2. MATERIAL ACCOUNTING POLICIES(A) BASIS OF PREPARATION AND PRESENTATION:
The Standalone Financial Statements have been
prepared in accordance with the accounting
principles generally accepted in India including Indian
Accounting Standards (Ind AS) prescribed under
Section 133 of the Companies Act, 2013, read with
rule 3 of Companies (Indian Accounting Standards)
Rules, 2015 as amended and relevant provisions of
the Companies Act, 2013 including presentation and
disclosure requirements of Division II of Schedule III of
the Act as amended from time to time.
Accordingly, the Company has prepared
these Standalone Financial Statements which
comprise the Balance Sheet as at 31st March, 2026,
the Statement of Profit and Loss for the year ended
31st March, 2026, the Statement of Cash Flows for
the year ended 31st March, 2026 and the Statement
of Changes in Equity for the year ended as on that
date, and accounting policies and other explanatory
information (together hereinafter referred to as '
Standalone Financial Statements').
These Standalone Financial Statements have been
prepared on a going concern basis; the management
having assessed that the Company has adequate
resources to continue in operational existence for the
foreseeable future.
In addition, the Standalone financial statements
are presented in INR which is also the Company's
functional currency and all values are rounded to the
nearest crore except when otherwise indicated.
(B) BASIS OF MEASUREMENT:
The Standalone financial statements are prepared
in accordance with Indian Accounting Standards
(Ind AS), under the historical cost convention on the
accrual basis as per the provisions of the Companies
Act, 2013 ("the Act"), except for:
- Financial instruments - measured at fair value;
- Plan assets under defined benefit plans -
measured at fair value
- Equity-settled share-based payments - measured
at fair value at the grant date;
- Other long-term employee benefits - measured at
the present value of the defined benefit obligation.
I n addition, the carrying values of recognised assets
and liabilities, designated as hedged items in fair
value hedges that would otherwise be carried at cost,
are adjusted to record changes in the fair values
attributable to the risks that are being hedged in
effective hedge relationships.
(C) SIGNIFICANT ACCOUNTING ESTIMATES,
JUDGEMENTS AND ASSUMPTIONS:
The preparation of the Standalone financial statements
in conformity with Ind AS requires the management to
make estimates, judgments and assumptions. These
estimates, judgments and assumptions affect the
application of accounting policies and the reported
amounts of assets and liabilities, the disclosures of
contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues
and expenses during the period. Actual results could
differ from those estimates according to the nature of
the assumption and other circumstances. This note
provides an overview of the areas where there is a higher
degree of judgment or complexity. Detailed information
about each of these estimates and judgments is
included in relevant notes together with information
about the basis of calculation.
The following are areas involving critical estimates
and judgments:
Judgements:
- Leases
- Evaluation of recoverability of deferred tax
assets, and estimation of income tax payable and
income tax expense in relation to an uncertain tax
position
- Provisions and Contingencies
- Determination of the point at which control of
exported goods transfers to the customer, having
regard to the applicable Incoterm
Estimates:
- Impairment
- Accounting for Defined benefit plans
- Useful lives of property, plant and equipment and
intangible assets
- Fair Valuation of Financial instruments
- Valuation of inventories
- Estimation of variable consideration on sales,
including discounts, rebates and rights of return
- Expected credit losses on trade receivables
(D) CURRENT AND NON-CURRENT CLASSIFICATION:
The Company presents assets and liabilities in
the Balance Sheet based on current/non-current
classification, An assets is treated as current when it
is:
i) Expected to be realised or intended to be sold or
consumed in normal operating cycle, or
ii) Held primarily for the purpose of trading, or
iii) Expected to be realised within twelve months
after the reporting period, or
iv) Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period
A liability is treated as current when it is:
(i) Expected to be settled in normal operating cycle,
or
(ii) Held primarily for the purpose of trading, or
(iii) Due to be settled within twelve months after the
reporting period, or
(iv) There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period
All other assets and liabilities are classified as non¬
current assets and liabilities. Deferred tax assets and
liabilities are classified as non-current assets and
liabilities.
The operating cycle is the time between the acquisition
of assets for processing and their realisation in cash
and cash equivalents. The Company has identified
twelve months as its operating cycle.
(E) PROPERTY, PLANT AND EQUIPMENT, INTANGIBLEASSETS AND DEPRECIATION/AMORTIZATION:1. Property, Plant and Equipment (PPE)
PPEs held for use in the production, supply or
administrative purposes, are stated in the balance
sheet at cost less applicable accumulated
depreciation/amortisation and accumulated
impairment losses (if any).
The cost of PPE comprises its purchase price
(including the costs of materials/components)
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,
including relevant borrowing costs for qualifying
assets including exchange differences arising
from foreign currency borrowings to the extent
that they are regarded as an adjustment to interest
costs and such other incidental costs that may
be associated with acquisition or creation of the
asset ready for its intended use.
An item or part of PPE is derecognised upon
disposal or when no future economic benefits are
expected from its use. Any gain or loss arising
on de-recognition of the asset (calculated as the
difference between the net disposal proceeds
and the carrying amount of the asset) is included
in the Statement of Profit & Loss as and when the
asset is derecognised.
PPE which are not ready for intended use as
on the date of Balance Sheet are disclosed
as "Capital work-in-progress". Capital Work-
in-Progress represents expenditure incurred
on capital assets that are under construction/
erection or are pending to be commercialised and
put to use. The same is carried at cost which is
determined in the same manner as for any PPE.
2. Intangible Assets
Intangible assets are recognised when it is
probable that the future economic benefits
that are attributable to the asset will flow to
the Company and the cost of the asset can be
measured reliably. Intangible assets are stated
at original cost net of tax/duty credits availed,
if any, less accumulated amortisation and
cumulative impairment. Administrative and other
general overhead expenses that are specifically
attributable to acquisition of intangible assets
are allocated and capitalised as a part of the cost
of the intangible assets. Intangible development
costs are capitalised as and when technical
and commercial feasibility of the asset is
demonstrated and future economic benefits are
probable.
The useful lives of intangible assets are assessed
as either finite or indefinite. Intangible assets
with finite lives are amortised over the useful
economic life and assessed for impairment
whenever there is an indication that the intangible
asset may be impaired. The amortisation period
and the amortisation method for an intangible
asset with a finite useful life are reviewed at least
at the end of each reporting period.
Gains or losses arising from de-recognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the
carrying amount of the asset and are recognised
in the Statement of Profit and Loss when the
asset is derecognised.
3. Depreciation/Amortisation
Depreciation on Property, Plant and Equipment
is provided using the straight line method.
Depreciation is provided over the useful lives of
the assets as prescribed in Schedule II to the
Companies Act, 2013, except for certain classes
of assets set out below for which the useful lives
have been determined on the basis of technical
assessment by the management. For those
classes, the useful lives adopted differ from
those prescribed in Schedule II, and the technical
assessment is the justification for the difference
as required by Part C of Schedule II.
The useful lives adopted for various classes of
assets are as follows:
The residual values, useful lives and methods of
depreciation and amortisation are reviewed at
the end of each reporting period and adjusted
prospectively where appropriate.
4. Impairment
The Company assesses at each reporting date
whether there is any indication that the carrying
amounts of its property, plant and equipment,
and intangible assets may be impaired. If any
indication exists, or when annual impairment
testing for an asset is required, the Company
estimates the asset's recoverable amount.
I mpairment loss, if any, is provided to the extent,
the carrying amount of assets exceeds their
recoverable amount. Recoverable amount is
higher of net selling price of an asset or its
value in use. Value in use is the present value of
estimated future cash flows expected to arise
from the continuing use of an asset and from its
disposal at the end of its useful life.
(F) RESEARCH AND DEVELOPMENT:
Research costs are expensed as incurred.
Development expenditures on an individual project are
recognised as an intangible asset when the Company
can demonstrate:
- development costs can be measured reliably;
- the product or process is technically and
commercially feasible;
- future economic benefits are probable; and
- the Company intends to, and has sufficient
resources to complete development and to use or
sell the asset.
Following initial recognition of the development
expenditure as an asset, the asset is carried at cost
less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins
when development is complete and the asset is
available for use. It is amortised over the period of
expected future benefit. Amortisation expense is
recognised in the statement of profit and loss unless
such expenditure forms part of carrying value of
another asset. During the period of development, the
asset is tested for impairment annually.
(G) INTANGIBLE ASSETS UNDER DEVELOPMENT:
Expenditure incurred on acquisition/development
of intangible assets which are not ready for their
intended use at balance sheet date are disclosed
under intangible assets under development.
(H) VALUATION OF INVENTORIES:
Inventories have been valued on the following basis:
Goods in transit represent inventories in respect of
which control has passed to the Company as at the
reporting date, but which had not been received at the
Company's premises on that date.
Net realisable value is the estimated selling price in
the ordinary course of business, less estimated costs
of completion and the estimated costs necessary to
make the sale.
Provisions are made for obsolete and non-moving
inventories. Unserviceable and scrap items, when
determined, are valued at estimated net realisable
value.
(I) REVENUE RECOGNITION:
Ind AS 115 applies, with limited exceptions, to all
revenue arising from contracts with its customers Ind
AS 115 establishes a five-step model to account for
revenue arising from contracts with customers and
requires that revenue be recognised at an amount that
reflects the consideration to which an entity expects
to be entitled in exchange for transferring goods or
services to a customer.
Ind AS 115 requires entities to exercise judgment,
taking into consideration all of the relevant facts and
circumstances when applying each step of the model
to contracts with their customers It also specifies the
accounting for the incremental costs of obtaining a
contract and the costs directly related to fulfilling a
contract.
(i) Sale of Goods
Revenue from sale of goods is recognised when
control of the products being sold is transferred
to the customer and when there are no longer
any unfulfilled obligations. Income from services
rendered is recognised based on agreements/
arrangements with the customers as the
service is performed and there are no unfulfilled
obligations.
The Company recognises net revenue from
goods sold and services rendered at Transaction
Price which is the amount of consideration the
Company expects to be entitled to in exchange
for transferring promised goods or services to
a customer, excluding the amounts collected
on behalf of a third party. The Transaction price
is net of discounts, sales incentives, rebates
granted, returns, sales taxes, GST and duties and
any other recoverable taxes.
Variable consideration, including discounts, sales
incentives, rebates, credit notes and rights of
return, is estimated at contract inception and is
included in the transaction price only to the extent
that it is highly probable that a significant reversal
in the amount of revenue recognised will not occur
when the associated uncertainty is subsequently
resolved. The estimate is reassessed at each
reporting date.
I n the case of domestic sales, the performance
obligation is generally satisfied when the goods
are dispatched or delivery is handed over to
the transporter. In the case of export sales,
the performance obligation is satisfied at the
point at which control of the goods transfers to
the customer under the applicable Incoterm.
Accordingly, where goods are sold on terms such
as FOB, CFR and CIF, revenue is recognised by
reference to the bill of lading, airway bill or other
similar document evidencing delivery; and where
goods are sold on terms such as DAP under which
the Company retains responsibility for the goods
until they reach the agreed destination, revenue is
recognised on delivery at that destination, unless
if the title of such goods are assigned earlier.
(ii) Interest Income:
Interest income from a financial asset is
recognised when it is probable that the economic
benefits will flow to the Company and the amount
of income can be measured reliably. Interest
income is accrued on a time basis, by reference
to the principal outstanding and at the effective
interest rate applicable, which is the rate that
exactly discounts estimated future cash receipts
through the expected life of the financial asset
to that asset's net carrying amount on initial
recognition.
(iii) Dividend Income:
Revenue is recognised when the Company's right
to receive the dividend is established, which
is generally when shareholders approve the
dividend.
(iv) Export Benefits:
Export incentives are recognised as income
when the right to receive credit as per the terms
of the scheme is established in respect of the
exports made and where there is no significant
uncertainty regarding the ultimate collection of
the relevant export proceeds.
(v) Subsidy Received:
Subsidy from the Department of Fertilizers is
recognised, based on the eligible quantities
supplied by the Company, at the rates as notified/
announced by the Government of India.
(J) FINANCIAL INSTRUMENTS:Recognition and initial measurement
Financial assets and financial liabilities are recognised
when an entity becomes a party to the contractual
provisions of the instrument. Financial assets and
financial liabilities are initially measured at fair value.
However, Trade receivables that do not contain
a significant financing component are measured
at transaction price. Transaction costs directly
attributable to the acquisition of financial assets or
financial liabilities at fair value through profit and
loss are recognised immediately in the Statement of
Profit and Loss. Transaction costs that are directly
attributable to the acquisition or issue of financial
assets and financial liabilities (other than financial
assets and financial liabilities at fair value through
Statement of Profit and Loss (FVTPL)) are added
to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial
recognition.
Classification and Subsequent Measurement of
Financial Assets:
The Company classifies financial assets, subsequently
at amortised cost, Fair Value through Other
Comprehensive Income ("FVTOCI") or Fair Value
through Profit or Loss ("FVTPL') on the basis of
following:
- the entity's business model for managing the
financial assets and
- the contractual cash flow characteristics of the
financial asset.
(a) Financial Assets measured at Amortised Cost:
A Financial Asset is measured at amortised
Cost if it is held within a business model whose
objective is to hold the asset in order to collect
contractual cash flows and the contractual terms
of the Financial Asset give rise on specified dates
to cash flows that represent solely payments of
principal and interest on the principal amount
outstanding.
(b) Financial Assets measured at Fair Value Through
Other Comprehensive Income (FVTOCI):
A Financial Asset is measured at FVTOCI if it is
held within a business model whose objective
is achieved by both collecting contractual cash
flows and selling Financial Assets and the
contractual terms of the Financial Asset give rise
on specified dates to cash flows that represent
solely payments of principal and interest on the
principal amount outstanding.
(c) Financial Assets measured at Fair Value Through
Profit or Loss (FVTPL):
FVTPL is a residual category for financial assets.
Any financial asset, which does not meet the
criteria for categorisation as at amortised cost or
as FVTOCI, is classified as at FVTPL.
Classification and Subsequent Measurement of
Financial Liabilities:
(a) Financial liabilities measured at Fair Value
Through Profit or Loss (FVTPL):
Financial liabilities are classified as FVTPL
when the financial liability is held for trading or
is a derivative (except for effective hedge) or are
designated upon initial recognition as FVTPL.
Gains or Losses, including any interest expense
on liabilities held for trading are recognised in the
Statement of Profit and Loss.
(b) Other Financial Liabilities:
Other financial liabilities (including loans and
borrowings, bank overdrafts and trade and
other payables) are subsequently measured
at amortised cost using the effective interest
method.
The effective interest rate is the rate that exactly
discounts estimated future cash payments
(including all fees and amounts paid or received
that form an integral part of the effective interest
rate, transaction costs and other premiums
or discounts) through the expected life of the
financial liability, or (where appropriate) a shorter
period, to the amortised cost on initial recognition.
I nterest expense (based on the effective interest
method), foreign exchange gains and losses, and
any gain or loss on derecognition is recognised in
the Statement of Profit and Loss.
For trade and other payables maturing within one
year from the Balance Sheet date, the carrying
amounts approximate fair value due to the short
maturity of these instruments.
Debt and Equity Instruments:
Debt and equity instruments issued by the Company
are classified as either financial liabilities or as equity
in accordance with the substance of the contractual
arrangements and the definitions of a financial liability
and an equity instrument. An equity instrument is any
contract that evidences a residual interest in the assets
of an entity after deducting all of its liabilities. Equity
instruments issued by the Company are recognised at
the proceeds received, net of direct issue costs.
Equity Investments
All equity investments (other than investments in
subsidiaries and joint ventures) in the scope of Ind
AS 109 are measured at fair value. Equity instruments
which are held for trading are classified as at FVTPL.
For all other equity instruments, the Company may
make an irrevocable election to present in other
comprehensive income subsequent changes in the
fair value. The Company makes such election on an
instrument-by-instrument basis. The classification is
made on initial recognition and is irrevocable. If the
Company decides to classify an equity instrument as at
FVTOCI, then all fair value changes on the instrument,
excluding dividends, are recognised in the OCI. There is
no recycling of the amounts from OCI to the statement
of profit and loss, even on sale of investment. However,
the Company may transfer the cumulative gain or loss
within equity. Equity instruments included within the
FVTPL category are measured at fair value with all
changes recognised in the statement of profit and
loss.
Investments in Subsidiaries and Joint Ventures:
Investments in subsidiaries and joint ventures are
carried at cost less accumulated impairment losses,
if any, in accordance with Ind AS 27 Separate Financial
Statements. Where an indication of impairment exists,
the carrying amount of the investment is assessed
and written down immediately to its recoverable
amount. On disposal of investments in subsidiaries
and joint ventures, the difference between net disposal
proceeds and the carrying amounts are recognised in
the statement of profit and loss.
De-recognition of Financial Instruments:
The Company derecognises a Financial Asset when
the contractual rights to the cash flows from the
Financial Asset expire or it transfers the Financial
Asset and the transfer qualifies for de-recognition
under Ind AS 109. In cases where the Company has
neither transferred nor retained substantially all of the
risks and rewards of the financial asset, but retains
control of the financial asset, the Company continues
to recognise such financial asset to the extent of its
continuing involvement in the financial asset. In that
case, the Company also recognises an associated
liability. The financial asset and the associated liability
are measured on a basis that reflects the rights and
obligations that the Company has retained.
A Financial liability (or a part of a financial liability) is
derecognised from the Company's Balance Sheet when
the obligation specified in the contract is discharged
or cancelled or expires. When an existing financial
liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange
or modification is treated as the derecognition of the
original liability and the recognition of a new liability.
The difference between the carrying amount of the
financial liability de-recognised and the consideration
paid and payable is recognised in the Statement of
Profit and Loss.
Impairment of Financial Assets:
In accordance with Ind AS 109, the Company uses
'Expected Credit Loss' (ECL) model, for evaluating
impairment of all Financial Assets subsequent to initial
recognition other than financial assets measured
at fair value through profit and loss (FVTPL). The
Company uses historical default rates to determine
impairment loss on the portfolio of trade receivables.
At every reporting date these historical default rates
are reviewed and changes in the forward-looking
estimates are analysed. For other financial assets, the
Company uses 12 month ECL to provide for impairment
loss where there is no significant increase in credit
risk since its initial recognition. If there is significant
increase in credit risk since its initial recognition full
lifetime ECL is used. The impairment losses and
reversals are recognised in Statement of Profit and
Loss.
ECL is the difference between all contractual cash
flows that are due to the Company in accordance
with the contract and all the cash flows that the entity
expects to receive (i.e., all cash shortfalls), discounted
at the original EIR.
Offsetting of Financial Instruments:
Financial assets and financial liabilities are offset and
presented on net basis in the balance sheet when there
is a legally enforceable right to set-off the recognised
amounts and it is intended to either settle them on
net basis or to realise the asset and settle the liability
simultaneously.
Fair Value of Financial Instruments
In determining the fair value of its financial
instruments, the Company uses a variety of methods
and assumptions that are based on market conditions
and risks existing at each reporting date. The methods
used to determine fair value include discounted cash
flow analysis and available quoted market prices,
where applicable. All methods of assessing fair value
result in general approximation of value, and such
value may never actually be realised.
Financial instruments by category are separately
disclosed indicating carrying value and fair value of
financial assets and liabilities. For financial assets and
liabilities maturing within one year from the Balance
Sheet date and which are not carried at fair value, the
carrying amounts approximate fair value due to the
short maturity of these instruments.
Derivative Financial Instruments:
Derivative financial instruments such as forward
contracts, option contracts and cross currency
swaps, to hedge its foreign currency risks are initially
recognised at fair value on the date a derivative
contract is entered into and are subsequently re¬
measured at their fair value with changes in fair value
recognised in the Statement of Profit and Loss in the
period when they arise.
Cash Flow Hedge
At inception of designated hedging relationships, the
Company documents the risk management objective
and strategy for undertaking the hedge. The Company
also documents the economic relationship between
the hedged item and the hedging instrument, including
whether the changes in cash flows of the hedged item
and hedging instrument are expected to offset each
other.
The Company is exposed to foreign exchange risk
arising from foreign currency transactions, primarily
with respect to USD. Foreign exchange risk arises from
future commercial transactions and recognised assets
and liabilities denominated in a currency that is not the
Company's functional currency (').
The risk is measured through a forecast of highly
probable foreign currency cash flows. The objective
of the hedges is to minimise the volatility of the '
cash flows of highly probable forecast transactions.
The Company risk management policy is to hedge
forecasted foreign currency sales for the subsequent
12 to 36 months. As per the risk management policy,
appropriate foreign currency hedges are executed or
undertaken to hedge forecasted sales.
The spot component of forward contracts is determined
with reference to relevant spot market exchange rates.
The differential between the contracted forward rate
and the spot market exchange rate is defined as the
forward points.
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the
fair value of the derivative is recognised in OCI and
accumulated in other equity under 'effective portion
of cash flow hedges'. The effective portion of changes
in the fair value of the derivative that is recognised in
OCI is limited to the cumulative change in fair value of
the hedged item, determined on a present value basis,
from inception of the hedge. Any ineffective portion of
changes in the fair value of the derivative is recognised
immediately in statement of profit and loss.
Amounts accumulated in the cash flow hedge reserve
are subsequently reclassified to the Statement of
Profit and Loss in the periods in which the hedged item
affects profit or loss and are accordingly presented
within items that will be reclassified to the Statement
of Profit and Loss.
If a hedge no longer meets the criteria for hedge
accounting or the hedging instrument is sold, expires,
is terminated or is exercised, then hedge accounting
is discontinued prospectively. When hedge accounting
for cash flow hedges is discontinued, the amount
that has been accumulated in other equity remains
there until, for a hedge of a transaction resulting in
recognition of a non-financial item, it is included in the
non-financial item's cost on its initial recognition or,
for other cash flow hedges, it is reclassified to profit
or loss in the same period or periods as the hedged
expected future cash flows affect profit or loss.
If the hedged future cash flows are no longer expected
to occur, then the amounts that have been accumulated
in other equity are immediately reclassified to
statement of profit and loss.
(K) CASH AND CASH EQUIVALENTS:
For the purpose of presentation in the Balance
sheet, Cash and Cash equivalents comprises cash at
bank and on hand and other short-term, highly liquid
investments with an original maturity (or with an
option to or can be readily converted or liquidated into
cash) of three months or less, which are subject to an
insignificant risk of changes in value. Cash and Cash
Equivalents consist of balances with banks which are
unrestricted for withdrawals and usages.
For the purpose of presentation in the statement of
cash flows, cash and cash equivalents includes cash
at bank and on hand and other short-term highly
liquid investments that are readily convertible to
known amounts of cash and which are subject to an
insignificant risk of changes in value.
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