2.1 Basis of preparation
Standalone Financial Statements have been prepared in accordance with the accounting principles generally accepted in India
including Indian Accounting Standards (Ind AS) prescribed under the Section 133 of the Companies Act, 2013 read with rule 3 of the
Companies (Indian Accounting Standards) Rules, 2015 as amended and relevant provisions of the Companies Act, 2013.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been
measured at fair value or revalued amount:
- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments) and
- Employee defined benefit assets/(obligations) are recognised as the net total of the fair value of plan assets, plus actuarial losses,
less actuarial gains and the present value of the defined benefit obligations.
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 in use.
2.2 Summary of significant accounting policies
(a) Property, plant and equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.
Freehold land are stated at cost. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly
attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in
arriving at the purchase price.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is
depreciated separately. When significant parts of plant and equipment are required to be replaced at intervals, the Company
depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized
in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and
maintenance costs are recognized in profit or loss as incurred.
Subsequent expenditure related to an item of property, plant and equipment is added to its book value only if it increases the future
benefits from its previously assessed standard of performance. All other expenses on existing property, plant and equipment,
including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss
for the period during which such expenses are incurred.
Borrowing costs directly attributable to acquisition of property, plant and equipment which take substantial period of time to get
ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as
capital advances under other non-current assets.
An item of property, plant and equipment and any significant part initially recognized is de-recognized upon disposal or when no
future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as
the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss
when the Property, plant and equipment is de-recognized.
Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during construction period is
capitalized to the extent to which the expenditure is indirectly related to construction or is incidental thereto. Other indirect
expenditure (including borrowing costs) incurred during the construction period which is neither related to the construction activity
nor is incidental thereto is charged to the statement of profit and loss.
Costs of assets not ready for use at the balance sheet date are disclosed under capital work- in- progress.
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated on straight line basis using the useful lives as prescribed under Schedule II to the Companies Act, 2013. If
the management's estimate of the useful life of a item of property, plant and equipment at the time of acquisition or the remaining
useful life on a subsequent review is shorter than the envisaged in the aforesaid schedule, depreciation is provided at a higher rate
based on the management's estimate of the useful life/ remaining useful life.
The property, plant and equipment acquired under finance leases is depreciated over the asset's useful life or over the shorter of the
asset's useful life and the lease term if there is no reasonable certainty that the Company will obtain ownership at the end of the
lease term. Leasehold assets are amortised on a straight line basis over the balance period of lease.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's
carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated
recoverable amount.
(b) Intangible assets
Intangible assets that are acquired by the Company are measured initially at cost. After initial recognition, an intangible asset is
carried at its cost less any accumulated amortization and accumulated impairment loss.
Subsequent expenditure is capitalized only when it increases the future economic benefits from the specific asset to which it relates.
An intangible asset is derecognized on disposal or when no future economic benefits are expected from its use and disposal.
Losses arising from retirement and gains or losses arising from disposal of an intangible asset are measured as the difference
between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss.
Amortisation methods and periods
Intangible assets comprising of Surface Rights are amortized on a straight line basis over the useful life of three years which is
estimated by the management.
The estimated useful lives of intangible assets and the amortisation period are reviewed at the end of each financial year and the
amortisation method is revised to reflect the changed pattern, if any.
(c) Impairment of non financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists,
or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's
recoverable amount is the higher of an asset's or cash-generating unit's (CGU) fair value less costs of disposal and its value in use.
Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount.
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. In determining fair value less costs
of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation
model is used.
Impairment losses are recognized in the statement of profit and loss. After impairment, depreciation is provided on the revised
carrying amount of the asset over its remaining useful life.
When there is indication that an impairment loss recognised for an asset (other than a revalued asset) in earlier accounting periods
no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, to the
extent the amount was previously charged to the Statement of Profit and Loss.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of the entity are measured using the currency of the primary economic environment in
which the entity operates ('the functional currency'). The financial statements are presented in Indian rupee (INR), which is entity's
functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and
liabilities denominated in foreign currencies at year end exchange rates are recognised in statement of profit or loss. Non monetary
assets and liabilities are carried at cost.
(e) Financial Instruments
Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the
instruments.
Initial Recognition
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through
profit or loss and ancillary costs related to borrowings) are added to or deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets
or financial liabilities at fair value through profit or loss are recognised immediately in Statement of Profit and Loss.
Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income
("FVOCI") or fair value through profit or loss ("FVTPL") on the basis of following:
- the entity's business model for managing the financial assets and
- the contractual cash flow characteristics of the financial asset.
(i) Amortised Cost
A financial asset shall be classified and measured at amortised cost if both of the following conditions are met:
- the financial asset is held within a business model whose objective is to hold financial assets 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.
(ii) Fair Value through other comprehensive income
A financial asset shall be classified and measured at fair value through OCI if both of the following conditions are met:
- the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling
financial assets 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.
(iii) Fair Value through Profit or Loss
A financial asset shall be classified and measured at fair value through profit or loss unless it is measured at amortised cost or at fair
value through OCI.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the
classification of the financial assets.
Classification and Subsequent Measurement: Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL or 'other financial liabilities'.
(i) Financial Liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as
FVTPL. Gains or Losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
(ii) Other Financial Liabilities:
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the
effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense
over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all
fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or
discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on
initial recognition.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. The
Company recognises a loss allowance for expected credit losses on financial asset. In case of trade receivables, the Company follows
the simplified approach permitted by Ind AS 109 - Financial Instruments for recognition of impairment loss allowance. The
application of simplified approach does not require the Company to track changes in credit risk. The Company calculates the
expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers
the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither
transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company
recognises 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 recognise the financial
asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the
consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and
accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on
disposal of that financial asset.
Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of
a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently
enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and
settle the liabilities simultaneously.
(f) Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by a Company are recognised at the proceeds received.
(g) Taxes
(i) Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the
reporting date in the countries where the company operates and generates taxable income.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or
directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable
tax regulations are subject to interpretation and establishes provisions where appropriate.
(ii) Deferred tax
Deferred income tax is recognized using the balance sheet approach, deferred tax is recognized on temporary differences at the
balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, except
when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a
business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.
Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused
tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences,
and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is
realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance
sheet date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
(h) Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
Raw materials: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and
condition. valued at lower of cost and net realisable value. Cost is computed on FIFO basis.
Finished goods and stock in progress: Finished goods and stock-in-process are valued at lower of cost and net realizable value. Cost
for this purpose includes estimated cost of conversion and other costs incurred in bringing the inventories to their present location
and condition.
Traded goods: Valuation of stock in traded goods is carried out at lower of its cost and quoted market price. Cost is ascertained on
FIFO basis.
Stores and spares : Stores and spares are charged to consumption in the year of procurement.
(i) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns,
trade allowances, rebates, value added taxes and amounts collected on behalf of third parties. The company recognises revenue
when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific
criteria have been met for each of the company's activities as described below. The company bases its estimates on historical results,
taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Recognising revenue from major business activities
(i) Sale of goods and other tradable items
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the
buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or
receivable, net of returns and allowances, trade discounts and volume rebates.
(ii) Interest income
For all debt instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is
recorded using the effective interest rate (EIR).
(iii) Dividend income
Revenue is recognised when the company's right to receive the payment is established, which is generally when shareholders
approve the dividend.
(j) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the
end of the period in which the employees render the related service are recognised in respect of employees' services up to the end of
the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
(ii) Other long-term employee benefit obligations
The earned leave obligations are presented as current liabilities in the balance sheet as the entity does not have an unconditional
right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected
to occur.
(iii) Post-employment obligations
The company operates the following post-employment schemes:
(a) defined benefit plans viz gratuity,
(b) defined contribution plans viz provident fund/pension fund.
Gratuity obligations
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined
benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated
annually by actuaries using the projected unit credit method. The plan assets are administered by the approved gratuity fund trust.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to
market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related
obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value
of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the
period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of
changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised
immediately in profit or loss as past service cost.
Defined contribution plans
The company pays provident fund/pension fund contributions to approved publicly administered provident funds/pension funds. The
company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined
contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
(iii) Termination benefits
Termination benefits are payable when employment is terminated by the company before the normal retirement date, or when an
employee accepts voluntary redundancy in exchange for these benefits.
(k) Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception
of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or
assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
(i) As a lessee
A lease is classified at the inception date as a finance lease or an operating lease. Leases of property, plant and equipment where the
company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the company as lessee are classified
as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the
lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor's expected
inflationary cost increases.
(ii) As a lessor
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the
lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company's net investment in the leases.
Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment
outstanding in respect of the lease.
Lease income from operating leases where the company is a lessor is recognised in income on a straight-line basis over the lease term
unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost
increases. The respective leased assets are included in the balance sheet based on their nature.
Arrangements in the nature of lease
The Company enters into agreements, comprising a transaction or series of related transactions that does not take the legal form of a
lease but conveys the right to use the asset in return for a payment or series of payments. In case of such arrangements, the
Company applies the requirements of Ind AS 116 - Leases to the lease element of the arrangement. For the purpose of applying the
requirements under Ind AS 116 - Leases, payments and other consideration required by the arrangement are separated at the
inception of the arrangement into those for lease and those for other elements.
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