2. MATERIAL ACCOUNTING POLICIES:
2.01 Statement of Compliance
I n accordance with the notification issued by the Ministry
of Corporate Affairs, the Company has adopted Indian
Accounting Standards (referred to as “Ind AS”) notified
under the Companies (Indian Accounting Standards)
Rules, 2015.
2.02 Basis of preparation and presentation
The financial statements of the Company have been
prepared on an accrual basis and under the historical cost
convention except for certain financial instruments and
equity settled employee stock options transactions that are
within the scope of Ind AS 102, which have been measured at
fair value. Historical cost is generally based on the fair value
of consideration given in exchange of goods and services.
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 addition,
for financial reporting purposes, fair value measurements
are categorized into Level 1, 2 or 3 based on the degree
to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair
value measurement in its entirety. The accounting policies
are consistently applied by the Company during the year
and are consistent with those used in previous year.
2.03 Use of estimate
The preparation of these financial statements in conformity
with the recognition and measurement principles of Ind AS
requires the management of the Company to make estimates
and assumptions that affect the reported balances of assets
and liabilities, disclosures relating to contingent liabilities
as at the date of the financial statements and the reported
amounts of income and expense for the periods presented.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised
and future periods are affected. The management believes
that the estimates used in preparation of the financial
statements are prudent and reasonable. Future results
could differ due to these estimates and differences between
actual results and estimates are recognized in the periods
in which the results are known/materialize.
Key source of estimation of uncertainty at the date of
the financial statements, which may cause a material
adjustment to the carrying amounts of assets and liabilities
within the next financial year, is in respect of impairment of
investments, useful lives of property, plant and equipment,
valuation of deferred tax liabilities and provisions and
contingent liabilities.
Evaluation of satisfaction of performance
obligation for the purpose of revenue recognition
Determination of revenue under the satisfaction of
performance obligation necessarily involves making
estimates, some of which are of a technical nature,
concerning, where relevant, the timing of satisfaction of
performance obligation, costs to completion, the expected
revenues from the project or activity and the foreseeable
losses to completion. Estimates of project income, as well
as project costs, are reviewed periodically. The Company
recognises revenue when the Company satisfies its
performance obligation.
Impairment of investments
The Company reviews its carrying value of investments
carried at cost annually, or more frequently when there
is indication for impairment. If the recoverable amount
is less than its carrying amount, the impairment loss is
accounted for.
Useful lives of property, plant and equipment
The Company reviews the useful life of property, plant
and equipment at the end of each reporting period. This
reassessment may result in change in depreciation expense
in future periods.
Valuation of deferred tax assets
The Company reviews recognition of deferred tax at the
end of each reporting period. The policy for the same has
been explained under Note 2.09
Determination of lease term & discount rate
Ind AS 116 Leases requires lessee to determine the lease
term as the non-cancellable period of a lease adjusted with
any option to extend or terminate the lease, if the use of
such option is reasonably certain. The Company makes
assessment on the expected lease term on lease by lease
basis and thereby assesses whether it is reasonably certain
that any options to extend or terminate the contract will
be exercised. In evaluating the lease term, the Company
considers factors such as any significant leasehold
improvements undertaken over the lease term, costs
relating to the termination of lease and the importance of the
underlying to the Company’s operations taking into account
the location of the underlying asset and the availability of
the suitable alternatives. The lease term in future periods
is reassessed to ensure that the lease term reflects the
current economic circumstances.
The discount rate is generally based on the incremental
borrowing rate specific to the lease being evaluated or for a
portfolio of leases with similar characteristics
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