NOTE 2.1 - MATERIAL ACCOUNTING
POLICIES
A. Statement of compliance
The standalone Ind AS financial statements of the
Company have been prepared in accordance with the
Indian Accounting Standards (Ind AS) specified under
Section 133 of the Companies Act, 2013 read with the
Companies (Indian Accounting Standards) Rules, 2015
(as amended from time to time) and presentation
requirements of Division II of Schedule III to the
Companies Act, 2013 (IND AS compliant Schedule III),
to the extent applicable. The standalone Ind AS financial
statements of the company also includes financial
information and other explanatory information of Trident
Limited Employee Welfare Trust.
Basis of preparation and presentation
The standalone Ind AS financial statements have been
prepared under the historical cost convention on accrual
basis except for following assets and liabilities which
have been measured at fair value:
1. Derivative financial instruments
2. Certain financial assets and liabilities measured
at fair value (refer accounting policy regarding
financial instruments in Note O-Financial
Instruments)
3. Defined benefit plans - plan assets are measured
at fair value
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.
Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
The standalone Ind AS financial statements of the
Company are presented in Indian Rupee ('INR') and all
values are rounded to the nearest Million with one decimal
place (INR 000,000), except when otherwise indicated.
The Company has prepared the financial statements
on the basis that it will continue to operate as a
going concern.
New and amended standards
The Company applied for the first-time certain standards
and amendments, which are effective for annual periods
beginning on or after 1 April 2024. The Company has
not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective.
(i) Ind AS 117 Insurance Contracts
The Ministry of Corporate Affairs (MCA) notified the
Ind AS 117, Insurance Contracts, vide notification
dated 12 August 2024, under the Companies (Indian
Accounting Standards) Amendment Rules, 2024,
which is effective from annual reporting periods
beginning on or after 1 April 2024.
Ind AS 117 Insurance Contracts is a comprehensive
new accounting standard for insurance contracts
covering recognition and measurement,
presentation and disclosure. Ind AS 117 replaces
Ind AS 104 Insurance Contracts. Ind AS 117 applies
to all types of insurance contracts, regardless of
the type of entities that issue them as well as to
certain guarantees and financial instruments with
discretionary participation features; a few scope
exceptions will apply. Ind AS 117 is based on a
general model, supplemented by:
• A specific adaptation for contracts with direct
participation features (the variable fee approach)
• A simplified approach (the premium allocation
approach) mainly for short-duration contracts
The application of Ind AS 117 did not have material
impact on the Company's standalone financial
statements as the Company has not entered any
contracts in the nature of insurance contracts
covered under Ind AS 117.
(ii) Amendments to Ind AS 116 Leases - Lease
Liability in a Sale and Leaseback
The MCA notified the Companies (Indian Accounting
Standards) Second Amendment Rules, 2024, which
amend Ind AS 116, Leases, with respect to Lease
Liability in a Sale and Leaseback. The amendment
specifies the requirements that a seller-lessee
uses in measuring the lease liability arising in a
sale and leaseback transaction, to ensure the
seller-lessee does not recognise any amount of the
gain or loss that relates to the right of use it retains.
The amendment is effective for annual reporting
periods beginning on or after 1 April 2024 and must
be applied retrospectively to sale and leaseback
transactions entered into after the date of initial
application of Ind AS 116.
The amendments did not have a material impact on
the Company's financial statements.
B Revenue recognition
Revenue from contracts with customers is recognised
when control of the goods is transferred to the
customer on satisfaction of performance obligations.
The Performance obligations as per contracts with
customers are fulfilled at the time of dispatch or
delivery of goods depending upon the terms agreed
with customer.
The Company has generally concluded that it is the
principal in its revenue arrangements because it
typically controls the goods before transferring them to
the customer.
Revenue towards satisfaction of a performance
obligation is measured at the amount of transaction
price (net of variable consideration) allocated to that
performance obligation. The transaction price of goods
sold is net of variable considerable on account of trade
discounts and volume rebates and incentives etc. offered
by the Company as part of the contract.
Amounts disclosed as revenue are net of returns and
allowances. The Company collects goods and services
tax on behalf of the government and therefore, these are
not economic benefits flowing to the Company. Hence,
these are excluded from the revenue.
Variable consideration includes trade discounts, volume
rebates and incentives, etc. The Company estimates the
variable consideration with respect to above based on
an analysis of accumulated historical experience. The
Company adjusts estimate of revenue at the earlier of
when the most likely amount of consideration expected
to be received changes or when the consideration
becomes fixed.
The revenue in respect of duty drawback and similar
other export benefits (Refer Note C- Government grants/
subsidies) is recognised on post export basis at the rate
at which the entitlements accrue and is included in the
'Other operating revenue'.
Dividend income
Dividend on financial assets is recognised when the
Company's right to receive the dividends is established,
it is probable that the economic benefits associated with
the dividend will flow to the entity, the dividend does not
represent a recovery of part of cost of the investment and
the amount of dividend can be measured reliably.
Other income
Insurance claims are recognised when there exists no
significant uncertainty with regards to the amounts to be
realised and the ultimate collection thereof.
Contract balances - Trade receivables
A trade receivable is recognised if the amount of
consideration is unconditional (i.e., only the passage of
time is required before payment of the consideration is
due). Refer to accounting policies of financial assets in
section - Financial instruments - initial recognition and
subsequent measurement.
C Government grants/subsidies
Government grants are recognised where there is
reasonable assurance that the grant will be received
and all attached conditions will be complied with. When
the grant relates to an expense item, it is recognised as
income on a systematic basis over the periods that the
related costs, for which it is intended to compensate,
are expensed. When the grant relates to an asset, the
government grant related to asset is presented by
deducting the grant in arriving at the carrying amount
of the asset.
D Borrowing costs
Borrowing costs include interest and amortisation
of ancillary costs incurred in relation to borrowings.
Borrowing costs, allocated to and utilised for qualifying
assets, pertaining to the period from commencement
of activities relating to construction/development of the
qualifying asset upto the date of capitalisation of such
asset are added to the cost of the assets. Qualifying asset
is one that necessarily takes substantial period of time
to get ready for its intended use. Borrowing cost also
includes exchange differences to the extent regarded as
an adjustment to the borrowing costs.
Interest revenue earned on the temporary investment
of specific borrowings for qualifying assets pending
their expenditure, is deducted from the borrowing costs
eligible for capitalisation.
All other borrowing costs are recognised in the
Statement of Profit and Loss in the period in which they
are incurred.
E Income taxes
Income tax expense comprises current income tax and
deferred tax.
Current tax expense for the year is ascertained on the
basis of assessable profits computed in accordance
with the provisions of the Income Tax Act, 1961. The tax
rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the
reporting date.
Deferred tax is recognised using the liability method on
temporary differences between the carrying amounts of
assets and liabilities in the standalone Ind AS financial
statements and the corresponding tax bases used in
the computation of taxable profit. Deferred tax assets
are generally recognised for all deductible temporary
differences, the carry forward of unused tax credits
and unused tax losses to the extent that it is probable
that taxable profits will be available against which those
deductible temporary differences can be utilised. Such
deferred tax assets and liabilities are not recognised
if the temporary difference arises from the initial
recognition (other than in a business combination) of
assets and liabilities in a transaction that affects neither
the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed
at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to
be recovered.
Deferred tax liabilities and assets are measured at
the tax rates that are expected to apply in the period in
which the liability is settled or the asset realised, based
on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period.
Current and deferred tax are recognised in the Statement
of Profit and 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. Management
periodically evaluates positions taken in the tax returns
with respect to situations in which applicable tax
regulations are subject to interpretation and considers
whether it is probable that a taxation authority will accept
an uncertain tax treatment. The Company shall reflect
the effect of uncertainty for each uncertain tax treatment
by using either most likely method or expected value
method, depending on which method predicts better
resolution of the treatment.
The Company offsets deferred tax assets and deferred
tax liabilities if and only if it has a legally enforceable right
to set off current tax assets and current tax liabilities and
the deferred tax assets and deferred tax liabilities relate
to income taxes levied by the same taxation authority.
F Retirement and Employee benefits
The Company has schemes of employees benefits such
as Provident fund, Gratuity and Compensated absences,
which are dealt with as under:
Defined Contribution
Provident fund is the defined contribution scheme. The
contribution to this scheme is charged to the Statement
of Profit and Loss of the year in which contribution to such
scheme become due and when services are rendered by
the employees. The Company has no obligation other
than the contribution payable to the provident fund. If the
contribution payable to the scheme for services received
before the balance sheet date exceeds the contribution
already paid, the deficit payable to the scheme is
recognised as a liability after deducting the contribution
already paid. If the contribution already paid exceeds the
contribution due for services received before the balance
sheet date, then excess is recognised as an asset to the
extent that the pre-payment will lead to, for example, a
reduction in future payment or a cash refund.
Defined Benefit plan
Gratuity liability in respect of employees of the Company
is covered through trusts' gratuity schemes managed
by Life Insurance Corporation of India, SBI Life
Insurance Company Limited, Kotak Mahindra and Bajaj
Allianz. The cost of providing benefits is determined
using the projected unit credit method, with actuarial
valuations being carried out at each balance sheet date
by an independent valuer. Remeasurement gains and
losses are recognised in other comprehensive income
in the period in which they occur. Remeasurement
recognised in other comprehensive income is reflected
immediately in retained earnings and is not reclassified
to the Statement of Profit and Loss. Past service cost
is recognised in the Statement of Profit and Loss in the
period of a plan amendment. Net interest is calculated
by applying the discount rate at the beginning of the
period to the net defined benefit liability or asset. Defined
benefit costs are categorised as follows:
• service cost (including current service cost,
past service cost, as well as gains and losses on
curtailments and settlements);
• net interest expense or income; and
• re-measurement
Short-term employee benefits
The undiscounted amount of short-term employee
benefits expected to be paid in exchange for the
services rendered by employees are recognised on an
undiscounted accrual basis during the year when the
employees render the services. 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.
Long-term employee benefits
Compensated absences which are not expected to occur
within twelve months after the end of the period in which
the employee renders the related service are recognised
as a liability at the present value of the defined benefit
obligation as at the balance sheet date. The cost of
providing benefits is determined using the projected unit
credit method, with actuarial valuations being carried out
at each balance sheet date. Actuarial gains and losses
are recognised in the Statement of Profit and Loss in the
period in which they occur. The Company presents the
entire leave liability as current liability, since it does not
have an unconditional right to defer its settlement for 12
months after the reporting period.
G Property, Plant and Equipment (PPE)
Land and buildings held for use in the production
or supply of goods or services, or for administrative
purposes, are stated in the Balance Sheet at cost less
accumulated depreciation and accumulated impairment
losses (if any). Freehold land is not depreciated and have
been measured at fair value at the date of transition i.e.
April 01, 2015 to Ind AS. The Company regards the fair
value as deemed cost at the transition date.
Capital Work in progress is stated at cost, less
any recognised impairment loss.
Property, plant and equipment except freehold land
acquired before the date of transition to Ind AS is
carried at cost net of accumulated depreciation and
accumulated impairment losses if any. Cost comprises
of its purchase price including non-refundable duties
and taxes and excluding any trade discount and rebates
and any directly attributable costs of bringing the asset
to it working condition and location for its intended use.
Cost also includes professional fees and, for qualifying
assets, borrowing costs capitalised in accordance with
the Company's accounting policy (refer note 2.1 (D)).
Such items are classified to the appropriate categories
of property, plant and equipment when completed and
ready for intended use. Depreciation of these assets
commences when the assets are ready for their
intended use.
The Company reviews the estimated residual values
and expected useful lives of assets at least annually. In
particular, the Company considers the impact of health,
safety and environmental legislation in its assessment
of expected useful lives and estimated residual values.
Subsequent expenditure related to an item of PPE 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. Such
cost includes the cost of replacing part of the plant
and equipment. 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.
Gains or losses arising from derecognition of the assets
are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are
recognised in the Statement of Profit and Loss when the
asset is derecognised.
H Depreciation on tangible assets
Depreciable amount for assets is the cost (net of amount
received towards government grant) of an asset, or
other amount substituted for cost, less its estimated
residual value.
Depreciation on tangible property, plant and equipment
has been provided on the straight-line method as per the
useful life prescribed in Schedule II to the Companies
Act, 2013 except in respect of the following categories
of assets, in whose case the life of the assets has been
assessed as under based on technical advice, taking
into account the nature of the asset, the estimated
usage of the asset, the operating conditions of the asset,
past history of replacement, anticipated technological
changes, manufacturers warranties and maintenance
support, etc.:
Leasehold improvements are depreciated over the
remaining lease period or over the useful life, whichever
is shorter.
When parts of an item of Property, plant and equipment
have different useful life, they are accounted for as
separate items (Major components) and are depreciated
over the useful life of part or the parent asset to which it
relates, whichever is lower.
I Intangible assets
Intangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated
amortisation and accumulated impairment losses, if
any. Intangible assets with finite lives are amortised on
a straight line basis over the estimated useful economic
life. The estimated useful life and amortisation method
are reviewed at the end of each reporting period.
Development expenditures on an individual project are
recognised as an intangible asset when the Company
can demonstrate:
• The technical feasibility of completing the intangible
asset so that the asset will be available for use or sale
• Its intention to complete and its ability and intention
to use or sell the asset
• How the asset will generate future economic benefits
• The availability of resources to complete the asset
• The ability to measure reliably the expenditure
during development
Following initial recognition of the development
expenditure as an asset, the asset is carried at cost
less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins
when development is complete and the asset is available
for use. Amortisation expense is recognised in the
Statement of Profit and Loss unless such expenditure
forms part of carrying value of another asset.
Intangible assets are amortised on the straight¬
line method as per the useful life assessed based on
expected future benefit, taking into account the nature
of the asset and the estimated usage of the asset:
An intangible asset is derecognised upon disposal (i.e.,
at the date the recipient obtains control) or when no
future economic benefits are expected from its use or
disposal. Any gain or loss arising upon derecognition 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
asset is derecognised.
J Inventories
Raw materials, work in progress, finished goods, process
waste and stores and spares are valued at cost or net
realisable value, whichever is lower. Raw materials
inventories held for use in the production of inventories
are not written down below cost if the finished products
in which they will be incorporated are expected to be
sold at or above cost. However, when a decline in the
price of raw materials indicates that the cost of the
finished products exceeds net realisable value, the raw
materials are written down to net realisable value. Net
realisable value represents the estimated selling price
for inventories less all estimated costs of completion
and cost necessary to make the sale. The basis of
determining cost for various categories of inventories is
as follows:
• Raw materials: moving weighted average cost *- Cost
includes cost of purchase and other costs incurred
in bringing the inventories to their present location
and condition.
• Work in progress: cost of raw materials plus
conversion cost depending upon the stage of
completion. Cost is determined on a moving weighted
average basis except for work-in-progress inventory
of towel and sheeting divisions for which cost is
determined on a monthly weighted average basis.
• Stock-in-trade (acquired for trading) - Cost is
determined on a moving weighted average basis
including other costs incurred in bringing the
inventories to their present location and condition.
• Finished goods (including stock in transit): cost of raw
materials plus conversion cost and packing cost. Cost
is determined on a moving weighted average basis
except for finished goods inventory of towel and
sheeting divisions for which cost is determined on a
monthly weighted average basis.
• Process waste is valued at net realisable value.
• Stores and spares: moving weighted average cost
- Cost includes cost of purchase and other costs
incurred in bringing the inventories to their present
location and condition.
• Includes by products which is valued at net realisable value
K 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. The 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. Where 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
available, and if no such transactions can be identified
an appropriate valuation model is used.
The Company bases its impairment calculation on
detailed budgets and forecast calculations which are
prepared separately for each of the Company's CGU's to
which the individual assets are allocated. These budgets
and forecast calculations generally cover a period of five
years. For longer periods, a long term growth rate is
calculated and applied to projected future cash flows
after the fifth year.
An assessment is made at each reporting date as to
whether there is any indication that previously recognised
impairment losses may no longer exist or may have
decreased. If such indication exists, the Company
estimates the asset's or CGU's recoverable amount. A
previously recognised impairment loss is reversed only
if there has been a change in the assumptions used to
determine the asset's recoverable amount since the last
impairment loss was recognised. The reversal is limited
so that the carrying amount of the asset does not exceed
its recoverable amount, nor exceed the carrying amount
that would have been determined, net of depreciation,
had no impairment loss been recognised for the asset in
prior years. Such reversal is recognised in the Statement
of Profit and Loss.
Capital work in progress and intangibles asset under
development is tested for impairment annually
L Segment reporting
The Company identifies primary segments based
on the dominant source, nature of risks and returns
and the internal organisation and management
structure. The operating segments are the segments
for which standalone financial information is available
and for which operating profit/loss amounts are
evaluated regularly by the chief operating decision
maker in deciding how to allocate resources and in
assessing performance.
Operating segments are reported in a manner
consistent with the internal reporting provided to
the Chief Operating Decision Maker. Chief Operating
Decision Maker review the performance of the Company
according to the nature of products manufactured with
each segment representing a strategic business unit that
offers different products and serves different markets.
The analysis of geographical segments is based on the
locations of customers.
M Leases
The Company assesses at contract inception whether a
contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset
for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and
measurement approach for all leases, except for
short-term leases and leases of low-value assets. The
Company recognises lease liabilities to make lease
payments and right-of-use assets representing the right
to use the underlying assets.
i) Right of use assets
The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities. The
cost of right-of-use assets includes the amount
of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before
the commencement date less any lease incentives
received. Right-of-use assets are depreciated on
a straight-line basis over the shorter of the lease
term and the estimated useful lives of the assets,
as follows:
• Leasehold land 30 to 99 years
• Office premises and guest houses 5 to 20 years
• Factory premises (including plant & equipment)
10 years
I f 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.
The right-of-use assets are also subject to
impairment. Refer to the accounting policies in
section 2.1 (K) Impairment of non-financial assets.
ii) Lease liabilities
At the commencement date of the lease, the
Company recognises lease liabilities measured at
the present value of lease payments to be made
over the lease term. The lease payments are
fixed payments.
In calculating the present value of lease payments,
the Company uses its incremental borrowing rate at
the lease commencement date because the interest
rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change
in the lease term, a change in the lease payments
(e.g., changes to future payments resulting from a
change in an index or rate used to determine such
lease payments) or a change in the assessment of
an option to purchase the underlying asset.
The Company's lease liabilities are disclosed
separately in the Balance Sheet (see Note 40).
iii) Short-term leases and leases of low-value
assets
The Company applies the short-term lease
recognition exemption to its short-term leases
except in case of lease contracts with related
parties since there exist economic incentive for the
Company to continue using the leased premises for
a period longer than the 11 months and considering
the contract is with the related parties, it does
not foresee non-renewal of the lease term for
future periods, thus basis the substance and
economics of the arrangements, management
believes that under Ind AS 116, the lease terms
in the arrangements with related parties have
been determined considering the period for which
management has an economic incentive to use the
leased asset (i.e. reasonable certain to use the
asset for the said period of economic incentive).
Such assessment of incremental period is based
on management assessment of various factors
including the remaining useful life of the asset as
on the date of transition. The management has
assessed period of arrangements with related
parties as 10 years as at April 01, 2019. 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.
Company as a lessor
Leases in which the Company does not transfer
substantially all the risks and rewards of ownership of an
asset are classified as operating leases. Rental income
from operating lease is recognised on a straight-line
basis over the term of the relevant lease. Initial direct
costs incurred in negotiating and arranging an operating
lease are added to the carrying amount of the leased
asset and recognised over the lease term on the same
basis as rental income. Contingent rents are recognised
as revenue in the period in which they are earned.
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