1.3 Material Accounting Policies:
1.3.1 Basis of Preparation and Presentation
The Financial Statements have been prepared on the historical cost basis except for
following assets and liabilities which have been measured at fair value amount:
(a) Certain Financial Assets and Liabilities (including derivative instruments if any), and
(b) Defined Benefit Plans - Plan Assets
The financial statements of the Company have been prepared to comply with the Indian
Accounting standards ('Ind AS'), including the rules notified under the relevant provisions
of the Companies Act, 2013.
Company's financial statements are presented in Indian Rupees, which is also its functional
currency. The Company discloses only those accounting policies that are material to
understanding the financial statements in accordance with Ind AS 1.
Standards issued but not yet effective
The Ministry of Corporate Affairs has issued certain amendments to Indian Accounting
Standards that are effective for annual periods beginning on or after 1 April 2026 (or the
applicable effective date). The Company has not early adopted these amendments. Based
on its assessment, these amendments are not expected to have a material impact on the
financial statements of the Company.
1.3.2 Fair Value Measurement
Some of the Company's accounting policies and disclosures require the measurement of
fair values, for both financial and non-financial assets and liabilities.
The Company has an established control framework with respect to the measurement of
fair values. This includes a financial reporting team that has overall responsibility for
overseeing all significant fair value measurements, including Level 3 fair values.
The financial reporting team regularly reviews significant unobservable inputs and
valuation adjustments. If third party information, such as pricing services, is used to
measure fair values, then the financial reporting team assesses the evidence obtained
from the third parties to support the conclusion that these valuations meet the
requirements of Ind AS, including the level in the fair value hierarchy in which the
valuations should be classified.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs
used in the valuation techniques as follows.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable
market data as far as possible. If the inputs used to measure the fair value of an asset or a
liability fall into different levels of the fair value hierarchy, then the fair value
measurement is categorised in its entirety in the same level of the fair value hierarchy as
the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of
the reporting period during which the change has occurred.
1.3.3 Current and Non-Current Classification
The Company presents assets and liabilities in the Balance Sheet based on Current /Non-
Current classification.
An asset is treated as Current when it is -
- Expected to be realised or intended to be sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a
liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve
months after the reporting period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
1.3.4 Property, Plant and Equipment
(a) Tangible Assets
Property, Plant and Equipment are stated at cost, net of recoverable taxes, trade discount
and rebates less accumulated depreciation and impairment losses, if any. Such cost
includes purchase price, borrowing cost and any cost directly attributable to bringing the
assets to its working condition for its intended use, net charges on foreign exchange
contracts and adjustments arising from exchange rate variations attributable to the assets.
Subsequent costs are included in the asset's carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated
with the item will flow to the entity and the cost can be measured reliably.
Property, Plant and Equipment which are significant to the total cost of that item of
Property, Plant and Equipment and having different useful life are accounted separately.
Depreciation
Free hold land is not depreciated. Leasehold land and the improvement costs are
amortized over the period of the lease. Depreciation on Property, Plant and Equipment is
provided using Written Down Value Method (WDV). Depreciation is provided based on
useful life of the assets as prescribed in Schedule II to the Companies Act, 2013 as below:
nature of the asset and the estimated usage basis management's best judgement of
economic benefits from those classes of assets.
The residual values, useful lives and methods of depreciation of Property, Plant and
Equipment are reviewed at each financial year end and adjusted prospectively, if
appropriate.
Derecognition
Gains or losses arising from derecognition of a Property, Plant and Equipment 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.
(b) Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable taxes, trade discount
and rebates less accumulated amortisation/depletion and impairment losses, if any. Such
cost includes purchase price, borrowing costs, and any cost directly attributable to bringing
the asset to its working condition for the intended use, net charges on foreign exchange
contracts and adjustments arising from exchange rate variations attributable to the
Intangible Assets.
Subsequent costs are included in the asset's carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated
with the item will flow to the entity and the cost can be measured reliably.
Amortization
The amortization expenses on Intangible assets with the finite lives are recognized in the
Statement of Profit and Loss. The Company's intangible assets comprises assets with finite
useful life which are amortized on a Written Down Value Method (WDV) of their expected
useful life.
*Management has estimated the useful life of trademark as 3.86 years, based on expected
future economic benefits.
The amortization period and the amortization method for an intangible asset with finite
useful life is reviewed at each financial year end and adjusted prospectively, if appropriate.
(c) Capital Work-in-Progress
Cost of Property, Plant and Equipment not ready for intended use, as on the balance sheet
date, is shown as a "Capital Work-in-Progress". The Capital Work-in-Progress is stated at
cost.
Expenditure directly attributable to the construction or development of such assets,
including material costs, labour charges, professional fees, and other related expenses, is
accumulated under Capital Work-in-Progress until the asset is complete and ready for its
intended use.
Upon completion of the construction or development and when the asset is ready for its
intended use, the accumulated cost is transferred to the appropriate category of Property,
Plant and Equipment, and depreciation is charged thereafter in accordance with the
Company's accounting policy on Property, Plant and Equipment.
1.3.5 Impairment of Non-Financial Assets - Property, Plant and Equipment and Intangible
Assets
The Company assesses at each reporting date whether there is any indication that an item
of Property, Plant and Equipment, Intangible Assets or a group of assets constituting a
Cash Generating Unit (CGU) may be impaired. If any such indication exists, the Company
estimates the recoverable amount of the asset or CGU to determine the extent of
impairment loss, if any. Where it is not possible to estimate the recoverable amount of an
individual asset, the Company estimates the recoverable amount of the CGU to which the
asset belongs.
An impairment loss is recognised in the Statement of Profit and Loss when the carrying
amount of an asset or CGU exceeds its recoverable amount. The recoverable amount is the
higher of an asset's (or CGU's) fair value less costs of disposal and its value in use. Value in
use is determined based on the estimated future cash flows 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.
At each reporting date, the Company assesses whether there is any indication that an
impairment loss recognised in prior periods may no longer exist or may have decreased. If
such indication exists, the Company estimates the recoverable amount of the asset or
CGU.
A previously recognised impairment loss is reversed and recognised in the Statement of
Profit and Loss to the extent that the revised carrying amount of the asset or CGU does not
exceed the carrying amount that would have been determined (net of depreciation or
amortisation) had no impairment loss been recognised for the asset or CGU in prior
periods.
1.3.6 Lease
(a) The Company as a Lessee
The Company, as a lessee, recognises a right-of-use asset and a lease liability for its leasing
arrangements if the contract conveys the right to control the use of an identified asset.
The contract conveys the right to control the use of an identified asset if it involves the use
of an identified asset and the Company has substantially all of the economic benefits from
use of the asset and has the right to direct the use of the identified asset. The cost of the
right-of-use asset comprises the amount of the initial measurement of the lease liability,
adjusted for any lease payments made at or before the commencement date and any
initial direct costs incurred. The right-of-use asset is subsequently measured at cost less
accumulated depreciation and accumulated impairment losses, if any, and adjusted for any
remeasurement of the lease liability. Right-of-use assets are depreciated on a straight-line
basis over the shorter of the lease term and the useful life of the underlying asset.
The Company measures the lease liability at the present value of lease payments that are
unpaid at the commencement date of the lease. Lease payments are discounted using the
interest rate implicit in the lease, if readily determinable; otherwise, the Company's
incremental borrowing rate is used.
The Company has elected to apply the recognition exemptions available under Ind AS 116
for short-term leases (leases with a lease term of 12 months or less) and leases of low-
value assets. Payments associated with such leases are recognised as an expense in the
Statement of Profit and Loss on a straight-line basis over the lease term or another
systematic basis, if that basis is more representative of the pattern of benefit derived from
the use of the underlying asset.
(b) The Company as a Lessor
Leases for which the Company is a lessor is classified as a finance or operating lease.
Whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee, the contract is classified as a finance lease. All other leases are
classified as operating leases.
For operating leases, rental income is recognized on a straight-line basis over the term of
the relevant lease.
1.3.8 Inventories
Inventories are valued at the lower of cost and net realisable value after providing for
obsolescence, if any.
The cost of inventories comprises the cost of purchase, cost of conversion and other costs,
including appropriate manufacturing overheads, net of recoverable taxes, incurred in
bringing the inventories to their present location and condition.
The cost of Raw Materials is determined using the First-In, First-Out (FIFO) method. The
cost of Work-in-Progress and Finished Goods is determined using the Weighted Average
Cost method.
Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.
Inventories valued on the above basis are certified by the management.
1.3.9 Borrowing Costs
Borrowing costs that are directly attributable to the acquisition or construction of
qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one
that necessarily takes substantial period of time to get ready for its intended use.
Interest income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for
capitalization.
All other borrowing costs are charged to the Statement of Profit and Loss for the period for
which they are incurred.
1.3.10 Employee Benefits
(A) Short-Term Employee Benefits
The undiscounted amount of short-term employee benefits expected to be paid in
exchange for the services rendered by employees are recognised as an expense during the
period when the employees render the services.
(B) Post-Employment Benefits
(i) Defined Contribution Plans
The Company contributes to statutory defined contribution schemes, including the
Employees' Provident Fund (EPF) and the Employees' State Insurance Corporation (ESIC),
as applicable. Contributions to these schemes are recognised as an expense in the
Statement of Profit and Loss in the period in which the employees render the related
service. Any unpaid contribution as at the reporting date is recognised as a liability, and
any excess payment is recognised as an asset to the extent that it will result in a reduction
in future payments or a cash refund.
(ii) Defined Benefit Plan
(a) Gratuity Scheme: The Company's defined benefit plan comprises a gratuity scheme
administered in accordance with the provisions of the Payment of Gratuity Act,
1972. The gratuity liability is determined on the basis of an independent actuarial
valuation using the Projected Unit Credit Method at each reporting date.
(b) The defined benefit plan exposes the Company to actuarial risks, including:
Salary escalation risk - the present value of the defined benefit obligation increases
with future increases in employees' salaries.
Discount rate risk - a decrease in market yields on Government bonds increases the
present value of the defined benefit obligation.
Longevity risk - an increase in employees' life expectancy may increase the
expected duration of benefit payments.
Employee attrition risk - changes in employee withdrawal, resignation and
retirement patterns may affect the timing and amount of benefit payments.
The Company regularly reviews the assumptions used in the actuarial valuation to
ensure that they appropriately reflect current market conditions and the
characteristics of the defined benefit plan.
Remeasurement gains and losses arising from adjustments and changes in actuarial
assumptions are recognised in the period in which they occur in Other Comprehensive
Income.
(iii) Other Long - Term Employee Benefits
Entitlement to annual leave is recognized when they accrue to employees.
(iv) Characteristics of defined benefit plans and risks associated with them:
Valuation of defined benefit plan are performed on certain basic set of pre-determined
assumptions and other regulatory framework which may vary over time. Thus, the
Company is exposed to various risks in providing the above benefit plans which are as
follows:
1.3.11 Revenue Recognition
Revenue from contracts with customers is recognised when control of the goods or
services are transferred to the customer at an amount that reflects the consideration
entitled in exchange for those goods or services.
The Company generally controls the goods or services before transferring them to the
customer.
Generally, control is transferred upon shipment of goods to the customer or when the
goods is made available to the customer, provided transfer of title to the customer occurs
and the Company has not retained any significant risks of ownership or future obligations
with respect to the goods shipped.
Revenue from rendering of services is recognised over time as the performance obligations
are satisfied.
Revenue is measured at the amount of consideration which the Company expects to be
entitled to in exchange for transferring distinct goods or services to a customer as specified
in the contract, excluding amounts collected on behalf of third parties (for example taxes
and duties collected on behalf of the government). Consideration is generally due upon
satisfaction of performance obligations and a receivable is recognised when it becomes
unconditional.
Export Incentives
Export incentive revenues are recognized when the right to receive the credit is
established and there is no significant uncertainty regarding the ultimate collection.
Interest Income
Interest Income from a Financial Assets is recognised using effective interest rate method.
And it is recognized on time proportion basis taking into account the amount outstanding
and rate applicable.
Dividend Income
Dividend Income is recognised when the Company's right to receive the amount has been
established.
Surplus / (Loss) on disposal of Property, Plants and Equipment / Investments
Surplus or loss on disposal of property, plants and equipment or investment is recorded on
transfers of title from the Company, and is determined as the difference between the sales
price and carrying value of the property, plants and equipment or investments and other
incidental expenses.
Insurance Claim
Claim receivable on account of insurance is accounted for to the extent the Company is
reasonably certain of their ultimate collections.
Other Income
Other income is recognised on an accrual basis when it is probable that the economic
benefits will flow to the Company and the amount can be measured reliably.
1.3.12 Foreign Currency Transactions and Translation
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date
of transaction. Monetary assets and liabilities denominated in foreign currencies are
translated at the functional currency closing rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are
recognised in Statement of Profit and Loss except to the extent of exchange differences
which are regarded as an adjustment to interest costs on foreign currency borrowings that
are directly attributable to the acquisition or construction of qualifying assets which are
capitalised as cost of assets.
Non-monetary items that are measured in terms of historical cost in a foreign currency are
recorded using the exchange rates at the date of the transaction. Non-monetary items
measured at fair value in a foreign currency are translated using the exchange rates at the
date when the fair value was measured. The gain or loss arising on translation of non¬
monetary items measured at fair value is treated in line with the recognition of the gain or
loss on the change in fair value of the item (i.e., translation differences on items whose fair
value gain or loss is recognised in Other Comprehensive Income or Statement of Profit and
Loss are also recognised in Other Comprehensive Income or Statement of Profit and Loss,
respectively).
1.3.13 Financial Instruments - Financial Assets
(A) Initial Recognition and Measurement
All Financial Assets are initially recognised at fair value. Transaction costs that are directly
attributable to the acquisition or issue of Financial Assets, which are not at Fair Value
Through Profit or Loss, are adjusted to the fair value on initial recognition. Purchase and
sale of Financial Assets are recognised using trade date accounting.
(B) Subsequent Measurement
a) Financial Assets measured at Amortised Cost (AC)
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 to cash flows on specified dates 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 represents solely payments of principal and interest on the principal amount
outstanding.
Further, the Company, through an irrevocable election at initial recognition, has measured
certain investments in equity instruments at FVTOCI. The Company has made such election
on an instrument-by-instrument basis. These equity instruments are neither held for
trading nor are contingent consideration recognized under a business combination.
Pursuant to such irrevocable election, subsequent changes in the fair value of such equity
instruments are recognized in OCI. However, the Company recognizes dividend income
from such instruments in the Statement of Profit and Loss.
c) Financial Assets measured at Fair Value Through Profit or Loss (FVTPL)
A Financial Asset which is not classified in any of the above categories is measured at
FVTPL. Financial assets are reclassified subsequent to their recognition, if the Company
changes its business model for managing those financial assets. Changes in business model
are made and applied prospectively from the reclassification date which is the first day of
immediately next reporting period following the changes in business model in accordance
with principles laid down under Ind AS 109 - Financial Instruments.
(C) Investments
Investments are classified as current or non-current based on the criteria specified in Ind
AS 1.
An investment is classified as current when it is expected to be realised within twelve
months after the reporting date or is held primarily for the purpose of trading. All other
investments are classified as non-current.
Equity investments within the scope of Ind AS 109, Financial Instruments, are measured at
fair value. Investments in mutual funds and other investments held for trading are
measured at Fair Value Through Profit or Loss (FVTPL). Other equity investments are
accounted for in accordance with the requirements of Ind AS 109, based on the applicable
measurement category elected by the Company.
(D) Investment in Subsidiaries, Associates and Joint Ventures
The Company has accounted for its investments in Subsidiaries, associates and joint
venture at cost less impairment loss (if any).
(E) Impairment of Financial Assets
In accordance with Ind AS 109, the Company uses 'Expected Credit Loss' (ECL) model, for
evaluating impairment of Financial Assets other than those measured at Fair Value
Through Profit and Loss (FVTPL). The Company applies the simplified approach prescribed
under Ind AS 109 for impairment of trade receivables and recognises lifetime expected
credit losses.
1.3.14 Financial Instruments - Financial Liabilities
(A) Initial Recognition and Measurement
All Financial Liabilities are recognised at fair value and in case of borrowings, net of directly
attributable cost. Fees of recurring nature are directly recognised in the Statement of
Profit and Loss as finance cost.
(B) Subsequent Measurement
Financial Liabilities are carried at amortised cost using the effective interest method. 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.
1.3.15 Derivative Financial Instruments and Hedge Accounting
Derivative financial instruments are measured at fair value through profit or loss and
hedge accounting is not applied.
1.3.16 Derecognition 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 derecognition under Ind AS 109. 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.
1.3.17 Financial Instruments - Offsetting
Financial Assets and Financial Liabilities are offset and the net amount is presented in the
balance sheet when, and only when, the Company has a legally enforceable right to set off
the amount and it intends, either to settle them on a net basis or to realise the asset and
settle the liability simultaneously.
1.3.18 Taxes on Income
The tax expenses for the period comprises of current tax and deferred income tax. Tax is
recognised in Statement of Profit and Loss, except to the extent that it relates to items
recognised in the Other Comprehensive Income. In which case, the tax is also recognised in
Other Comprehensive Income. Current tax is measured considering the provisions of
Section 115BAB of the Income-tax Act, 1961.
(a) Current Tax
Current tax assets and liabilities are measured at the amount expected to be recovered
from or paid to the Income Tax authorities, based on tax rates and laws that are enacted at
the Balance sheet date.
(b) Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amounts of
assets and liabilities in the Financial Statements and the corresponding tax bases used in
the computation of taxable profit.
Deferred tax assets are recognised to the extent it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry forward of
unused tax losses can be utilised. Deferred tax liabilities and assets are measured at the tax
rates that are expected to apply in the period in which the liability is settled or the asset
realised, based on tax rates (and tax laws) that have been enacted or substantively enacted
by the end of the reporting period. The carrying amount of Deferred tax liabilities and
assets are reviewed at the end of each reporting period.
Presentation
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 settle the liability simultaneously. In case of
deferred tax assets and deferred tax liabilities, the same are offset if the Company has a
legally enforceable right to set off corresponding current tax assets against current tax
liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes
levied by the same tax authority on the Company.
1.3.19 Segment Reporting
Based on the internal reporting reviewed by the Chief Operating Decision Maker (CODM),
the Company has identified a single reportable operating segment in accordance with Ind
AS 108.
1.3.20 Earnings per Share
Basic earnings per share is calculated by dividing the net profit after tax by the weighted
average number of equity shares outstanding during the year adjusted for bonus element
in equity share. Diluted earnings per share adjusts the figures used in determination of
basic earnings per share to take into account the conversion of all dilutive potential equity
shares. Dilutive potential equity shares are deemed converted as at the beginning of the
period unless issued at a later date.
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