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F-15
(k)
Property, plant and equipment
Property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation less accumulated impairment, if any.
Freehold land is measured at cost and is not depreciated.
Cost includes purchase price, taxes and duties, labour cost and direct overheads for self-constructed assets and other direct costs incurred up to the date the
asset is ready for its intended use.
Interest cost incurred for constructed assets is capitalized up to the date the asset is ready for its intended use, based on borrowings incurred specifically for
financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been incurred for the asset.
Depreciation is provided on the Straight Line Method (SLM) over the estimated useful lives of the assets considering the nature, estimated usage, operating
conditions, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support. Taking into account these
factors, the Company has decided to apply the useful life for various categories of property, plant & equipment, which are different from those prescribed in
Schedule II of the Act. Estimated useful lives of assets are as follows:
Type of Asset
Estimated useful life
Buildings, Roads, Bridges and culverts
4 to 60 years
Plant, machinery and equipment
8 to 20 years
Computers and other IT assets
4 to 6 years
Vehicles
4 to 10 years
Furniture, fixture and office appliances
5 to 15 years
The useful lives is reviewed at least at each year end. Changes in expected useful lives are treated as change in accounting estimate.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant
lease.
Depreciation is not recorded on capital work-in-progress until construction and installation are complete and the asset is ready for its intended use.
(l)
Other intangible assets
Intangible assets purchased are measured at cost less accumulated amortization and accumulated impairment, if any.
Amortization is provided on a straight-line basis over estimated useful lives of the intangible assets as per details below:
Type of asset
Estimated amortization period
Technological know-how
8 to 10 years
Software
4 years
The amortization period for intangible assets with finite useful lives is reviewed at least at each year-end. Changes in expected useful lives are treated as
changes in accounting estimates
Internally generated intangible assets
Research costs are charged to the Statement of Profit and Loss in the year in which they are incurred.
Product development costs incurred on new vehicle platform, engines, transmission and new products are recognized as intangible assets, when feasibility
has been established, the Company has committed technical, financial and other resources to complete the development and it is probable that asset will
generate probable future economic benefits.
The costs capitalized include the cost of materials, direct labour and directly attributable overhead expenditure incurred up to the date the asset is available
for use.
Interest cost incurred is capitalized up to the date the asset is ready for its intended use, based on borrowings incurred specifically for financing the asset or
the weighted average rate of all other borrowings if no specific borrowings have been incurred for the asset.
Product development costs are amortised over a period of 120 months for New Generation vehicles and powertrains on the basis of higher of the volumes
between planned and actuals and on a straight line method over a period of 36 months for Vehicle Variants, Derivatives and other Regulatory Projects.
Capitalized development expenditure is measured at cost less accumulated amortization and accumulated impairment, if any.
(m)
Goodwill
Cash generating units to which goodwill is allocated are tested for impairment annually at each balance sheet date, or more frequently when there is an
indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than the carrying amount of the unit, the impairment
loss is allocated first to reduce the carrying amount of any goodwill allocated to that unit and then to the other assets of the unit pro rata on the basis of
carrying amount of each asset in the unit. Goodwill impairment loss recognized is not reversed in subsequent period.
(n)
Leases
At the inception of a lease, the lease arrangement is classified as either a finance lease or an operating lease, based on the substance of the lease
arrangement.
NOTES FORMING PART OF FINANCIAL STATEMENTS