1.3 Summary of significant accounting policies
1. Property, Plant and Equipment.
Freehold land is carried at cost. All other items of property, plant and equipment are stated at
cost less depreciation and impairment, if any. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the Company and the cost of the item can be measured reliably. The
carrying amount of any component accounted for as a separate asset is derecognised when
replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss
during the reporting period in which they are incurred.
Depreciation methods, estimated useful lives and residual value
Depreciation is provided on written down value basis as specified schedule II of the companies
Act 2013. Depreciation on assets acquired / disposed off during the year if any, is provided on
pro-rata basis with reference to the date of addition / disposal. The estimated useful lives of
assets are as under:
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.
Capital work in process
Expenditure related to and incurred during the implementation of capital project, to get the
assets ready for intended use is shown under "capital work in process". The same is allocated
to the respective items' property, plant and equipment on completion of construction /
erection of the capital assets. The cost of assets not put to use before the year and capital
inventory are disclosed under Capital work in process.
Impairment of Tangible Assets
The Company reviews at each reporting period whether there is any indication that an asset
may be impaired. If any such indication exists, the company estimates the recoverable amount
of the asset. If such recoverable amount of the asset or the recoverable amount of the cash
generating unit to which the asset belongs is less than it carrying amount, the carrying amount
is reduced to its recoverable amount. The reduction is treated as an impairment loss and is
recognized in the Statement of Profit and Loss. If at the reporting period, there is an indication
that there is change in the previously assessed impairment loss, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount. 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 of Profit
and Loss.
2. Inventories
Inventories are stated 'at cost or net realisable value, whichever is lower' except for Waste /
Scrap which are valued at net realisable value. Cost comprises all cost of purchase, cost of
conversion and other costs incurred in bringing the inventories to their present location and
condition. Cost formulae used are 'First-in-First-out. 'Specific identification', as applicable. Due
allowance is estimated and made for defective and obsolete items, wherever necessary.
3. Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided
to the chief operating decision maker. The company has only single business segment hence
the detailed disclosure related to segment reporting is not required to be made.
4. Borrowings
Borrowings are initially recognised at net of transaction costs incurred and measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the
redemption amount is recognised in the Statement of Profit and Loss over the period of the
borrowings using the effective interest method.
Preference shares, which are mandatorily redeemable on a specific date are classified as
liabilities. The dividend on these preference shares is recognised in Statement of Profit and
Loss as finance costs.
5. Borrowing costs
Borrowing cost directly attributable to the acquisition, construction of qualifying asset that
necessarily takes a substantial period of time to get ready for its intended use, capitalised as
part of cost of asset. The borrowing costs includes interest and transaction cost that a
company incurs in connection with the borrowing of the funds. Other interest and borrowing
costs are charged to Statement of Profit and Loss.
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