3.(e) Provision, contingent liabilities and contingent assets
Provision: A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can
be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the
time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in
the provision due to the passage of time is recognized as a finance cost.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at reporting
date, taking into account the risks and uncertainties surrounding the obligation.
Contingent Liability: Contingent liabilities are possible obligations that arise from past events and whose existence will only be
confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it
is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is
disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Contingent liabilities are disclosed
on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to
reflect the current management estimate.
3.(f) Revenue recognition:
With Effective 1st April, 2018, the Company has applied Ind AS 115 - Revenue from Contracts with Customers Pursuant to adoption of
Ind AS 115, Revenue from contracts with customers are recognized when the control over the goods or services promised in the
contract are transferred to the customer. The amount of revenue recognized depicts the transfer of promised goods and services to
customers for an amount that reflects the consideration to which the Company is entitled to in exchange for the goods or services.
f.1 Interest Income: The Company recognises interest income using Effective Interest Rate (EIR) on all financial assets
subsequently measured at amortised cost. EIR is calculated by considering all costs and other incomes attributable to
acquisition of a financial assets.
f.2 Dividend: Dividend income from investments is recognised when the shareholders' right to receive payment has been
established which is generally when the shareholders approve the dividend.
f.3 Other revenue from operations: The Company recognises revenue from contracts with customers (other than financial
assets to which Ind AS 109 'Financial Instruments' is applicable) based on a comprehensive assessment model as set out in Ind
AS 115 'Revenue from contracts with customers'. The Company identifies contract(s) with a customer and its performance
obligations under the contract, determines the transaction price and its allocation to the performance obligations in the
contract and recognises revenue only on satisfactory completion of performance obligations. Revenue is measured at fair
value of the consideration received or receivable.
3.(g) Employee benefits
Short Term Benefits: Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the
related service is provided.
A liability is recognized for the amount expected to be paid under performance related pay if the Company has a present legal or
constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated
reliably.
3.(h) Taxation
h.1 Current Income tax: Provision for current tax is made as per 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.Current income tax relating to
items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity).
Management periodically evaluates positions taken in the tax returns with respect to applicable tax regulations which are subject to
interpretation and establishes provisions where appropriate.
h.2 Deferred Tax: Deferred tax is provided using the Balance Sheet method on temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets and liabilities are measured
based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognized
outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity).
3.(i) Earning per share
Basic earnings/ (loss) per share are calculated by dividing the net profit/ (loss) for the period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares
outstanding during the period are adjusted for any bonus shares issued during the period and also after the Balance Sheet date but
before the date the Ind AS financial statements are approved by the Board of Directors.
For the purpose of calculating diluted earnings/ (loss) per share, the net profit/ (loss) for the period attributable to equity
shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive
potential equity shares.
The number of equity shares and potentially dilutive equity shares are adjusted for bonus shares as appropriate. The dilutive potential
equity shares are adjusted for the proceeds receivable, had the shares been issued at fair value. Dilutive potential equity shares are
deemed converted as of the beginning of the period, unless issued at a later date.
3.(j) Statement of cash Flows: Statement of cash flows is prepared in accordance with the indirect method prescribed in Ind AS-7
'Statement of cash flows.
NOTE 4
4 Major Estimates and Judgments made in preparing Standalone Financial Statements
The preparation of the Company's Standalone Financial Statements requires management to make judgements and estimates that
affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of
contingent liabilities. These include recognition and measurement of financial instruments, estimates of useful lives and residual
value of Property, Plant and Equipment and Intangible Assets, valuation of inventories, measurement of recoverable amounts of cash¬
generating units, measurement of employee benefits, actuarial assumptions, provisions etc.
Uncertainty about these judgments and estimates could result in outcomes that require a material adjustment to the carrying amount
of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the
most recently available information. Revisions to accounting estimates are recognized prospectively in the Statement of Profit and
Loss in the period in which the estimates are revised and in any future periods affected.
4.1 JUDGEMENTS
In the process of applying the company's accounting policies, management has made the following judgements, which have the
significant effect on the amounts recognised in the Standalone Financial Statements:
Materiality
Ind AS requires assessment of materiality by the Company for accounting and disclosure of various transactions in the
Standalone Financial Statements. Accordingly, the Company assesses materiality limits for various items for accounting and
disclosures and follows on a consistent basis. Overall materiality is also assessed based on various financial parameters such
as Gross Block of assets, Net Block of Assets, Total Assets, Revenue and Profit Before Tax. The materiality limits are reviewed
and approved by the Board.
Provisions and contingencies
The assessments undertaken in recognizing provisions and contingencies have been made in accordance with Ind AS 37,
'Provisions, Contingent Liabilities and Contingent Assets'. The evaluation of the likelihood of the contingent events has
required best judgment by management regarding the probability of exposure to potential loss. Should circumstances change
following unforeseeable developments, this likelihood could alter. In the similar line, management also on the basis of best
judgment and estimate determines the net realizable value of the Inventories to make necessary provision.
4.2 MAJOR ESTIMATES
The key assumptions concerning the future and other key sources of estimation 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, however, 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.
Useful life of property, plant and equipment and intangible assets
The estimated useful life of property, plant and equipment is based on a number of factors including the effects of
obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological
advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.
Useful life of the assets other than Plant and machinery are in accordance with Schedule II of the Companies Act, 2013.
The Company reviews at the end of each reporting date the useful life of property, plant and equipment, and are adjusted
prospectively, if appropriate.
Income Taxes
The Company uses estimates and judgements based on the relevant facts, circumstances, present and past experience, rulings,
and new pronouncements while determining the provision for income tax. A deferred tax asset is recognised to the extent that
it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can
be utilised.
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