3 SIGNIFICANT ACCOUNTING POLICIES
3.1 USE OF ESTIMATES
The preparation of the financial statements in conformity with Ind AS requires management to make
estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application
of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets
and liabilities at the date of the financial statements and reported amounts of revenues and expenses during
the period. Application of accounting policies that require critical accounting estimates involving complex
and subjective judgments and the use of assumptions in these financial statements. Accounting estimates
could change from period to period. Actual results could differ from those estimates. Appropriate changes in
estimates are made as management becomes aware of changes in circumstances surrounding the estimates.
Changes in estimates are reflected in the financial statements in the period in which changes are made and,
if material, their effects are disclosed in the notes to the financial statements.
CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby profit or (loss) and tax is adjusted for the
effects of transactions of noncash nature and any deferrals or accruals of past or future cash receipts or
payments. The cash flows from operating, investing and financing activities of the Company are segregated
based on the available information
3.2 PROPERTY PLANT & EQUIPMENT
a) Property, plant and equipment are stated at cost net of taxes less accumulated depreciation and/or
impairment loss; if any. All costs such as freight, non recoverable duties & taxes and other incidental
expenses until the property, plant and equipment are ready for use, as intended by the management and
borrowing cost attributable to the qualifing property, plant and equipments are capitalized.
b) Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable
that future economic benefits associated with these will flow to the Company and the cost of the item can
be measured reliably.
c) Capital work in progress represents expenditure incurred in respect of capital projects which are carried at
cost. Cost includes land, related acquisition expenses, development and construction costs, borrowing costs
and other direct expenditure.
d) The cost and related accumulated depreciation are eliminated from the financial statements upon sale or
retirement of the asset and the resultant gains or losses are recognized in the Statement of Profit and Loss.
Assets to be disposed off are reported at the lower of the carrying value or the fair value less cost to sell.
e) Depreciation on property, plant and equipment is charged in accordance with estimate of useful life of the
assets on written down value method, at rates specified in Schedule II to the Companies Act, 2013.
f) In respect of assets added/disposed off during the year, depreciation is charged on pro-rata basis with
reference to the month of addition/disposal.
g) Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial
year end.
3.3 FINANCIAL INSTRUMENTS
Initial recognition
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual
provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial
recognition, except for trade receivables which are initially measured at transaction price. Transaction costs
that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are
not at fair value through profit or loss, are added to the fair value on initial recognition. Regular way
purchase and sale of financial assets are accounted for at trade date.
Subsequent measurement
Financial assets carried at amortised cost
A financial asset is subsequently 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 are solely payments of principal and interest on
the principal amount outstanding.
Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial
asset expire or it transfers the financial asset and the transfer qualifies for derecognition in accordance with
Ind AS 109 "Financial Instruments" issued by the Ministry of Corporate Affairs, Government of India. A
financial liability (or a part of a financial liability) is derecognized from the Company's Balance Sheet when
the obligation specified in the contract is discharged or cancelled or expires.
3.4 IMPAIRMENT
Financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets
which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant
financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected
credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant
increase in credit risk from initial recognition in which case those are measured at lifetime ECL.The amount
of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to
the amount that is required to be recognised is recognized as an impairment gain or loss in profit or loss.
Non-financial assets
Property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances
indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the
recoverable amount (i.e. the 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 such assets are considered to be impaired, the impairment to be recognized in the Statement of Profit and
Loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable
amount of the asset. An impairment loss is reversed in the Statement of Profit and Loss, if there has been a
change in the estimates used to determine the recoverable amount. The carrying amount of the asset is
increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount
that would have been determined (net of any accumulated amortization or depreciation) had no impairment
loss been recognized for the asset in prior years.
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