MATERIAL ACCOUNTING POLICIES1.1 Basis of preparation of standalone financial
statements:
The standalone financial statements have been
prepared on going concern basis and on accrual
method of accounting in accordance with Indian
Accounting Standards. Historical cost is used except
for certain financial assets and liabilities that are
measured at fair values at the end of each reporting
period, as explained in accounting policies below.
Historical cost is generally based on the fair value
of the consideration given in exchange for goods
and services. The standalone financial statements
are presented in Indian Rupees (‘' /INR/' ) and all
values are rounded to the nearest lakhs (' 00,000),
except when otherwise indicated.
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date, regardless of whether that price
is directly observable or estimated using another
valuation technique.
1.2 Use of estimates and judgments:
The preparation of the standalone financial
statements in conformity with recognition and
measurement principles of Ind AS requires
management of the Company 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 standalone
financial statements and reported amounts of
revenues and expenses for the period presented.
Application of accounting policies that require
critical accounting estimates involving complex and
subjective judgments and the use of assumptions in
these standalone financial statements have been
disclosed below. Accounting estimates could change
from period to period and 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 standalone financial statements in the period
in which changes are made and, if material, their
effects are disclosed in the notes to the standalone
financial statements.
The areas involving significant estimates and
assumptions are as follows:
(i) Measurement of useful lives of Property, Plant
and Equipment and Intangible assets [Note
1.4(a) & (b), Note 2 & Note 5]
(ii) Estimation of Employee benefits (Defined
benefits) [Note 1.12(c), 1.12(e) & Note 43]
(iii) Impairment of assets [Note 1.10 and Note
1.17(viii)]
(iv) Estimation of taxes on income [Note 1.15 &
Note 18]
(v) Provisions and contingencies [Note 1.22, Note
46 and Note 36]
1.3 Current versus non-current classification:
The Company presents assets and liabilities in
the balance sheet based on current/ non-current
classification.
a An asset is treated as current when it is:
- Expected to be realised or intended to be
sold or consumed in normal operating
cycle.
- Held primarily for the purpose of trading
- Expected to be realised within twelve
months after the reporting period, or
- Cash or Cash equivalent unless restricted
from being exchanged or used to settle a
liability for at least twelve months after
the reporting period
All other assets are classified as non-current.
b A liability is treated as current when it is:
- Expected to be settled in normal operating
cycle
- Held primarily for the purpose of trading
- Due to be settled within twelve months
after the reporting period, or
- There is no right to defer the settlement
of the liability for at least twelve months
after the reporting period
All other liabilities are classified as non¬
current.
c Deferred tax assets/ liabilities are classified as
non-current assets/ liabilities.
d Based on the nature of products/activities of
the Company and the normal time between
acquisition of the assets and the realisation in
cash and cash equivalents, the Company has
determined its operating cycle as 12 months
for the purpose of classification of its assets
and liabilities as current and non-current.
1.4 Critical Accounting Estimates:
a Property, Plant and Equipment:
Property, plant and equipment represent a
significant proportion of the asset base of the
Company. The charge in respect of periodic
depreciation is derived after determining
an estimate of an asset's expected useful
life and the expected residual value at the
end of its life. The useful lives and residual
values of company's assets are determined by
management at the time the asset is acquired
and reviewed periodically, including at each
financial year end. The lives are based on
historical experience with similar assets as
well as anticipation of future events, which
may impact their life, such as changes in
technology.
b Intangible Assets
The capitalisation of cost in intangible asset
under development is based on judgement
of the management that technological and
economical feasibility is confirmed and that
the assets will generate economic benefits in
future. Based on the evaluations carried out,
the Company's management has determined
that there is no factor which indicate that these
assets have suffered any impairment loss.
c Investment in subsidiaries
The Company reviews its carrying value
of investments carried at cost annually, or
more frequently when there is indication for
impairment. If the recoverable amount is less
than its carrying amount, the impairment
loss is accounted for. The management of the
Company is confident that the investment
does not require further provision for
impairment based on the future projections.
On disposal of investments in Subsidiaries, the
difference between net disposal proceeds and
the carrying amounts are recognised in the
statement of profit and loss.
d Provision and Contingent liability
The Company reviews pending cases, claims
by third party and other contingencies, if any
on an on-going basis. For contingent losses
that are considered probable, estimated loss is
recorded as an accrual in standalone financial
statements. A disclosure for contingent
liabilities is made where there is a possible
obligation or present obligation that may
probably not require an outflow of resources.
When there is a possible obligation or present
obligation where the likelihood of outflow of
resources is remote, no provision or disclosure
is made in the standalone financial statements.
Gain contingencies are not recognised until the
contingencies are resolved and the amounts
are received or recoverable.
e Provision for Credit loss
The Company reviews the position of trade
receivable and ascertains a provision for life
time credit loss after considering the industry
and economic conditions in which customer
operate, the profile of the customer and the
past experience.
f Defined benefit plans
The cost of the defined benefit plan and other
postemployment benefits and the present
value of such obligations are determined using
actuarial valuations. An actuarial valuation
involves making various assumptions that
may differ from actual developments in the
future. These include the determination of the
discount rate, future salary increases, mortality
rates and future pension increases. Due to the
complexities involved in the valuation and its
long-term nature, a defined benefit obligation
is sensitive to changes in these assumptions.
All assumptions are reviewed at each reporting
date.
1.5 Revenue Recognition:
The Company recognises revenue, when or as
the entity satisfies a performance obligation by
transferring a promised goods or services to a
customer; i. e. when the customer is able to direct
the use of the transferred goods or services and
obtains substantially all of the remaining benefits,
provided a contract with enforceable rights and
obligations exists and amongst others collectability
of consideration is probable taking into account our
customer's creditworthiness. With regards to the
sale of products (a) where delivery is not considered
to have occurred, and therefore no revenues are
recognised, until the customer has taken title to
the products and assumed the risks and rewards of
ownership of the products specified in the purchase
order or sales agreement. (b) Where dispatch has
not been done but tests have been completed as
per the terms agreed with the customer, revenue
is the transaction price the Company expects to be
entitled to. Consideration is adjusted for the time
value of money if the period between the transfer
of goods or services and the receipt of payment
is substantial and there is a significant financing
benefit either to the customer or Company. If a
contract contains more than one distinct good or
service, the transaction price is allocated to each
performance obligation based on relative stand¬
alone selling prices. If stand-alone selling prices are
not observable, the Company reasonably estimates
those. Revenue is recognised for each performance
obligation either at a point in time or over the time.
Revenues from services:
Revenues are recognised over time on a straight¬
line basis or, if the performance pattern is other
than straight-line, as services are provided, i. e. the
progress towards complete satisfaction using input
method or output method.
Revenue recognised by the Company where
services are rendered to the customer and for
which invoice has not been raised (which we refer
as unbilled revenue) are classified as contract
assets. Amount collected from the customer and
services have not yet been rendered are classified
as contract liabilities.
Dividend Income:
Revenue is recognised when the Company's right to
receive the payment is established.
Interest Income:
Interest income is recognised using effective
interest rate method. The effective interest rate is
the rate that exactly discounts estimated future
cash receipts through the expected life of the
financial asset to the gross carrying amount of
financial asset. Interest income from 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.
1.6 Export Incentives:
Export incentives are recognised in the statement
of profit and loss when the right to receive credit as
per the terms of the scheme is established in respect
of exports made and when there is no significant
uncertainty regarding the ultimate collection of the
relevant export proceeds.
1.7 Property, plant and equipment (PPE):Initial Measurement:
Free hold land is carried at historical cost. All
other items of Property, Plant and Equipment's are
carried at cost of acquisition/construction net of
recoverable taxes, less accumulated depreciation
/ amortisation and impairment losses, if any.
The cost includes directly attributable expenses
relating to the acquisition and bringing the assets
to the location and condition of use net of any sale
proceeds and finance cost till assets are put to use,
are capitalised. Stores, spares and parts which can
be used only in connection with an item of plant
or equipment and whose useful life is expected to
be irregular are capitalised and depreciated over
the useful life of the principal item of the relevant
assets.
Subsequent expenditure relating to property,
plant and equipment is capitalised 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. Repairs and
maintenance costs are recognised in the statement
of profit and loss when incurred.
Interest cost incurred for constructed assets is
capitalised 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.
Property, Plant and Equipment manufactured
internally are capitalised at Factory Cost incurred
up to the date the asset is ready for its intended use
Capital Work in Progress:
Property, Plant and Equipment which are not yet
ready for their intended use are carried at cost,
comprising direct cost and related incidental
expenses. Advances paid towards acquisition of
PPE outstanding at each balance sheet date are
classified as Capital advances under other non-
Hirrpnt aQQptd
Depreciation and amortisation:
i. Depreciation on Property, Plant and
Equipments is provided using straight
line method (SLM) with reference to the
estimated useful life of the Property, Plant and
Equipment less its residual value as prescribed
under Schedule II of the Companies Act 2013,
or useful life of the asset as estimated by the
management, whichever is lower. Property,
Plant and Equipment costing below ' 5,000/-
are depreciated fully. Depreciation is charged
for complete quarter on addition / deletion.
ii. Freehold land is not depreciated.
iii. Depreciation is not recorded on capital work-
in-progress until construction and installation
are complete and the asset is ready for its
intended use.
The estimated useful lives are as mentioned
below:
Derecognition:
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 PPE is
determined as the difference between the sales
proceeds and the carrying amount of the asset and
is recognised in statement of profit or loss.
1.8 Intangible Assets:
Intangible assets with finite lives that are acquired
are carried at cost or fair value as of the date
of acquisition, as applicable, less accumulated
amortisation and accumulated impairment losses,
if any. The estimated useful life and amortisation
method are reviewed at the end of each reporting
period, with the effect of any changes in estimate
being accounted for on a prospective basis.
Intangible assets with indefinite useful lives that
are acquired separately are carried at cost less
accumulated impairment losses.
Intangible assets consist of technical knowhow /
license fees / softwares which are amortised over
a period of 5 years on a straight-line basis being the
estimated useful life.
1.9 Research & Development
Expenditure on research activity undertaken is
charged to the Statement of Profit & Loss as and
when incurred during the year to their natural head
of accounts. The expenditure incurred includes cost
of materials, salaries & wage and other revenue
expenditure.
Development costs are capitalised only after the
technical and commercial feasibility of the asset for
sale or use has been established.
Capital Expenditure is categorised and disclosed
separately as Research & Development Property
Plant and Equipment and depreciation is charged
as disclosed in Sl. No.1.7 above.
1.10 Impairment of Assets:
a. Financial assets (other than at fair value):
The Company assesses at the end of each
reporting period, whether a financial asset
or a group of financial assets is impaired.
Ind AS 109 requires expected credit losses
to be measured through a loss allowance.
The Company recognises lifetime expected
losses for all contract assets and / or all trade
receivables that do not constitute a financing
transaction. For all other financial assets,
expected credit losses are measured at an
amount equal to the 12 month expected credit
losses or at an amount equal to the life time
expected credit losses if the credit risk on
the financial asset has increased significantly
since initial recognition.
b. Non-Financial Assets:
Property, plant and equipments and
intangible assets
Property, plant and equipment and intangible
assets with finite life are evaluated for
recoverability whenever there is any
indication that their carrying amounts may
not be recoverable. If any such indication
exists, the recoverable amount (i.e. 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 the recoverable amount of an asset (or CGU) is
estimated to be less than its carrying amount, the
carrying amount of the asset (or CGU) is reduced
to its recoverable amount. An impairment loss is
recognised in the statement of profit and loss.
1.11 Inventories:
Inventories are valued at lower of cost and net
realisable value. Raw materials and bought out
items are valued on first in first out basis and
includes material cost, carriage inward, insurance
and purchase related expenses. Cost in respect
of work in progress and finished goods include
appropriate portion of overheads. Net realisable
value represents the estimated selling price for
inventory less all estimated cost of completion and
cost necessary to make the sale.
1.12 Employee Benefits:
Employee benefits include provident fund,
pension fund, employee state insurance scheme,
compensated absences and gratuity.
a. Short-term employee benefits:
The undiscounted amount of short-term
employee benefits expected to be paid in
exchange for the services rendered by the
employees are recognised during the year
when the employees render the service. These
benefits include performance incentive and
compensated absences which are expected to
occur within twelve months after the end of
the period in which the employee renders the
related services.
b. Long-term employee benefits -
Long term employee benefits include
compensated absences which are not expected
to occur within twelve months after the end of
the period in which the employee renders the
related services are recognised as a liability
at the present value of the defined benefit
obligation as at balance sheet date less the fair
value of the plan assets, if any out of which the
obligations are expected to be settled.
c. Defined Benefit Plans:
For defined benefit plans in the form of
Gratuity (funded), the cost of providing
benefits is determined using the Projected Unit
Credit method, with actuarial valuation being
carried out at the end of each reporting period,
taking effect of actuarial gains and losses
which is recognised in Other Comprehensive
Income. The amount is funded to gratuity fund
administered by the trustees and managed by
Life Insurance Corporation of India.
Re-measurement of net defined benefit
liability/ asset pertaining to gratuity
comprise of actuarial gains/ losses (i.e.
changes in the present value resulting
from experience adjustments and effects
of changes in actuarial assumptions) and is
reflected immediately in the balance sheet
with a charge or credit recognised in other
comprehensive income in the period in which
they occur. Re-measurement recognised in
other comprehensive income is reflected
immediately in retained earnings and is not
reclassified to statement of profit or loss.
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 expenses in the statement of profit and
loss.
Past service cost is recognised immediately in
the statement of profit and loss. The benefits
obligation in respect of gratuity recognised in
the Balance Sheet represents the present value
of the defined benefit obligation as adjusted
for present value plan assets including refunds
and reductions if any available as against
future contributions to the scheme.
d. Defined Contribution Plans:
The Company has contributed to provident
fund and employee state insurance scheme
which is defined contribution plan. The
contribution paid/ payable under the scheme
is charged to Statement of Profit and loss
during the year in which an employee renders
the related service. Company has no further
obligation beyond making the payment.
e. Termination benefits are recognised as an
expense as and when incurred.
1.13 Share based payments
The Company recognises compensation expense
relating to share-based payments in net profit
using fair-value in accordance with IND AS 102,
Share Based Payment. The estimated fair value
of awards is charged to income on straight line
basis over the requisite service period for each
separately vesting portion of the award as if the
award was in substance, multiple awards with a
corresponding credit to Employee Stock Option /
Rights outstanding Reserve.
The Company has created an Employee Stock
Options Trust (ESOP Trust) for providing share-
based payment to its employees. The Company
uses ESOP as a vehicle for distributing shares to
employees under the employee remuneration
schemes. The ESOP Trust buys shares of the
Company from the market, for giving shares to
employees in addition to allotment of shares by the
Company as per the requirements of the scheme.
The Company treats ESOP as its extension and
shares held by ESOP are treated as treasury shares.
Treasury shares are recognised at cost of acquisition
and included under other equity. No gain or loss is
recognised in profit or loss on the purchase or issue
of the Company's own equity shares. Share options
exercised during the reporting period are deducted
from treasury shares.
1.14 Leases:
Company as a Lessee:
Contracts with third party, which give the
Company the right of use in respect of an Asset, are
accounted in line with the provisions of Ind AS 116
- Leases, if the recognition criteria as specified in
the Accounting standard are met.
Lease payments associated with Short terms leases
and Leases in respect of Low value assets are
charged off as expenses on straight line basis over
lease term or other systematic basis, as applicable.
At commencement date, the value of “right of use”
is capitalised at the present value of outstanding
lease payments plus any initial direct cost and
estimated cost, if any, of dismantling and removing
the underlying asset and presented as part of Plant,
property and equipment.
Liability for lease is created for an amount
equivalent to the present value of outstanding lease
payments and presented as Borrowing. Subsequent
measurement, if any, is made using Cost model.
Each lease payment is allocated between the
liability created and finance cost. The finance cost
is charged to the Statement of Profit and loss over
the lease period so as to produce a constant periodic
rate of interest on the remaining balance of the
liability for each period.
The right-of-use asset is depreciated over the
shorter of the asset's useful life and the lease term
on a straight-line basis. If ownership of the leased
asset transfers to the Company at the end of the
lease term or the cost reflects the exercise of a
purchase option, depreciation is calculated using
the estimated useful life of the asset. Right-of-use
assets are subject to impairment test.
The lease payments are discounted using the
interest rate implicit in the lease, if that rate can
be determined, or the Company's incremental
borrowing rate. The Company applies the
short-term lease recognition exemption to its
short-term leases (i.e., those leases that have a lease
term of 12 months or less from the commencement
date and do not contain a purchase option). It also
applies the lease of low-value assets recognition
exemption to leases that are considered of low
value. Lease payments on short-term leases and
leases of low-value assets are recognised as expense
on a straight-line basis over the lease term.
Lease modifications, if any are accounted as a
separate lease if the recognition criteria specified in
the standard are met.
Company as a lessor:
Leases are classified as operating lease or a finance
lease based on the recognition criteria specified in
Ind AS 116 - Leases
a) Finance Lease:
At commencement date, amount equivalent to
the “net investment in the lease” is presented as
a Receivable. The implicit interest rate is used
to measure the value of the “net investment in
Lease”.
Each lease payment is allocated between the
Receivable created and finance income. The
finance income is recognised in the Statement
of Profit and loss over the lease period so as to
reflect a constant periodic rate of return on the
net investment in Lease.
The asset is tested for de-recognition and
impairment requirements as per Ind AS 109 -
Financial Instruments.
Lease modifications, if any are accounted as
a separate lease if the recognition criteria
specified in the standard are met.
b) Operating Lease:
The Company recognises lease payments
from operating leases as income on either a
straight-line basis or another systematic basis,
if required.
Lease modifications, if any are accounted as
a separate lease if the recognition criteria
specified in the standard are met.
1.15 Income Taxes:
The Company's major tax jurisdictions are in India.
Significant judgements are involved in determining
the provision for income tax credits, including the
amount to be paid or refunded.
Income tax expense comprises current tax expense
and the net change in the deferred tax asset or
liability during the year. Current and deferred tax
are recognised in statement of 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.
a. Current Income Taxes:
The current income tax expense includes
income taxes payable by the Company and
its overseas branches. Advance taxes and
provisions for current income taxes are
presented in the balance sheet after off-setting
advance tax paid and income tax provision
arising in the same tax jurisdiction and where
the relevant tax paying units intends to settle
the asset and liability on a net basis or where
it has legally enforceable right to set off the
recognised amount.
b. Deferred Income Taxes:
Deferred income tax is recognised using the
balance sheet approach. Deferred income
tax assets and liabilities are recognised for
deductible and taxable temporary differences
arising between the tax base of assets and
liabilities and their carrying amount.
Deferred income tax asset is recognised to the
extent that it is probable that taxable profit
will be available against which the deductible
temporary differences and unused tax losses,
if any can be utilised.
The carrying amount of deferred income tax assets
is reviewed at each reporting 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 utilised.
Deferred tax assets and liabilities are measured
using substantively enacted tax rates expected to
apply to taxable income in the years in which the
temporary differences are expected to be received
or settled.
Deferred tax assets and liabilities are offset when
they relate to income taxes levied by the same
taxation authority and the relevant entity intends
to settle its current tax assets and liabilities on a net
basis.
1.16 Foreign Currency:
a. Functional and presentation currency:
The Standalone financial statement is
presented in Indian Rupee (Rs/'), which
is also the Company's functional currency.
Transaction in foreign currencies are initially
recorded by the Company at their respective
functional currency spot rates at the date,
the transaction first qualifies for recognition.
However, for practical reasons, the
Company uses an average rate, if the average
approximates the actual rate at the date of the
transaction.
b. Initial Recognition:
Foreign currency transactions are recorded
in the reporting currency, by applying
foreign currency exchange rates between the
reporting currency and the foreign currency
prevailing at the dates of the transactions.
c. Measurement of foreign currency monetary
items and Non-monetary items at the balance
sheet date
Monetary items outstanding at the balance
sheet date are restated at the rate as on reporting
date. Non - monetary items which are carried
in terms of historical cost denominated in a
foreign currency are not restated and hence is
reported using the exchange rate prevailing at
the date of transactions.
d. Treatment of exchange differences on
monetary items
Exchange differences arising on settlement
/ restatement of foreign currency assets and
liabilities of the Company are recognised as
income or expense in the statement of profit
and loss in the period in which they arise.
e. In respect of overseas branch, financial
statements are translated as if the
transactions are those of the Company itself
i.e. Indian Rupees as the functional currency
since the overseas branch is primarily
involved in selling/marketing goods
manufactured by the Company in India. The
net impact of the foreign exchange difference
of foreign operations is recognised in Other
Comprehensive Income.
1.17 Financial Instruments:
A financial instrument is any contract that gives
rise to a financial asset of any entity and a financial
liability or equity instrument of another entity.
Financial assets and liabilities are recognised when
the Company becomes a party to the contractual
provisions of the instrument. Financial assets
and 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) are added to or deducted from the fair value
measured on initial recognition of financial asset or
financial liability.
i. Cash and Cash equivalents:
The Company considers all highly liquid
financial instruments, which are readily
convertible into known amounts of cash that
are subject to an insignificant risk of change in
value and having original maturities of three
months or less from the date of purchase, to be
cash equivalents. Cash and cash equivalents
consist of balances with banks which are
unrestricted for withdrawal and usage.
ii. Financial assets at amortised cost:
Financial assets are subsequently measured
at amortised cost if these financial assets are
held within a business whose objective is to
hold these 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.
iii. 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 and
liabilities at fair value through profit or loss are
immediately recognised in statement of profit
and loss.
iv. Financial liabilities:
Financial liabilities are subsequently carried
at amortised cost using the effective interest
method. For trade and other payables maturing
within one year from the balance sheet date,
the carrying amounts approximate fair value
due to the short maturity of these instruments.
Financial liabilities at Fair value through profit
and Loss are stated at fair value, with any gains
or losses arising on re-measurement in Profit
and loss statement.
v. Equity Instrument:
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, net of
issue costs.
vi. De-recognition of financial instruments:
The Company derecognises 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
de-recognition under Ind AS 109. A financial
liability (or a part of a financial liability) is
derecognised when the obligation specified
in the contract is discharged or cancelled or
expires.
vii. Impairment of financial assets:
The Company assesses on a forward looking
basis the expected credit losses associated
with its assets carried at amortised cost. The
impairment methodology applied depends
on whether there has been a significant
increase in credit risk. In respect of trade
receivables, the Company applies simplified
approach permitted by Ind AS 109 Financial
Instruments, which requires expected lifetime
losses to be recognised from initial recognition
of the receivables.
viii. Investments in subsidiary:
Investments in subsidiary are carried at cost
less accumulated impairment, if any.
ix. Fair value of financial instruments:
In determining the fair value of its financial
instruments, the Company uses following
hierarchy and assumptions that are based on
market conditions and risks existing at each
reporting date.
Fair value hierarchy:
All assets and liabilities for which fair value
is measured or disclosed in the financial
statements are categorised within the fair
value hierarchy, described as follows, based on
the lowest level input that is significant to the
fair value measurement as a whole:
Level 1 — Quoted (unadjusted) market prices in
active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is directly or indirectly
observable
Level 3 - Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable
For assets and liabilities that are recognised
in the standalone financial statements on a
recurring basis, the Company determines
whether transfers have occurred between
levels in the hierarchy by re-assessing
categorisation (based on the lowest level
input that is significant to the fair value
measurement as a whole) at the end of each
reporting period
1.18 Accounting for Derivatives:
Derivatives are initially recognised at fair value and
are subsequently re-measured to their fair value
at the end of each reporting period. The resulting
gains/losses is recognised in the statement of profit
and loss of that period.
1.19 Borrowing Cost:
General and specific borrowing cost that are
directly attributable to the acquisition, construction
or production of a qualifying asset are capitalised
during the period that is required to complete and
prepare the asset for its intended use. Qualifying
assets are assets that necessarily take a substantial
period of time to get ready for their intended use.
Investment income earned on the temporary
investment of specific borrowings pending their
expenditure on qualifying assets is deducted from
the borrowing costs eligible for capitalisation.
Other borrowing costs are charged to statement
of Profit and Loss in the period in which they are
incurred.
1.20 Government Grants:
Government grants are not recognised until there
is reasonable assurance that the Company will
comply with the conditions attached to them and
that the grants will be received. Government grants
are recognised in profit or loss on a systematic basis
over the periods in which the Company recognises
as expenses the related costs for which the grants
are intended to compensate.
1.21 Cash Flow statement
Cash flows are reported using Indirect method,
whereby profit for the period is adjusted for the
effects of transactions of non-cash nature, any
deferrals or accruals of past or future operating
cash receipts or payments and item of income or
expenses associated with investing or financing
cash flows. The cash flows from operating,
financing and investing activity of the Company are
segregated.
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