2 Significant Accounting Policies
2.1 Basis of preparation
The financial statements of the company have been prepared and presented in accordance with Indian
Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015
as amended by the Companies(Indian Accounting Standards)(Amendment) Rules, 2016 and the relevant
provisions of the Companies Act, 2013 ("the Act").
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 or at amortised cost depending on the
classification(refer accounting policy regarding financial instruments),
- 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,
and
- Long term borrowings, except obligations under finance leases, are measured at amortised cost using
the effective interest rate method.
The Company adopted Disclosure of Accounting Policies (Amendments to Ind AS 1) from April 1, 2023.
Although the amendments did not result in any changes in the accounting policies themselves, they
impacted the accounting policy information disclosed in the financial statements.
The amendments require the disclosure of 'material' rather than 'significant' accounting policies. The
amendments also provide guidance on the application of materiality to disclosure of accounting policies,
assisting entities to provide useful, entity specific accounting policy information that users need to
understand other information in the financial statements.
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 estimated by the management,
which are equal to those 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 land is amortised on a
straight line basis over the balance period of lease.
The residual values are not more than 5% of the original cost of the asset.
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 trade marks are amortized on a straight line basis over the useful life of
ten 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) Research and development
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development
costs of products are also charged to the Statement of Profit and Loss in the year it is incurred, unless a
product's technological feasibility has been established, in which case such expenditure is capitalised.
These costs are charged to the respective heads in the Statement of Profit and Loss in the year it is
incurred. The amount capitalised comprises of expenditure that can be directly attributed or allocated
on a reasonable and consistent basis for creating, producing and making the asset ready for its intended
use. Fixed assets utilised for research and development are capitalised and depreciated in accordance
with the policies stated for Tangible Fixed Assets and Intangible Assets.
(d) 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 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.
(e) 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.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the
statement of profit and loss, within finance costs. All other foreign exchange gains and losses are
presented in the statement of profit and loss on a net basis within other gains/(losses).
(f) 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.
Equity investment in subsidiaries, joint ventures and associates
Investment in subsidiaries, joint ventures and associates are carried at cost. Impairment recognized,
if any, is reduced from the carrying value.
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.
Derivative financial instruments
Derivative financial instruments are initially recognised at fair value on the date on which a derivative
contract is entered into and are subsequently re-measured at fair value. Derivatives are carried
as financial assets when the fair value is positive and as financial liabilities when the fair value is
negative.
(g) 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.
(h) Convertible financial instrument
Convertible instruments are separated into liability and equity components based on the terms of the
contract.
On issuance of the convertible instruments, the fair value of the liability component is determined
using a market rate for an equivalent non-convertible instrument. This amount is classified as a financial
liability measured at amortised cost (net of transaction costs) until it is extinguished on conversion or
redemption.
The remainder of the proceeds is allocated to the conversion option that is recognised and included in
equity since conversion option meets Ind AS 32 criteria for fixed to fixed classification. Transaction costs
are deducted from equity, net of associated income tax. The carrying amount of the conversion option
is not remeasured in subsequent years.
Transaction costs are apportioned between the liability and equity components of the convertible
instrument based on the allocation of proceeds to the liability and equity components when the
instruments are initially recognised.
(i) 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.
(iii) Minimum alternate Tax
MAT payable for a year is charged to the statement of profit and loss as current tax. The Company
recognizes MAT credit available in the statement of profit and loss as deferred tax with a corresponding
asset only to the extent that there is probability that the Company will pay normal income tax during
the specified period, i.e., the period for which MAT credit is allowed to be carried forward. The said
asset is shown as 'MAT Credit Entitlement' under Deferred Tax. The Company reviews the same at
each reporting date and writes down the asset to the extent the Company does not have probable
certainty that it will pay normal tax during the specified period.
(j) 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. Cost is determined on weighted average basis.
Finished goods and work in progress: cost includes cost of direct materials and labour and a proportion
of manufacturing overheads based on the normal operating capacity, but excluding borrowing costs.
Cost is determined on weighted average basis.
Traded goods: cost includes cost of purchase and other costs incurred in bringing the inventories to
their present location and condition. Cost is determined on weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs
of completion and the estimated costs necessary to make the sale. The net realizable value of work-in¬
progress is determined with reference to the selling prices of related finished products. Raw materials
and other supplies held for use in production of finished products are not written down below cost
except in cases where material prices have declined and it is estimated that the cost of the finished
products will exceed their net realizable value.
(k) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed
as revenue are inclusive of excise duty and 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
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.
(iv) Export benefits
Export Benefits are accounted on accrual basis and recognised in the year of export.
(l) 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. The liabilities are
presented as current employee benefit obligations in the balance sheet.
(ii) Other long-term employee benefit obligations
The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months
after the end of the period in which the employees render the related service. They are therefore
measured as the present value of expected future payments to be made in respect of services
provided by employees up to the end of the reporting period using the projected unit credit method.
The benefits are discounted using the market yields at the end of the reporting period that have
terms approximating to the terms of the related obligation.
The obligations are presented as current liabilities in the balance sheet if 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.
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 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 contributions to publicly administered provident funds as per local
regulations. 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.
(iv) 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.
(v) Share-based payments
Share-based compensation benefits are provided to employees via the Employee Option Plan.
Employee options
The fair value of options granted under the Employee Option Plan is recognised as an employee
benefits expense with a corresponding increase in equity. The total amount to be expensed is
determined by reference to the fair value of the options granted.
The total expense is recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the end of each period, the entity revises its
estimates of the number of options that are expected to vest based on the non-market vesting and
service conditions. It recognises the impact of the revision to original estimates, if any, in profit or
loss, with a corresponding adjustment to equity.
(m) 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.
(n) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result
of a past event and it is probable that an outflow of resources, that can be reliably estimated, will be
required to settle such an obligation.
If the effect of the time value of money is material, provisions are determined by discounting the
expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects
current market assessments of the time value of money and, where appropriate, the risks specific to the
liability. Unwinding of the discount is recognised in the Statement of Profit and Loss as a finance cost.
Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate.
A present obligation that arises from past events where it is either not probable that an outflow of
resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as
a contingent liability. Contingent liabilities are also disclosed when there is a possible obligation arising
from past events, the existence of which will be confirmed only by the occurrence or non -occurrence
of one or more uncertain future events not wholly within the control of the Company.
Claims against the Company where the possibility of any outflow of resources in settlement is remote,
are not disclosed as contingent liabilities.
Contingent assets are not recognised in financial statements since this may result in the recognition of
income that may never be realised. However, when the realisation of income is virtually certain, then
the related asset is not a contingent asset and is recognised.
(o) Borrowing costs
Borrowing costs are interest and other costs that the Company incurs in connection with the borrowing
of funds and is measured with reference to the effective interest rate (EIR) applicable to the respective
borrowing. Borrowing costs include interest costs measured at EIR and exchange differences arising
from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs, allocated to qualifying assets, pertaining to the period from commencement of
activities relating to construction / development of the qualifying asset up to the date of capitalisation
of such asset are added to the cost of the assets. Capitalisation of borrowing costs is suspended and
charged to the Statement of Profit and Loss during extended periods when active development activity
on the qualifying assets is interrupted.
All other borrowing costs are recognised as an expense in the period which they are incurred.
|