3. SIGNIFICANT ACCOUNTING POLICIES
(a) Revenue Recognition
Revenue is measured at fair value of consideration received or receivable.
(i) Sale of Services
-The Company recognizes revenues on the sale of services, net of discounts.
(ii) Other Operating Revenue
Other Income is recognized as and when the same is accrued.
(b) Property, Plant and Equipment
Property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation less accumulated
impairment, if any.
Freehold land is measured at cost and is not depreciated.
Cost includes purchase price, taxes and duties, labour cost and direct overheads for self-constructed assets and other direct costs
incurred up to the date the asset is ready for its intended use.
Interest cost incurred for constructed assets is capitalized up to the date the asset is ready for its intended use, based on borrowings
incurred specifically for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been
incurred for the asset.
Depreciation is provided on the Straight Line Method (SLM) over the estimated useful lives of the assets considering the nature,
estimated usage, operating conditions, past history of replacement, anticipated technological changes, manufacturer's warranties and
maintenance support.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter,
the term of the relevant lease.
Depreciation is not recorded on capital work-in-progress until construction and installation are complete and the asset is ready for its
intended use.
Capital work in progress Assets in the course of construction are capitalized in capital work in progress account. At the point when an
asset is capable of operating in the manner intended by management, the cost of construction is transferred to the appropriate category
of property, plant and equipment. Costs associated with the commissioning of an asset are capitalized when the asset is available for
use but incapable of operating at normal levels until the period of commissioning has been completed.
(c) Intangible Assets
Intangible assets acquired are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost
less any accumulated amortisation and accumulated impairment losses. The useful lives of intangible assets are assessed as either finite
or indefinite. The Company currently does not have any intangible assets with indefinite useful life. Intangible assets are amortised
over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired.
The amortisation period and the amortisation method for an intangible asset are reviewed at least at the end of each reporting period.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are
considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The
amortisation expense on intangible assets is recognised in the statement of profit and loss unless such expenditure forms part of carrying
value of another asset. Gains or losses arising from derecognition 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.
(d) Financial Instruments
i) Classification, Initial Recognition and Measurement:
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity. Financial assets other than equity instruments are classified into categories: financial assets at fair value through
profit or loss and at amortised cost. Financial assets that are equity instruments are classified as fair value through profit or loss
or fair value through other comprehensive income. Financial liabilities are classified into financial liabilities at fair value through
profit or loss and other financial liabilities.
Financial instruments are recognized on the balance sheet when the Company becomes a party to the contractual provisions of the
instrument.
Initially, a financial instrument is recognized at its fair value. Transaction costs directly attributable to the acquisition or issue of
financial instruments are recognized in determining the carrying amount, if it is not classified as at fair value through profit or loss.
Subsequently, financial instruments are measured according to the category in which they are classified.
Financial assets at amortised cost: Financial assets having contractual terms that give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal outstanding and that are held within a business model whose objective is
to hold such assets in order to collect such contractual cash flows are classified in this category. Subsequently, these are measured
at amortized cost using the effective interest method less any impairment losses.
Equity investments at fair value through other comprehensive income: These include financial assets that are equity instruments
and are irrevocably designated as such upon initial recognition. Subsequently, these are measured at fair value and changes therein
are recognized directly in other comprehensive income, net of applicable income taxes.
Dividends from these equity investments are recognized in the Statement of Profit and Loss when the right to receive payment has
been established.
When the equity investment is derecognized, the cumulative gain or loss in equity is transferred to retained earnings.
Financial assets at fair value through profit or loss: Financial assets are measured at fair value through profit or loss unless it
is measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs
directly attributable to the acquisition of financial assets at fair value through profit or loss are immediately recognised in profit or
loss.
Equity instruments: An equity instrument is any contract that evidences residual interests in the assets of the Company after
deducting all of its liabilities.
Equity instruments issued by the Company are recorded at the proceeds received, net of direct Financial Liabilities at fair value
through profit or loss. Derivatives, including embedded derivatives separated from the host contract, unless they are designated as
hedging instruments, for which hedge accounting is applied, are classified into this category. These are measured at fair value with
changes in fair value recognized in the Statement of Profit and Loss.
Financial guarantee contracts: These are initially measured at their fair values and, are subsequently measured at the higher of the
amount of loss allowance determined or the amount initially recognized less, the cumulative amount of income recognized.
Other financial liabilities: These are measured at amortized cost using the effective interest method.
ii) Determination of Fair Value:
The fair value of a financial instrument on initial recognition is normally the transaction price (fair value of the consideration given
or received). Subsequent to initial recognition, the Company determines the fair value of financial instruments that are quoted in
active markets using the quoted bid prices (financial assets held) or quoted ask prices (financial liabilities held) and using valuation
techniques for other instruments. Valuation techniques include discounted cash flow method and other valuation models.
iii) Derecognition of Financial Assets and Financial Liabilities:
The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers
the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither
transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the
Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company
retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the
financial asset and also recognizes a collateralized borrowing for the proceeds received.
Financial liabilities are derecognised when these are extinguished, that is when the obligation is discharged, cancelled or has
expired.
iv) Impairment of Financial Assets:
The Company recognizes a loss allowance for expected credit losses on a financial asset that is at amortized cost. Loss allowance
in respect of financial assets is measured at an amount equal to life time expected credit losses and is calculated as the difference
between their carrying amount and the present value of the expected future cash flows discounted at the original effective interest
rate.
(e) Cash and Cash Equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of
three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash
and cash equivalents consist of cash and short-term deposits, as defined above.
(f) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in
the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing
of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
(g) Inventories
Inventories are valued at cost on FIFO basis.
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