2 MATERIAL ACCOUNTING POLICY INFORMATION:-a) Statement of Compliance
These financial statements comprising of Balance Sheet, Statement of Profit and Loss including other comprehensive
income, Statement of Changes in Equity and Statement of Cash Flows have been prepared in accordance with Indian
Accounting Standard (Ind AS) as prescribed under Section 133 of the Companies Act, 2013 read with the Companies
(Indian Accounting Standards) Rules, 2015 and as amended from time to time.
b) Basis of Preparation of Financial Statements
The financial statements have been prepared on the historical cost basis except for certain financial instruments that are
measured at fair values at the end of each financial year, as explained in the material accounting policies below.
The standalone financial statements have been prepared on accrual and going concern basis. The accounting policies are
applied consistently to all the periods presented in the standalone financial statements.
The financial statements are presented in Indian Rupee ("?") and all values are rounded to the nearest crore, except when
otherwise indicated. Amounts less than ' 50,000/- have been presented as "0.00".
Fair value:
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. In estimating the fair value of an asset or liability, the Company takes into account the
characteristics of the asset or liability if market participants would take those characteristic into account when pricing the
asset or liability at the measurement date.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized 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:
1) Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or Liabilities.
2) Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable.
3) Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
c) Operating Cycle
The Company presents assets and liabilities in the balance sheet based on current / non-current classification based on
operating cycle.
An asset is treated as current when it is:
1. Expected to be realized or intended to be sold or consumed in normal operating cycle;
2. Held primarily for the purpose of trading;
3. Expected to be realised / settled within twelve months after end of financial year, or
4. Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months
after end of financial year
All other assets are classified as non-current.
A liability is current when:
1. It is expected to be settled in normal operating cycle;
2. It is held primarily for the purpose of trading;
3. It is due to be settled within twelve months after end of financial year, or
4. There is no unconditional right to defer the settlement of the liability for at least twelve months after end of the
financial year
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The company has identified twelve months as its operating cycle. This is based on the nature of outstanding and time
between acquisition of assets or inventories for processing and their realisation in cash & cash equivalents.
d) Use of estimates and critical accounting judgements
The preparation of the financial statements in conformity with the Ind AS requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,
revenue, expense and disclosures of the financial statements. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates
under different assumptions and conditions. The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only
that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Estimates and Assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year, are described below. Existing circumstances and assumptions about future developments may change due
to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the
assumptions when they occur.
i. Useful Lives of Property, Plant and Equipment and intangible assets
Useful life of Property, Plant and Equipment and intangible assets is based on the life prescribed in Schedule II to the
Companies Act, 2013 or based on technical estimates, taking into account the nature of the asset, estimated usage,
expected residual values and operating conditions of the asset. Uncertainties in these estimates relate to technical
and economic obsolescence that may change the utility of certain software, IT equipment and other plant and
equipments.
ii. Allowances for Expected Credit Losses / Impairment of Financial Assets
The impairment provisions for trade receivables are made considering simplified approach based on assumptions
about risk of default and expected loss rates. The Company uses judgement in making these assumptions and
selecting the inputs to the impairment calculation based on the company's past history and other factors like
financial position of the counter-parties, market information and other relevant factors at the end of each reporting
period. In case of other financial assets, the Company applies general approach for recognition of impairment
losses wherein the Company uses judgement in considering the probability of default upon initial recognition and
whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period.
iii. Allowances for Inventories
Management reviews the inventory age listing on a periodic basis. This review involves comparison of the carrying
value of the aged inventory items with the respective net realizable value. The purpose is to ascertain whether an
allowance is required to be made in the financial statements for any obsolete and slow-moving items. Management
estimates the net realisable values of inventories, taking into account the most reliable evidence available at each
reporting date. The future realisation of these inventories may be affected by market-driven changes.
iv. Fair Value Measurement of Financial Instruments
When the fair values of financials assets and financial liabilities recorded in the Balance Sheet cannot be measured
based on quoted prices in active markets, their fair value is measured using valuation techniques, including the
discounted cash flow model, which involve various judgements and assumptions. This involves developing
estimates and assumptions consistent with how market participants would price the instrument. Management
bases its assumptions on observable data as far as possible but this is not always available. In that case management
uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in
an arm's length transaction at the reporting date.
v. Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as result of a past event and it is probable
that the outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be
made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent
liabilities are not recognised in the financial statements.
vi. Defined Benefit Obligation / Plan
In determining the appropriate discount rate for plans operated in India, the management considers the interest
rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.
vii. Impairment of Non Financial Assets
Impairment of Non Financial Assets exists when the carrying value of an asset or cash generating unit exceeds its
recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less
costs of disposal calculation is based on available data for similar assets or observable market prices less incremental
costs for disposing of the asset. The value in use calculation is based on a discounted future cashflows model. The
recoverable amount is sensitive to the discount rate used for the discounted future cashflows model as well as the
expected future cash-inflows and the growth rate used.
viii. Taxes
The Company's tax jurisdiction is India. Significant judgements are involved in estimating budgeted profits for the
purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/
recovered for uncertain tax positions. Significant management judgement is also required to determine the amount
of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits
together with future tax planning strategies, including estimates of temporary differences reversing on account of
available benefits from the Income Tax Act, 1961.
e) Property, Plant and Equipment
Property, plant & equipments are stated at actual cost (including cost of acquisition and installation) less accumulated
depreciation and net of impairment, if any.
All items of property, plant and equipments are derecognized 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
property, plant and equipment is determined as the difference between the sale proceeds and the carrying amount of the
asset and is recognized in the statement of profit and loss.
Capital work-in-progress comprises cost of property, plant and equipment that are not yet installed and ready for their
intended use at the balance sheet date.
Depreciation
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual
value. Depreciation on property, plant and equipment are charged based on straight line method on estimated useful
life as prescribed in Schedule II to the Companies Act, 2013 except in respect of the following assets, for which, based on
technical evaluation, useful life is different than those prescribed in Schedule II.
Depreciation on items of property, plant and equipment acquired / disposed off during the year is provided on pro-rata
basis with reference to the date of addition / disposal.
f) Intangible Assets
Intangible Assets Acquired Separately
I ntangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is recognized on a straight-line basis over their estimated useful lives.
The estimated useful life are reviewed at the end of each financial year, with the effect of any changes in estimate being
accounted for on a prospective basis.
Derecognition of Intangible Assets
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal.
Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal
proceeds and the carrying amount of the asset, are recognized in the statement of profit and loss when the asset is
derecognized.
Useful Lives of Intangible Assets
Intangible assets are amortised over their estimated useful life on a straight line basis over a period of 5 years.
g) Investment Property
Investment property comprises land and office building that are held for long term yield and / or capital appreciation.
Investment property is initially recognized at cost. Subsequently investment property comprising of building is carried at
cost less accumulated depreciation and accumulated impairment losses.
Investment property i.e, Buildings is depreciated under the straight line method over a period of 58 years from the date
of purchase based on the technical evaluation. Though the Company measures investment property using cost based
measurement, the fair value of investment property is disclosed in the notes.
I nvestment properties are derecognized when either they have been disposed of or when the investment property is
permanently withdrawn from use and no economic benefit is expected from its disposal.
The difference between the net disposal proceeds and the carrying amount of the asset is recognized in the Statement of
Profit and Loss.
h) Impairment
Financial assets (other than at fair value)
The Company assesses at each Balance sheet 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 recognizes 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 lifetime expected credit losses if the credit risk on the financial asset has increased significantly
since initial recognition.
Non-financial Assets
At the end of each financial year, the Company reviews the carrying amounts of Non-financial Assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible
to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash
generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash generating units, or otherwise they are allocated to the smallest
group of cash generating unit for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. 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 for which the estimates of future cash flows have
not been adjusted.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash generating unit) is reduced to its recoverable amount. An impairment loss is recognized
immediately in the statement profit and loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash generating unit) is increased
to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognized for the asset (or cash generating unit)
in prior years. A reversal of an impairment loss is recognized immediately in the statement of profit and loss.
i) 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 fulfilment 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.
Company as a lessee :
(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:
Assets Estimated useful life
Right-of-use assets Over the balance period of lease agreement
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. The right-of-use assets
are also subject to impairment. Refer to the material accounting policies in relating to 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 include fixed payments (including in substance
fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and
amounts expected to be paid under residual value guarantees. Variable lease payments that do not depend on an
index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which
the event or condition that triggers the payment occurs.
I n 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.
(iii) Short-term leases and leases of low-value assets
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 that are considered to be 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.
The Company as a lessor
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease
transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease.
All other leases are classified as operating leases.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sublease
separately. The sublease is classified as a finance or operating lease by reference to the ROU asset arising from the
head lease. For operating leases, rental income is recognized on a straight line basis over the term of the relevant
lease.
j) Investments in Subsidiaries
Investments in subsidiaries are carried at cost less accumulated impairment losses, if any. Where an indication of impairment
exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On
disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are
recognized in the Statement of Profit and Loss.
k) Financial Instruments
Financial instrument is a contract that give rise to a financial asset of one entity and a financial liability or equity instrument
of another entity.
Classification:
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive
income or fair value through profit and loss on the basis of its business model for managing the financial assets and the
contractual cash flows characteristics of the financial asset.
Initial Recognition and Measurement
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 asset and liabilities at fair value
through profit & loss) are added to or deducted from the fair value measured on initial recognition of the financial assets or
financial liabilities.
Financial Assets at Amortised Cost
Financial assets are subsequently measured at amortised cost using effective interest rate method, if:
(a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows and
(b) 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.
This category generally applies to trade and other receivables.
Financial Asset at Fair Value Through Profit and Loss (FVTPL)
Financial assets are measured at fair value through profit and loss unless it is measured at amortized cost or fair value
through other comprehensive income. Financial assets under this category are measured initially as well as at each financial
year at fair value with all changes recognised in the statement of profit and loss.
Financial Assets at Fair Value Through Other Comprehensive Income
A financial asset is measured at fair value through other comprehensive income if 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.
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.
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 recognized in other comprehensive
income and accumulated in equity is recognized in profit and loss if such gain or loss would have otherwise been recognized
in profit and loss on disposal of that financial asset.
Financial Liabilities and Equity Instruments
Classification as debt or equity
Financial instruments are classified as a liability or equity according to the substance of the contractual arrangement and
not its legal form.
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, net of issue costs.
Financial Liabilities
All financial liabilities excluding derivatives are classified as subsequently measured at amortised cost using effective rate
of return except for financial liabilities at fair value through profit and loss. Such liabilities are subsequently measured at fair
value, with any gains or loss arising on remeasurement recognised in profit and loss.
Derecognition of Financial Liabilities
The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled
or have expired. An exchange between a lender of debt instruments with substantially different terms is accounted for as
an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial
modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the
debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial
liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and
payable is recognized in profit and loss.
Derivative Contracts
The Company uses a variety of derivative financial instruments to hedge its foreign currency risks and interest rate risks.
Such 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.
The resulting gain or loss is recognised in the statement of profit and loss immediately, except for the effective portion of
cash flow hedges, which is recognised in OCI and later reclassified to statement of profit or loss.
At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to
which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking
the hedge.
Hedges that meet the strict criteria for hedge accounting are accounted for as described below.
Cash flow hedges
The Company designates derivative contracts or non derivative financial assets / liabilities as hedging instruments to
mitigate the risk of movement in interest rates exposure on highly probable future cash flows attributable to a recognised
asset or liability or forecast cash transactions.
Any ineffective portion of changes in the fair value of the derivative is recognised immediately in the statement of profit &
loss.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to the statement of profit and
loss, except for the effective portion of cash flow hedges, which is recognised in OCI and later reclassified to the statement
of profit and loss when the hedge item affects profit or loss or treated as basis adjustment if a hedged forecast transaction
subsequently results in the recognition of a non-financial asset or non-financial liability.
Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in financial statements 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.
Financial Guarantee Contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt
instrument.
Financial guarantee contracts issued by a Company entity are initially measured at their fair values and, if not designated
as at FVTPL, are subsequently measured at the higher of:
• the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
• the amount initially recognized less, when appropriate, the cumulative amount of income recognized in the
statement of Profit & Loss
l) Inventories
Inventories are valued as under -
Raw Materials, Packing Materials & Stores and Spares:-
Raw materials, packing material and stores & spare parts are carried at weighted average cost. Cost includes purchase price
excluding taxes those are subsequently recoverable from the concerned authorities, freight inwards and other expenditure
incurred in bringing such inventories to their present location and condition. The carrying cost of raw materials and
packing material are appropriately written down when there is a decline in replacement cost of such materials and finished
products in which they will be incorporated are expected to be sold below cost.
Finished goods, stock-in-trade and work in progress:-
Finished goods, stock-in-trade and work in progress are valued at the lower of cost and net realizable value.
Cost includes all expenses directly attributable to the manufacturing process as well as suitable portions of related
production overheads, based on normal operating capacity and costs incurred in bringing the inventories to their present
location and condition. Net realisable value is the estimated selling price in the ordinary course of business less any
applicable cost of conversion from their existing state to a finished condition and directly attributable selling expenses.
In determining the cost of raw materials, packing materials, stock-in-trade, stores and spares, trading and other products,
weighted average cost method is used.
m) 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 maturities of three months or less from the date of
purchase, to be cash equivalents.
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