
in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from 'profit before tax' as reported
in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and
items that are never taxable or deductible. The Company's current tax is calculated using tax rates that have been enacted
or substantially enacted by end of reporting periods.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Standalone
financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are
generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that taxable profits will be available against which those deductible
temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference
arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that
it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability
is settled or the asset realised, based on tax rates that have been enacted or substantively enacted by the end of the
reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in
which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and
liabilities.
3.6 Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated
in the balance sheet at cost less accumulated depreciation and accumulated impairment losses.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any
recognised impairment loss. Cost includes professional fees for qualifying assets, borrowing costs capitalised in accordance
with the Company's accounting policy. Such properties are classified to the appropriate categories of property, plant and
equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property
assets, commences when the assets are ready for their intended use.
Freehold land is not depreciated.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is recognised so as to write off the cost of assets (other than freehold land & properties under construction)
less their residual values over their useful lives, as indicated in the Companies Act, 2013, using the straight-line method. 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.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property,
plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and
is recognised in profit or loss.
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment
recognised as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed
cost as of the transition date.
3.7 Impairment of tangible and intangible assets (other than goodwill)
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it
is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount
of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group
of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at
least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. 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 for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised
immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased
to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
3.8 Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a first-in-first-
out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion
and costs necessary to make the sale.
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