95 / 172
93
Notes
to the Financial Statements
Note 1 Significant Accounting Policies
(continued)
c) Machinery spares which are capitalised, are depreciated over the useful life of the related fixed asset. The
written down value of such spares is charged in the Statement of Profit and Loss, on issue for consumption.
d) Depreciation and amortisation methods, useful lives and residual values are reviewed periodically, including
at each financial year end.
e) Useful lives as prescribed under Part C of Schedule II to the Companies Act, 2013 are applied except
following categories where the Management has estimated shorter useful lives for all asset categories:
Asset category
Useful life
Plant and machinery *
7 to 20 years
Vehicles *
6 to 10 years
* For the above class of assets, based on internal assessment and independent technical evaluation carried out by
external valuers the Management believes that the useful lives as given above best represent the period over which
the Management expects to use these assets. Hence the useful lives for these assets are different from the useful lives
as prescribed under Part C of Schedule II to the Companies Act, 2013.
Amortisation
a) Leasehold land is amortised on a straight-line basis over the period of lease.
b) Computer Software cost is amortised over a period of 3 years using straight-line method.
05. Impairment of assets:
The carrying amounts of assets are reviewed at each Balance Sheet date to assess if there is any indication of
impairment based on internal | external factors. An impairment loss on such assessment will be recognised
wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of the
assets is net selling price or value in use, whichever is higher. While assessing value in use, the estimated
future cash flows are discounted to the present value by using weighted average cost of capital. A previously
recognised impairment loss is further provided or reversed depending on changes in the circumstances and
to the extent that the assets carrying amount does not exceeds the carrying amount that would have been
determined if no impairment loss had previously been recognised.
06. Borrowing costs:
Borrowing costs in relation to acquisition and construction of qualifying assets are capitalised as part of cost
of such assets up to the date when such assets are ready for intended use. Other borrowing costs are charged
as expense in the year in which these are incurred. Borrowing costs include interest, other costs incurred in
connection with borrowing and exchange differences arising from foreign currency borrowings to the extent
that they are regarded as an adjustment to the interest cost.
07. Investments:
Investments that are intended to be held for more than a year, from the date of acquisition, are classified as
long-term investments and are carried at cost. However, provision for diminution in value of investments is
made to recognise a decline, other than temporary, in the value of the investments.
Current investments not intended to be held for a period more than one year, are stated at lower of cost and
fair value.
08. Inventories:
a) Raw materials, packing materials, purchased finished goods, work-in-progress, finished goods
manufactured, fuel, stores and spares other than specific spares for machinery are valued at cost or
net realisable value whichever is lower. Cost is arrived at on moving weighted average basis. However,
materials and other supplies held for use in the production of inventories are not written down below cost
if the finished products in which they will be incorporated are expected to be sold at or above cost.
b) Goods-in-transit and in bonded warehouse are stated at the cost to the date of Balance Sheet.
c) ‘Cost’ comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventory
to the present location and condition.
d) Due allowances are made for slow moving and obsolete inventories based on estimates made by the
Company.