3. Material accounting policies and other
explanatory information
3.1 Statement of compliance with Indian
Accounting Standards (Ind AS)
The financial statements of the Company have
been prepared in accordance with Ind AS notified
by the Companies (Indian Accounting Standards)
Rules, 2015 and Companies (Indian Accounting
Standards) Amendment Rules, 2016 (as amended)
and presentation requirement of Division II of the
Schedule III of the Companies Act 2013. Accordingly,
the financial statements for the year ended 31 March
2025 are prepared complying applicable Ind AS.
3.2 Historical cost convention
These financial statements have been prepared on
a historical cost convention except where certain
financial assets and liabilities have been measured
at fair value. (refer accounting policy of financial
instruments)
3.3 Business combinations
Business combinations involving entities under
common control are accounted for using the pooling
of interest's method. The net assets of the transferor
entity or business are accounted at their carrying
amounts on the date of the acquisition subject
to necessary adjustments required to harmonise
accounting policies. Any excess or shortfall of the
consideration paid over the share capital of transferor
entity or business is recognised as capital reserve
under equity.
3.4 Goodwill
Goodwill represents the future economic benefits
arising from a business combination that are not
individually identified and separately recognised.
Goodwill is carried at cost less accumulated
impairment losses.
3.5 Revenue recognition
Revenue from contracts with customers are
recognized when the performance obligation towards
customer have been made i.e. on transfer of control
of promised goods or services to a customer at an
amount that reflects the consideration to which the
Company is expected to be entitled to in exchange
for those goods or services.
Revenue towards satisfaction of a performance
obligation is measured at the amount of transaction
price (net of variable consideration) allocated to
that performance obligation. Revenue is recognized
net of sales reductions such as discounts and sales
incentives granted. This variable consideration is
estimated based on the expected value of outflow.
Sale of products:
Revenue from the sale of products is recognized when
the Company has transferred control of the goods to
the buyer and the buyer obtains the benefits from
the goods, the potential cash flows and the amount
of revenue (the transaction price) can be measured
reliably, and it is probable that the Company will
collect the consideration to which it is entitled to in
exchange for the goods.
Sales-related warranties associated with the goods
are integral to sales price and cannot be purchased
separately, hence they serve as an assurance
that the products sold comply with agreed-upon
specifications. Accordingly, the Company accounts
for warranties in accordance with Ind AS 37 Provisions,
Contingent Liabilities and Contingent Assets.
Rendering of services:
Revenue from services is recognized over time
by measuring progress towards satisfaction of
performance obligation for the services rendered.
Revenue in respect of rental services is recognised
on an accrual basis, in accordance with the terms of
the respective contract as and when the Company
satisfies performance obligations by delivering the
services as per contractual agreed terms.
Interest and dividends:
Interest income and expenses are reported on an
accrual basis using the effective interest method.
Dividends are recognised at the time the right to
receive payment is established.
3.6 Leases
The Company's lease asset classes primarily consist
of leases for Land and Buildings. The Company
assesses whether a contract is or contains a lease,
at inception of a contract. A contract is, or contains,
a lease if the contract conveys the right to control
the use of an identified asset for a period of time in
exchange for consideration. To assess whether a
contract conveys the right to control the use of an
identified asset, the Company assesses whether:
(i) The contract involves the use of an
identified asset
(ii) The Company has substantially all of the
economic benefits from use of the asset through
the period of the lease and
(iii) The Company has the right to direct the use of
the asset.
At the date of commencement of the lease, the
Company recognises a right-of-use asset ("ROU")
and a corresponding lease liability for all lease
arrangements in which it is a lessee, except for
leases with a term of twelve months or less (short
term leases) and leases of low value assets. For
these short term and leases of low value assets,
the Company recognises the lease payments as an
operating expense on a straight line basis over the
term of the lease.
The right-of-use assets are initially recognised at
cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or
prior to the commencement date of the lease plus
any initial direct costs less any lease incentives. They
are subsequently measured at cost less accumulated
depreciation and impairment losses, if any. Right-of-
use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the
lease term and useful life of the underlying asset.
The lease liability is initially measured at the present
value of the future lease payments. The lease
payments are discounted using the interest rate
implicit in the lease or, if not readily determinable,
using the incremental borrowing rates. The lease
liability is subsequently re-measured by increasing
the carrying amount to reflect interest on the lease
liability, reducing the carrying amount to reflect the
lease payments made.
A lease liability is re-measured upon the occurrence
of certain events such as a change in the lease term
or a change in an index or rate used to determine
lease payments. The re-measurement normally also
adjusts the leased assets.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments
have been classified as financing cash flows.
3.7 Foreign currency transactions and translations
Initial recognition
The Company's financial statements are presented in
INR, which is also the Company's functional currency.
Transactions in foreign currencies are recorded
on initial recognition in the functional currency
at the exchange rates prevailing on the date of
the transaction.
Measurement at the balance sheet date
Foreign currency monetary items of the Company,
outstanding at the balance sheet date are restated
at the year-end rates. Non-monetary items which
are carried at historical cost denominated in a foreign
currency are reported using the exchange rate 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 is determined.
Treatment of exchange difference
Exchange differences that arise on settlement of
monetary items or on reporting at each balance
sheet date of the Company's monetary items at the
closing rate are recognised as income or expenses in
the period in which they arise.
3.8 Investment Property
Property that is held for long-term rental yields or for
capital appreciation or both, and that is not occupied
by the Company, is classified as investment property.
Investment property is measured initially at its
cost, including related transaction costs and where
applicable, borrowing costs. Subsequent expenditure
is capitalised to the asset's carrying amount only when
it is probable that future economic benefits associated
with the expenditure will flow to the Company and
the cost of the item can be measured reliably. All
other repairs and maintenance costs are expensed
when incurred. When part of an investment property
is replaced, the carrying amount of the replaced part
is derecognised. Additionally, when a property given
on rent is vacated and the managements intention
is to use the vacated portion for the purpose of its
own business needs, Investment Properties are
reclassified as Buildings. Investment properties are
depreciated using the straight-line method over their
estimated useful lives which is consistent with the
useful lives followed for depreciating Property, Plant
and Equipment.
3.9 Borrowing costs
Borrowing costs directly attributable to the
acquisition, construction or production of qualifying
assets, which are assets that necessarily take a
substantial period of time to get ready for their
intended use or sale, are capitalised during the period
of time that is necessary to complete and prepare the
asset for its intended use or sale.
All other borrowing costs are expensed in the period in
which they are incurred and reported in finance cost.
3.10 Government grants
The Company received refundable government loans
at below market rate of interest which are accounted
in accordance with the recognition and measurement
principles of Ind AS 109, Financial Instruments. The
benefit of below- market rate of interest is measured
as the difference between the initial carrying value
of loan determined in accordance with Ind AS 109
and the proceeds received. It is recognized as
income when there is reasonable assurance that the
Company will comply with all necessary conditions
attached to the loans. Income from such benefit is
recognized on a systematic basis over the period
of the loan during which the company recognizes
interest expense corresponding to such loans.
The company is entitled to subsidies from government
in respect of certain government schemes.
Subsidies are recognized as income on a systematic
basis over the periods in which the related costs for
which it is intended to be compensated are expensed.
3.11 Employee benefits
Employee benefits include provident fund, pension
fund, gratuity and compensated absences.
Defined contribution plans
The Company's contribution to provident fund and
pension fund is considered as defined contribution
plan and is charged as an expense as they fall due
based on the amount of contribution required
to be made and when services are rendered by
the employees. The Company has no legal or
constructive obligation to pay contribution in addition
to its fixed contribution. The interest rate payable
to the members of the trust shall not be lower than
the statutory rate of interest declared by the Central
Government under Employees Provident Fund and
Misc. Provisions Act, 1952 and short fall, if any, shall
be made good by the company.
In respect of certain employee's contributions are
made to a trust administrated by the Company/
employees.
Defined benefit plans
For defined benefit plans in the form of gratuity,
the cost of providing benefits is determined using
'the Projected Unit Credit method', with actuarial
valuations being carried out at each Balance Sheet
date. Re-measurements, comprising of actuarial gains
and losses are recognised immediately in the balance
sheet with a corresponding debit or credit to retained
earnings through other comprehensive income in
the period in which they occur. Re-measurements
are not reclassified to the statement of profit and
loss in subsequent periods. The retirement benefit
obligation recognised in the Balance Sheet represents
the present value of the defined benefit obligation as
adjusted for unrecognised past service cost.
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 during
the year when the employees render the service.
These benefits include performance incentive and
compensated absences which are expected to occur
within twelve months after the end of the period in
which the employee renders the related service. The
cost of such compensated absences is accounted
as under:
(a) In case of accumulated compensated absences,
when employees render the services that
increase their entitlement of future compensated
absences; and
(b) In case of non-accumulating compensated
absences, when the absences occur.
Long-term employee benefits
Compensated absences which are allowed to carried
forward over a period in excess of 12 months after
the end of the period in which the employee renders
the related service are recognised as a liability at the
present value of the defined benefit obligation as at
the Balance Sheet date out of which the obligations
are expected to be settled.
Taxation
Tax expense recognised in the statement of profit or
loss comprises the sum of deferred tax and current
tax not recognised in other comprehensive income
or directly in equity.
Current tax
Current income tax assets and/or liabilities comprise
those obligations to, or claims from, fiscal authorities
relating to the current or prior reporting periods,
that are unpaid at the reporting date. Current tax is
payable on taxable profit, which differs from profit or
loss in the financial statements. Calculation of current
tax is based on tax rates and tax laws that have
been enacted or substantively enacted by the end
of the reporting period. Deferred income taxes are
calculated using the liability method on temporary
differences between the carrying amounts of assets
and liabilities and their tax bases.
3.12 Deferred tax
Deferred tax assets are recognised to the extent
that it is probable that the underlying tax loss or
deductible temporary difference will be utilised
against future taxable income. This is assessed based
on the Company's forecast of future results, adjusted
for significant non-taxable income and expenses
and specific limits on the use of any unused tax loss
or credit.
Deferred tax liabilities are generally recognised in
full, although Ind AS 12, Income Taxes, specifies
limited exemptions.
Changes in deferred tax assets or liabilities are
recognised as a component of tax income or expense
in the statement of profit or loss, except where
they relate to items that are recognised in other
comprehensive income (such as the revaluation
of land) or directly in equity, in which case the
related deferred tax is also recognised in other
comprehensive income or equity, respectively.
3.13 Operating cycle
Based on the nature of products/activities of the
Company and the normal time between purchase
of raw materials and their realisation in cash or
cash equivalents, the Company has determined its
operation cycle as 12 months for the purpose of
classification of its assets and liabilities as current and
non-current.
3.14 Operating expenses
Operating expenses are recognised in statement
of profit or loss upon utilisation of the service or as
incurred. Expenditure for warranties is recognised
when the Company incurs an obligation, which is
usually when the related goods are sold.
3.15 (a) Property, plant and equipment
Freehold land is carried at historical cost except
for certain class of land which had been revalued
in financial year 2009-10 and 2011-12. All other
items of Property, plant and equipment are
stated at cost less accumulated depreciation and
impairment losses, if any.
Property, plant and equipment are stated at their
original cost including freight, duties, taxes and
other incidental expenses relating to acquisition
and installation.
The carrying amount of assets, including
those assets that are not yet available for use,
are reviewed at each balance sheet date to
determine whether there is any indication
of impairment. If any such indication exists,
recoverable amount of asset is determined. An
impairment loss is recognised in the statement
of profit and loss whenever the carrying amount
of an asset exceeds its recoverable amount.
An impairment loss is reversed only to the
extent that the carrying amount of asset does
not exceed the net book value that would have
been determined if no impairment loss had
been recognised.
When significant parts of property, plant and
equipment are required to be replaced at
intervals, the Company recognises the new
part and is depreciated accordingly. Further,
when major overhauling/ repair is performed,
the cost associated with this is capitalised,
if the recognition criteria are satisfied, and is
then depreciated over the remaining useful life
of asset or over the period of next overhauling
due, whichever is earlier. All other repair and
maintenance costs are recognised in the
statement of profit and loss as and when incurred.
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.
(b) Intangible assets
I ntangible Assets are recognised, if the future
economic benefits attributable to the assets
are expected to flow to the company and cost
of the asset can be measured reliably. All other
expenditure is expensed as incurred. The same
are amortised over the expected duration of
benefits. Such intangible assets are measured
at cost less any accumulated amortisation and
impairment losses, if any and are amortised over
their respective individual estimated useful life
on straight line method. 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 and adjusted
prospectively, if appropriate.
(c) Capital work-in-progress
Expenditure incurred during the period of
construction, including all direct and indirect
expenses, incidental and related to construction,
is carried forward and on completion, the costs
are allocated to the respective property, plant
and equipment. Capital work-in-progress
includes capital inventory.
3.16 Depreciation and amortisation
Depreciation is charged on a pro-rata basis on the
straight line method at rates prescribed in Schedule
II to the Companies Act, 2013 and is charged to
the statement of profit and loss. Freehold land is
not depreciated.
The estimated useful life of the items of property,
plant and equipment are as follows:
* Furnaces, part of the glass plant of the Company, included in
plant and machinery, are depreciated over a life of 6.5 years
which is different from life prescribed in Schedule II of the Act,
based on independent chartered engineer certificate.
** Temporary sheds, included in buildings, are depreciated
over a smaller useful life than mentioned in the above table
depending on the actual use of the asset.
*** Vehicles are being depreciated using written down value
method as per life of 8 years mentioned in Schedule II of the
Act, having residual value up to 10% at the end of the useful
life of the asset.
3.17 Impairment of property, plant & equipment
and intangible assets
Assets are tested for impairment whenever events or
changes in circumstances indicate that the carrying
amount may not be recoverable and an impairment
loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable
amount. The recoverable amount is higher of an
asset's fair value less costs of disposal and value in
use. For the purpose of assessing impairment, assets
are grouped at the lowest levels for which there
are separately identifiable cash inflows which are
largely independent of the cash inflows from other
assets or group of assets (cash generating units). If
at the balance sheet date, there is an indication that
a previously assessed impairment loss no longer
exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount subject
to a maximum of depreciated historical cost and the
same is accordingly reversed in the statement of
profit and loss.
3.18 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand &
at bank and demand deposits, together with other
short-term, highly liquid investments maturing
within 90 days from the date of acquisition. Cash and
cash equivalent are readily convertible into known
amounts of cash and are subject to an insignificant
risk of changes in value.
3.19 Cash flow statement
Cash flows are reported using the indirect method,
whereby profit/loss before tax is adjusted for the
effects of transactions of non-cash nature and any
deferrals or accruals of past or future cash receipts
or payments. The cash flows from operating,
investing and financing activities of the Company are
segregated based on the available information.
3.20 Inventories
I nventories are stated at the lower of cost and net
realisable value. The cost of inventories comprises
of all costs of purchase (net of tax credits where
applicable), costs of conversion and other costs
incurred in bringing the inventories to their present
location and condition.
Costs of inventories are determined on weighted
average basis. Net realisable value is the estimated
selling price in the ordinary course of business less
any applicable selling expenses.
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