Note 43: Summary of other Accounting Policies
This note provides a list of other accounting policies adopted in
the preparation of Standalone financial statements of the
company to the extent they have not already been disclosed in
the other notes above. These policies have been consistently
applied to all the years presented unless otherwise stated.
(a) Rounding Off
All amounts disclosed in the financial statements and
notes have been rounded off to the nearest lakhs, as per
the requirement of Schedule III, unless otherwise
stated.
(b) Goodwill
Goodwill arising on acquisition of a business is carried at
costs as established at the date of acquisition of the
business less accumulated impairment losses, if
any.
If the initial accounting for a business combination is
incomplete by end of the reporting period in which the
combination occurs, the Company reports provisional
amounts for the items for which the accounting is
incomplete. Those provisional amounts are adjusted
during the measurement period, or additional assets or
liabilities are recognised, to reflect new information
obtained above facts and circumstances that existed at
the acquisition date that, if known, would have affected
the amounts recognised at that date.
Goodwill is tested for impairment annually. For the
purpose of impairment testing, goodwill is allocated to
those cash-generating units that are expected to benefit
from the business combination in which the goodwill
arose. If the recoverable amount of the cash-generating
unit is less than its carrying amount, the impairment loss
is allocated to reduce the carrying amount of the goodwill.
Any impairment loss recognised for goodwill is not
reversed in subsequent periods.
(c) Foreign currency transactions
Items included in the financial statements of the
Company are measured using the currency of the
primary economic environment in which the entity
operate (i.e. the "functional currency"). The financial
statements are presented in Indian Rupee (INR), the
national currency for India, which is the functional and
presentation currency of the company.
Transactions in currencies other than the entity's
functional currency (foreign currencies) are recognised at
the rates of exchange prevailing at the date of the
transactions. At the end of each reporting period,
monetary items denominated in foreign currencies are
retranslated at the rates prevailing at that date. Non¬
monetary items carried at fair value that are denominated
in foreign currencies are retranslated at the rates
prevailing at that date when the fair value was
determined. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not
retranslated.
Exchange differences on monetary items are recognised
in the statement of profit and loss.
(d) Employee benefits
i) Long Term Employee Benefits
Defined Contribution Plans
Superannuation fund, Provident fund and Pension fund
are defined contribution plans towards which the
Company makes contribution at predetermined rates to
the Superannuation Trust, and the Regional Provident
Fund Commissioner respectively. The same is debited to
the Statement of Profit and Loss based on the amount of
contribution required to be made as and when services
are rendered by the employees.
The Company also makes contributions to state plans
namely Employee's State Insurance Fund and
Employee's Pension Scheme 1995. The Company has
no further payment obligation once the contributions have
been paid.
Defined Benefit Plan
The liability or asset recognised in the balance sheet in
respect of defined benefit gratuity plan is the present
value of the defined 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 amount is
funded to a Gratuity fund administered by the trustees of
'M/s. Wendt (India) Limited Employees Group Gratuity
Trust' and managed by Life Insurance Corporation of
India.
Remeasurement, comprising actuarial gain 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. 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;
• remeasurement
Other Long Term Employee Benefits -
Compensated Absences
The Company also has liabilities for earned leave that are
not expected to be settled wholly within 12 months after
the end of the period in which the employees render the
related service. These obligations 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 appropriate market yields at the end of the
reporting period that have terms approximating to the
terms of the related obligation. Remeasurements as a
result of experience adjustments and changes in
actuarial assumptions are recognised in the Statement of
profit or loss.
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.
Termination benefits are recognized as an expense as
and when incurred.
ii) Short-term employee benefits
Short term employee benefits including performance
incentives which are expected to be settled within 12
months after the end of the period in which the employee
renders related service, are determined as per
Company's policy and recognized as expense based on
expected obligation on undiscounted basis.
Income tax expense represents the sum of the tax
currently payable and deferred tax. Income tax expense
is recognized in the statement of profit and loss except to
the extent it relates to items directly recognized in equity
or in other comprehensive income.
i) Current tax
Current income tax for the current and prior periods are
measured at the amount expected to be recovered from
or paid to the taxation authorities based on the taxable
income for the period. The tax rates and tax laws used to
compute the current tax amount are those that are
enacted by the reporting date and applicable for the
period. The Company offsets current tax assets and
current tax liabilities, where it has a legally enforceable
right to set off the recognized amounts and where it
intends either to settle on a net basis or to realize the
asset and liability simultaneously.
ii) Deferred tax
Deferred tax is recognized using the Balance Sheet
approach. Deferred tax assets and liabilities are
recognized for deductible and taxable temporary
differences arising between the tax base of assets and
liabilities and their carrying amount in financial
statements. However, the deferred tax liabilities are not
recognised if they arise from the initial recognition of
goodwill or from initial recognition of an asset or liability in
a transaction that is not a business combination and
affects neither accounting nor taxable profits or losses at
the time of the transaction.
Deferred tax asset are recognized 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.
Deferred tax liabilities are recognized for all taxable
temporary differences.
The carrying amount of deferred tax assets are reviewed
at each reporting 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 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 reporting date.
iii) Indirect taxes
Goods and Services Tax (GST) credit on materials
purchased / services availed for production / input
services are taken into account at the time of purchase
and availing services. GST Credit on purchase of capital
goods wherever applicable are taken into account as and
when the assets are acquired. The GST credits so
availed are utilised for payment of GST on outward
supply and service. Theunutilised GST credit is carried
forward in the books.
f) Property, Plant and equipment
The cost of Property, Plant and equipment comprises its
purchase price net of any trade discounts and rebates,
any import duties and other taxes (other than those
subsequently recoverable from the tax authorities), any
directly attributable expenditure on making the asset
ready for its intended use, other incidental expenses
and interest on borrowings attributable to acquisition of
qualifying tangible assets up to the date the asset is
ready for its intended use. Machinery spares which can
be used exclusively in connection with an item of
Property, plant and equipment and whose use is
expected to be irregular are capitalised and depreciated
over the useful life of the principal item of the relevant
assets. Subsequent costs are included in the asset's
carrying amount are 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 profit or loss during the reporting period in
which they are incurred.
Capital work-in-progress
Items of assets which are not yet ready for their intended
use are carried at cost, comprising direct cost, related
incidental expenses and attributable interest, if
any.
Depreciation on property, plant and equipment has
been provided on the straight-line method as above
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.
Depreciation on assets added / disposed off during the
year is provided on pro-rata basis from the month of
addition or up to the month prior to the month of
disposal, as applicable.
Individual assets costing less than Rs.5,000 each are
depreciated in full in the year of acquisition.
An item of property, plant and equipment is
derecognised 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 sales proceeds and the carrying amount of the asset
and is recognised in the Statement of profit or loss.
(g) Intangible assets
Intangible assets (acquired)
Intangible assets with finite useful lives that are
acquired separately are carried at cost less
accumulated amortisation and accumulated
impairment losses, if any. The estimated useful life
and amortisation method are reviewed at the end of
each reporting period, with the effect of any changes in
estimate being accounted for on a prospective basis.
(h) Impairment of Property, plant and
equipment and intangible assets other
than goodwill
At the end of each reporting period, the Company
reviews the carrying amounts of its Property, plant and
equipment and intangible 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 assets 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 units for which a
reasonable and consistent allocation basis can be
identified.
Recoverable amount is higher of fair value less cost 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 recognised immediately in the
Statement of profit or loss.
Such assets, that suffered an impairment, are reviewed
for possible reversal of the impairment at the end of
each reporting period.
(i) Inventories
Inventories are valued at lower of cost and net
realizable value. Cost of raw materials, stores and
spares and traded goods comprises cost of purchases.
Cost of work-in-progress and finished goods comprises
direct materials, direct labour, and an appropriate
proportion of overheads. Cost of inventories also
include all other costs incurred in bringing the
inventories to the present location and condition. Cost is
computed on weighted average basis.
Net realisable value represents the estimated selling
price for inventories less the estimated costs of
completion and estimated costs necessary to make the
sale.
Provisions are made for potential obsolescence based
on management assessment of aged inventory items.
0) Cash and cash equivalents
Cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other
short term, highly liquid investments with maturity of 3
months or less that are readily convertible into known
amounts of cash and which are subject to an
insignificant risk of changes in values, and bank
overdrafts.
Statement of Cash flows are reported using the indirect
method, whereby profit for the period is adjusted for the
effects of transactions of a non-cash nature, any
deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses
associated with investing or financing cash flows. The
cash flows from operating, investing and financing
activities of the Company are segregated.
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