2. Summary of Material Accounting Policies
The Ind AS Financial Statements comprise of the
Audited Statement of Assets and Liabilities as at
March 31, 2024 and as at March 31, 2023, the related
Audited Ind AS Statement of Profit and Loss (including
Other Comprehensive Income), the Statement of
Changes in Equity, and the Statement of Cash Flows
for the year ended March 31, 2024 and March 31, 2023
respectively and the Significant Accounting Policies
and Other Financial Information.
These Standalone Financial Statements have been
prepared in terms of the requirements of: (a) Section
26 of Part I of Chapter III of the Companies Act, 2013
(the “Act”); (b) relevant provisions of the SEBI ICDR
Regulations; and (c) the Guidance Note on Reports in
Company Prospectuses (Revised 2019) issued by the
Institute of Chartered Accountants of India (ICAI) (the
“Guidance Note”).
2.1 Basis of preparation and presentation of
financial statements
Compliance with Ind AS
The Standalone Financial Statements are prepared in
accordance with Indian Accounting Standards ("Ind
AS"), under the historical cost convention on the
accrual basis except for certain financial instruments
which are measured at fair values. The Ind AS are
prescribed under Section 133 of the Act read with the
Companies (Indian Accounting Standards) Rules, 2015,
as amended and other relevant provisions of the Act.
Effective April 1, 2018, the Company has adopted all
the Ind AS and the adoption has been carried out in
accordance with Ind AS 101, First Time Adoption of
Indian Accounting Standards, with April 1, 2018 a the
transition date. The transition was carried out from
Indian Accounting Principles generally accepted in
India as prescribed under Section 133 of the Act,
which was the previous GAAP.
A. Basis of preparation
(i) The Audited Ind AS Statement of Assets and
Liabilities of the Company as at March 31, 2024 and
March 31, 2023 respectively and the Audited Ind AS
Statement of Profit and Loss, Audited Ind AS
Statement of Changes in Equity and Audited Ind AS
Statement of Cash Flows for the year ended March
31, 2024 and March 31, 2023 respectively
(hereinafter collectively referred to as “Ind AS
Financial Information”) have been prepared under
Indian Accounting Standards ("Ind AS") notified
under Section 133 of the Companies Act, 2013 (the
"Act") and other relevant provisions of the Act as
amended from time to time.
(ii) The audited financial statements of the Company
as at and for the year ended March 31, 2024
prepared in accordance with recognition and
measurement principles under Indian Accounting
Standard (‘Ind AS’) 34 "Interim Financial Reporting",
specified under section 133 of the Act and other
accounting principles generally accepted in India,
which have been approved by the Board of
Directors at their meeting held on May 21, 2024.
The Board of Directors approved the Financial
Statements as per the Ind AS, for the year ended on
March 31, 2024 along with Financial Statements for the
year ended March 31, 2023 and authorised to issue the
same vide resolution passed in the Board Meeting held
on May 21, 2024.
B. Basis of measurement
The Financial Statements have been prepared on
historical cost basis considering the applicable
provisions of Companies Act 2013. The exceptions to
the same are:
• certain financial assets and liabilities (including
derivative instruments) that are measured at fair
value; and
• net defined benefit (asset) / liability that are
measured at fair value of plan assets less present
value of define benefit obligations.
C. Current and non-current classification of
assets and liabilities
The Assets and Liabilities and the Statement of Profit
& Loss, including related notes, are prepared and
presented as per the requirements of Schedule III
(Division II) to the Companies Act, 2013. All assets and
liabilities have been classified and disclosed as current
or non-current as per the Company’s normal operating
cycle and other criteria set out in Schedule III. Based
on the nature of products and the time between the
acquisition of assets for processing and their
realization into cash and cash equivalents, the
Company has ascertained its operating cycle as twelve
months for the purpose of current - non current
classification of assets and liabilities.
D. Functional and presentation currency
The functional and presentation currency in these
Financial Statements is INR and all amounts are
rounded to nearest MM, up to 2 decimal places, unless
otherwise stated.
E. Use of judgements, estimates and assumptions
The preparation of Financial Statements in conformity
with Ind AS requires management to make
judgements, estimates and assumptions that affect
the reported amounts of revenue, expenses, current
assets, non-current assets, current liabilities, non¬
current liabilities and the disclosure of the contingent
liabilities on the date of the preparation of Financial
Statements. Such estimates are on a reasonable and
prudent basis considering all available information,
however due to uncertainties about these judgements,
estimates and assumptions, the actual results could
differ from those estimates. Information about each of
these estimates and judgements is included in
relevant notes. Any revision to accounting estimates is
recognised prospectively in current and future
periods.
Judgements
Information about judgements made in applying
accounting policies that have the most significant
effects on the amounts recognised in the Financial
Statements is included in the following notes:
Note No. 44 - classification of financial assets:
assessment of business model within which the
assets are held and assessment of whether the
contractual terms of the financial assets are solely
payments of principal and interest on the principal
amount outstanding.
Assumption and estimation of uncertainties
Information about assumptions and estimation
uncertainties that have a significant risk of resulting in
a material adjustment, assumptions and estimation
uncertainties are provided here, whereas the
quantitative break-ups for the same are provided in
the notes mentioned below:
• Note 3 and Note 6: Useful life of depreciable assets,
Property, Plant and Equipment and Other Intangible
Assets
• Note 38: Recognition of contingencies, key
assumptions about the likelihood and magnitude of
outflow of resources
• Note 37: Recognition of tax expenses including
deferred tax
• Note 46: Defined benefit obligation, key actuarial
assumptions
• Note 12: Impairment of trade receivables
• Note 10: Valuation of Inventories
Going concern assumption
These Financial Statements have been prepared on a
going concern basis. The management has, given the
significant uncertainties arising out of the various
situations, assessed the cash flow projections and
available liquidity for a period of at least twelve
months from the date of this Financial Statements.
Based on this evaluation, management believes that
the Company will be able to continue as a "going
concern" in the foreseeable future and for a period of
at least twelve months from the date of these
Financial Statements based on the following:
• Expected future operating cash flows based on
business projections, and
• Available credit facilities with its bankers
Based on the above factors, the management has
concluded that the "going concern" assumption is
appropriate. Accordingly, the Financial Statements do
not include any adjustments regarding the
recoverability and classification of the carrying amount
of assets and classification of liabilities that might
result, should the Company be unable to continue as a
going concern.
On November 29, 2023, an accidental fire broke out at
our Manufacturing Facility - II which is situated at Plot
No. 8203, Road No. 8, GIDC Industrial Estate, Sachin,
Surat - 394230, Gujarat (India).
This fire accident has adversely impacted the
Manufacturing Facility 2, mainly damaging Plant 2
(fully), Plan 1 and Tank Farm (partially). This Site - II
had been contributing the major share to revenue from
operations and hence, the fire accident has hampered
the revenues of the Company in FY 2023-24, as the
entire Site - II was closed for at least three months.
Revocation permission for unaffected plants at Site -
II were received from GPCB and DISH, which helped
the Company revive the Site for last month only.
The Company has, due to this fire accident, suffered
loss of Fixed Assets (Plant & Machinery, Equipment,
Furniture & Fixtures, and others), Inventories (mostly
Semi Finished and Finished Goods at the shop floor)
and Loss of Profit.
The Company is adequately insured to the extent of
damage occurred in the fire accident, including
impacted property, plant & equipment, inventories and
the loss of profit.
The impact of loss is being assessed for the fixed
assets and the survey is ongoing by the insurance
surveyor, hence the loss is yet to be ascertained. Loss
of inventory is Rs. 138.97 MM due to this fire accident,
which has been assessed and written off for in FY
2023-24 itself. The claim will be settled in the coming
FY 2024-25. Insurance claim for loss of profit, will be
assessed once the claim for fixed assets and
inventory is settled in FY 2024-25.
Final claim amount from the Insurance Company will
be completed in FY 2024-25 and any gain / loss will
be booked in the said financial year.
This fire accident has not affected our "Going
Concern" assumption. Accordingly, the Company will
continue as a going concern.
Reclassification
The company reclassifies comparative amounts,
unless impracticable and whenever the company
changes the presentation or classification of items in
its financial statements materially. No such material
reclassification has been made during the year.
2.2 Property, Plant And Equipment
Recognition and measurement
The Company has elected to continue with the
carrying value of Property, Plant and Equipment (‘PPE’)
recognised as of transition date measured as per the
Previous GAAP and use that carrying value as its
deemed cost of the PPE as on the transition date.
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated
impairment losses. Cost includes purchase price (after
deducting trade discount / rebate), non-refundable
import duties and taxes, cost of replacing the
component parts, borrowing costs and other directly
attributable cost to bringing the asset to the location
and condition necessary for it to be capable of
operating in the manner intended by management.
Spares parts procured along with the Plant and
Equipment or subsequently having value of Rs. 50,000
or more individually which meets the recognition
criteria of PPE are capitalized and added to the
carrying amount of such items. The carrying amount
of those spare parts that are replaced are de¬
recognized when no future economic benefits are
expected from their use or upon disposal. If the cost
of the replaced part is not available, the estimated
cost of similar new parts is used as an indication of
what the cost of the existing part was when the item
was acquired.
An item of PPE is de-recognised on disposal or when
no future economic benefits are expected from use.
Any profit or loss arising on the de-recognition of an
item of property, plant and equipment is determined
as the difference between the net disposal proceeds
and the carrying amount of the asset and is
recognized in Statement of Profit and Loss.
Subsequent costs
The cost of replacing a part of an item of property,
plant and equipment is recognised in the carrying
amount of the item if it is probable that the future
economic benefits embodied within the part will flow
to the Company and its cost can be measured reliably.
The carrying amount of the replaced part is de¬
recognised. The cost of the day-to-day servicing the
property, plant and equipment are recognised in the
statement of profit and loss as incurred.
Disposal
An item of property, plant and equipment is de¬
recognised upon the disposal or when no future
benefits are expected from its use or disposal. Gains
and losses on disposal of an item of property, plant
and equipment are determined by comparing the
proceeds from disposal with the carrying amount of
property, plant and equipment, and are recognised net
within other income / expenses in the statement of
profit and loss.
Depreciation
The depreciable amount of an asset is determined
after deducting its residual value. Where the residual
value of an asset increases to an amount equal to or
greater than the asset’s carrying amount, no
depreciation charge is recognised till the asset’s
residual value decreases below the asset’s carrying
amount. Depreciation of an asset begins when it is
available for use, i.e., when it is in the location and
condition necessary for it to be capable of operating in
the intended manner. Depreciation of an asset ceases
at the earlier of the date that the asset is classified as
held for sale in accordance with IND AS 105 and the
date that the asset is de-recognised.
The insurance claim is being assessed at the moment
and hence, the depreciation as per the Companies Act,
2013 and the Income Tax Act, 1961 is being continued
Impairments of non-financial assets
The Company assesses at each balance sheet date
whether there is any indication that an asset or cash
generating unit (CGU) may be impaired. Indefinite life
intangibles are subject to a review for impairment
annually or more frequently if events or
circumstances indicate that it is necessary. If any
such indication exists, the Company estimates the
recoverable amount of the asset. The recoverable
amount is the higher of an asset's or CGU's fair value
less costs of disposal or its value in use. Where the
carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired
and is written down to its recoverable amount.
In assessing the value in use, the estimated future
cash flows are 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. In determining the fair value less
costs of disposal, recent market transactions are
considered.
An impairment loss is recognised if the carrying
amount of an asset or CGU exceeds its recoverable
amount, Impairment losses are recognised in the
statement of profit and loss.
If at the balance sheet date there is an indication that
a previously assessed impairment loss no longer
exists, an impairment loss is reversed only to the
extent that the asset's carrying amount does not
exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
2.3 Intangible assets
Recognition and measurement
Intangible assets are recognised when the asset is
identifiable, is within the control of the Company, it is
probable that the future economic benefits that are
attributable to the asset will flow to the Company and
cost of the asset can be reliably measured.
Intangible assets acquired separately are measured on
initial recognition at cost. The cost of intangible assets
acquired in a business combination is their fair value
at the date of acquisition. Intangible assets acquired
by the Company that have finite useful lives are
measured at cost less accumulated amortisation and
any accumulated impairment losses. Intangible assets
with indefinite useful lives are not amortised, but are
tested for impairment annually, either individually or at
the cash-generating unit level.
Expenditure on Research activities is recognised in the
statement of Profit and Loss as incurred. Development
expenditure is capitalised only if the expenditure can
be measured reliably, the product or process is
technically and commercially feasible, future economic
benefits are probable, and the Company intends to
complete development and to use or sell the asset.
Intangible assets which comprise of the development
expenditure incurred on new product and expenditure
incurred on acquisition of user licenses for computer
software are recorded at their acquisition price.
Subsequent measurement
Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied in
the specific asset to which it relates.
Amortisation
The useful lives of intangible sets are assessed as
either finite of indefinite.
intangible assets i. e., computer software is amortized
on a straight-line basis over the period of expected
future benefits commencing from the date the asset
is available for its use.
The management has estimated the useful life of the
intangible Assets as mentioned below:
Asset Class Years
Software & Licenses 6
Trade Marks 4
Other Assets 4
Amortisation method, useful lives and residual values
are reviewed at the end of each financial year and
adjusted if appropriate.
intangible assets are assessed for impairment
whenever there is an indication that the intangible
asset may be impaired.
Disposal
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 de¬
recognized.
2.4. Financial Assets
A. Fair Value Assessment
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date, regardless of whether that price is
directly observable or estimated using another
valuation technique. In estimating the fair value of an
asset or a liability, the Company takes into account
the characteristics of asset and liability if market
participants would take those into consideration. Fair
value for measurement and / or disclosure purposes
in these Financial Statements is determined in such
basis except for transactions in the scope of Ind AS 2,
17 and 36. Normally at initial recognition, the
transaction price is the best evidence of fair value.
The fair value of an asset or a liability is measured
using the assumptions that market participants would
use when pricing the asset or liability, assuming that
market participants act in their economic best
interest.
A fair value measurement of a non-financial asset
takes into account a market participant’s ability to
generate economic benefits by using the asset in its
highest and best use or by selling it to another market
participant that would use the asset in its highest and
best use.
The Company uses valuation techniques those are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximizing the use of relevant observable inputs and
minimizing the use of unobservable inputs.
All financial assets and financial liabilities for which
fair value is measured or disclosed in the Financial
Statements are categorized within the fair value
hierarchy, described as follows, based on the lowest
level input that is significant to the fair value
measurement as a whole.
B. Subsequent Measurement
For purposes of subsequent measurement financial
assets are classified in three categories:
• Financial assets measured at amortized cost
• Financial assets at fair value through OCi
• Financial assets at fair value through profit or loss
C. Financial assets measured at amortized cost
Financial assets are measured at amortized cost if the
financials asset is held within a business model whose
objective is to hold financial assets in order to collect
contractual cash flows and the contractual terms of
the financial asset give rise on specified dates to cash
flows that are solely payments of principal and
interest on the principal amount outstanding. These
financials assets are amortized using the effective
interest rate (‘EIR’) method, less impairment.
Amortized cost is calculated by taking into account
any discount or premium on acquisition and fees or
costs that are an integral part of the EIR. The EIR
amortization is included in finance income in the
Statement of Profit And Loss. The losses arising from
impairment are recognized in the Statement of Profit
And Loss.
D. Financial assets at fair value through OCI
(‘FVTOCI’)
Financial assets are measured at fair value through
other comprehensive income if the financial asset 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 are solely payments of principal and
interest on the principal amount outstanding. At initial
recognition, an irrevocable election is made (on an
instrument-by-instrument basis) to designate
investments in equity instruments other than held for
trading purpose at FVTOCI. Fair value changes are
recognized in the other comprehensive income (‘OCI’).
However, the Company recognizes interest income,
impairment losses and reversals and foreign exchange
gain or loss in the Statement of Profit And Loss. On
de-recognition of the financial asset other than equity
instruments designated as FVTOCI, cumulative gain or
loss previously recognised in OCI is reclassified to the
Statement of Profit and Loss.
E. Financial assets at fair value through profit or
loss (‘FVTPL’)
Any financial asset that does not meet the criteria for
classification as at amortized cost or as financial
assets at fair value through other comprehensive
income is classified as financial assets at fair value
through profit or loss. Further, financial assets at fair
value through profit or loss also include financial
assets held for trading and financial assets designated
upon initial recognition at fair value through profit or
loss. Financial assets are classified as held for trading
if they are acquired for the purpose of selling or
repurchasing in the near term. Financial assets at fair
value through profit or loss are fair valued at each
reporting date with all the changes recognized in the
Statement of Profit And Loss.
F. De-recognition
The Company de-recognises a financial asset only
when the contractual rights to the cash flows from
the asset expire, or when it transfers the financial
asset and substantially all the risks and rewards of
ownership of the asset to another entity. If the
Company neither transfers nor retains substantially all
the risks and rewards of ownership and continues to
control the financial asset, the Company recognizes
its retained interest in the asset and an associated
liability for amounts it may have to pay.
G. Impairment of Financial Assets
The Company assesses impairment based on expected
credit loss (‘ECL’) model on the following:
• Financial assets that are measured at amortised
cost; and
• Financial assets measured at FVTOCI
ECL is measured through a loss allowance on a
following basis:
• The 12 month expected credit losses (expected
credit losses that result from those default events
on the financial instruments that are possible within
• 12 months after the reporting date)
• Full life time expected credit losses (expected credit
losses that result from all possible default events
over the life of financial instruments)
2.5. Financial Liabilities
The Company’s financial liabilities include trade
payable.
A. Initial recognition and measurement
All financial liabilities at initial recognition are
classified as financial liabilities at amortized cost or
financial liabilities at fair value through profit or loss,
as appropriate. All financial liabilities classified at
amortized cost are recognized initially at fair value net
of directly attributable transaction costs. Any
difference between the proceeds (net of transaction
costs) and the fair value at initial recognition is
recognised in the Statement of Profit And Loss.
B. Subsequent measurement
The subsequent measurement of financial liabilities
depends upon the classification as described below:-
(i) Financial Liabilities classified as Amortised Cost -
Financial Liabilities that are not held for trading and
are not designated as at FVTPL are measured at
amortised cost at the end of subsequent
accounting periods. Amortised cost is calculated by
taking into account any discount or premium on
acquisition and fees or costs that are an integral
part of the EIR. Interest expense that is not
capitalized as part of costs of assets is included as
Finance costs in the Statement of Profit And Loss.
(ii) Financial Liabilities classified as FVTPL - Financial
liabilities classified as FVTPL includes financial
liabilities held for trading and financial liabilities
designated upon initial recognition as FVTPL.
Financial liabilities are classified as held for trading
if they are incurred for the purpose of repurchasing
in the near term. Financial liabilities designated
upon initial recognition at FVTPL only if the criteria
in Ind AS 109 is satisfied.
Exports benefits are accounted for in the year of
exports based on the eligibility and when there is
certainty of receiving the same.
(iii) De-recognition - A financial liability is de¬
recognised when the obligation under the liability
is discharged / cancelled / expired. 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 de recognition of the
original liability and the recognition of a new
liability. The difference in the respective carrying
amounts is recognized in the Statement of Profit
And Loss.
(iv) Offsetting of financial instruments - Financial
assets and financial liabilities are offset and the
net amount is reported in the balance sheet if
there is a currently enforceable legal right to offset
the recognised amounts and there is an intention
to settle on a net basis, to realise the assets and
settle the liabilities simultaneously.
Other incomes, other than interest and dividend
are recognized when the same are due to be
received and right to receive such other income is
established.
2.6. Share Capital and Share Premium
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new shares
are shown in equity as a deduction net of tax from the
proceeds. Par value of the equity share is recorded as
share capital and the amount received in excess of
the par value is classified as share premium.
2.7. Dividend Distribution to equity shareholders
The Company recognizes a liability to make cash
distributions to equity holders when the distribution
is authorized and the distribution is no longer at the
discretion of the Company. As per the corporate laws
in India, a distribution is authorized when it is
approved by the shareholders. A corresponding
amount is recognized directly in other equity.
2.8. Cash Flows and Cash and Cash Equivalents
Statement of cash flows is prepared in accordance
with the indirect method prescribed in the relevant
IND AS. For the purpose of presentation in the
statement of cash flows, cash and cash equivalents
includes cash on hand, cheques and drafts on hand,
deposits held with Banks, other short-term, highly
liquid investments with original maturities of three
months or less that are readily convertible to known
amounts of cash and which are subject to an
insignificant risk of changes in value, and book
overdrafts. However, Book overdrafts are to be shown
within borrowings in current liabilities in the balance
sheet for the purpose of presentation.
The Company is banking with the below mentioned
Banks for its Working Capital and Banking
Requirements:
(i) ICICI Bank Ltd.
(ii) HDFC Bank Ltd.
(iii) State Bank of India
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