Note 1 Material accounting policies
This Note provides a list of the material accounting policies adopted by the Company in preparation of these
Standalone Financial Statements. These policies have been consistently applied to all the years presented, unless
otherwise stated.
a) Statement of compliance
The Standalone Financial Statements comply in all material respects with Indian Accounting Standards (Ind
AS) notified under Section 133 of the Companies Act, 2013 (the Act) read with Rule 3 of the Companies (Indian
Accounting Standards) Rules, 2015 and other relevant provisions of the Act, as amended.
b) Basis of preparation
i) Historical cost convention
The Standalone Financial Statements have been prepared on a historical cost basis except for the following:
a) Certain financial assets and liabilities (including derivative instruments): measured at fair value
b) Defined benefit plans: plan assets measured at fair value
ii) The Standalone Financial Statements have been prepared on accrual and going concern basis.
iii) The accounting policies are applied consistently to all the periods presented in the Standalone Financial
Statements. All assets and liabilities have been classified as current or non-current as per the normal operating
cycle of the Company and other criteria as set out in the Division II of Schedule III to the Companies Act,
2013. Based on the nature of products and the time between acquisition of assets for processing and their
realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for
the purpose of current or non-current classification of assets and liabilities. Deferred tax assets and liabilities
are classified as non-current assets and liabilities respectively.
iv) Recent accounting pronouncements
New and amended Ind ASs effective from April 01, 2025
The Ministry of Corporate Affairs (MCA) notifies new standards | amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued from time to time. During the year, the MCA has
amended the Ind AS as below:
Ind AS 1- Presentation of Financial Statements:
The amendment relates to classification of liabilities as current or non-current and non-current liabilities
with covenants. In the context of classifying a liability as current, it removes the requirement of existence of
a right to defer settlement for at least 12 months after the reporting date and instead requires that the said
right should exist on the reporting date and have substance. The amendment also introduces guidance on
classification of liabilities with covenants.
Ind AS 7- Statement of Cash Flows:
The amendments requires to inform users of the Standalone Financial Statements of the existence of supplier
finance arrangements and explain the nature of the arrangements, the carrying amount of liabilities and the
range of payment due dates.
Ind AS 12 - Income taxes:
This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to
transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of
this amendment is annual periods beginning on or after April 01, 2023. The Company has evaluated the
amendment and there is no material impact on its Standalone Financial Statement.
Ind AS 107- Financial Instruments Disclosures:
The amendments to add supplier finance arrangements as a factor that may cause concentration of
liquidity risk.
Ind AS 12- Income Taxes:
The amendments to the Pillar Two Model Rules introduce a temporary mandatory exemption from deferred
tax accounting for top-up taxes and require companies to disclose their use of this exemption. This relief
takes effect immediately and applies retrospectively. In addition, the amendments mandate new disclosures
to compensate for any potential loss of information resulting from the exemption.
Ind AS 21 - The Effects of Changes in Foreign Exchange Rates:
The amendments provide guidance on determining exchangeability between currencies and estimating spot
rates when a currency is not exchangeable.
The Company has evaluated the amendments and there is no material impact on its Standalone Financial
Statement.
c) Revenue recognition
i) Revenue from operations
Revenue is recognised when control of goods is transferred to a customer in accordance with the terms of
the contract. The control of the goods is transferred upon delivery to the customers either at factory gate of
the Company or a specific location of the customer or when the goods are handed over to the freight carrier,
as per the terms of the contract. A receivable is recognised by the Company when the goods are delivered to
the customer as this represents the point in time at which the right to consideration becomes unconditional,
as only the passage of time is required before payment is due.
Revenue is measured based on the consideration to which the Company expects to be entitled as per contract
with a customer. The consideration is determined based on the transaction price specified in the contract,
net of the estimated variable consideration. Accumulated experience is used to estimate and provide for the
variable consideration, using the expected value method and revenue is only recognised to the extent that
it is highly probable that a significant reversal will not occur. Contracts with customers are for short-term,
at an agreed price basis having contracted credit period ranging up to 45 days. The contracts do not grant
any rights of return to the customer. Returns of goods are accepted by the Company only on an exception
basis. Revenue excludes any taxes or duties collected on behalf of government that are levied on sales such
as goods and service tax.
ii) Other income
Interest income from financial assets is recognised using the effective interest rate method. The effective
interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate,
the Company estimates the expected cash flows by considering all the contractual terms of the financial
instrument (for example, prepayment, extension, call and similar options), but does not consider the expected
credit losses.
Dividends are recognised in the Standalone Statement of Profit and Loss only when the right to receive
payment is established; it is probable that the economic benefits associated with the dividend will flow to
the Company and the amount of the dividend can be measured reliably.
Lease rental income is recognised on accrual basis.
d) Income tax
Income tax expense comprises current tax and deferred tax. Current tax is the tax payable on the taxable income of
the current period based on the applicable income tax rates. Deferred income tax is recognised using the balance
sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary
differences arising between the tax base of assets and liabilities and their carrying amount.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period. The Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate,
on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts. However, deferred tax liabilities are not recognised if they arise from the
initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of
an asset or liability in a transaction other than a business combination that at the time of the transaction affects
neither accounting profit | (loss) nor taxable profit | (tax loss). Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantively enacted by the Standalone Balance Sheet date and are
expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is
settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
The Company considers reversals of deferred income tax liabilities, projected future taxable income and tax
planning strategies in making the assessment of deferred tax liabilities and realisability of deferred tax assets.
Based on the level of historical taxable income and projections for future taxable income over the periods in
which the deferred income tax assets are deductible, the Management believes that the Company will realise
the benefits of those deductible differences.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and
tax liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle
on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity respectively.
The Company considered whether it has any uncertain tax positions based on past experience pertaining to income
taxes, including those related to transfer pricing as per Appendix C to Ind AS 12. The Company has determined
its tax position based on tax compliance and present judicial pronouncements and accordingly expects that its
tax treatments will be accepted by the taxation authorities.
The Company determines whether to consider each uncertain tax treatment separately or together with one or
more other uncertain tax treatments and uses the approach that better predicts the resolution of the uncertainty.
The Company applies significant judgement in identifying uncertainties over income tax treatments.
e) LeasesAs a lessee
The Company assesses whether a contract is, or contains a lease, at inception of the 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 commencement date of the lease, the Company recognises a right-of-use asset and a corresponding
lease liability for all lease arrangements in which it is a lessee, except for short-term leases (leases with a term
of twelve months or less), leases of low value assets and, for contract where the lessee and lessor has the right
to terminate a lease without permission from the other party with no more than an insignificant penalty. The
lease expense of such short-term leases, low value assets leases and cancellable leases, are recognised as an
operating expense on a straight-line basis over the term of the lease.
At commencement date, lease liability is measured at the present value of the lease payments to be paid during
non-cancellable period of the contract, discounted using the incremental borrowing rate. The right-of-use assets
is initially recognised at the amount of the initial measurement of the corresponding lease liability, lease payments
made at or before commencement date less any lease incentives received and any initial direct costs.
Subsequently, the right-of-use asset is measured at cost less accumulated depreciation and any impairment
losses. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the
lease liability (using effective interest rate method) and reducing the carrying amount to reflect the lease payments
made. The right-of-use asset and lease liability are also adjusted to reflect any lease modifications or revised
in-substance fixed lease payments.
As a lessor
Leases for which the Company is a lessor are classified as finance or operating leases. Whenever the terms of
the lease substantially transfer 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.
Income from operating leases where the Company is a lessor is recognised as income on a straight-line basis
over the lease term unless the receipts are structured to increase in line with the expected general inflation
to compensate for the expected inflationary cost increases. The respective leased assets are included in the
Standalone Balance Sheet based on their nature. Leases of property, plant and equipment where the Company
as a lessor has substantially transferred all the risks and rewards are classified as finance lease. Finance leases
are capitalised at the inception of the lease at the fair value of the leased property or, if lower, the present value
of the minimum lease payments. The corresponding rent receivables, net of interest income, are included in other
financial assets. Each lease receipt is allocated between the asset and interest income. The interest income is
recognised in the Standalone Statement of Profit and Loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the asset for each period.
Under combined lease agreements, land and building are assessed individually.
f) Property, plant and equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment (PPE) are stated at
acquisition cost net of accumulated depreciation and accumulated impairment losses, if any. Historical cost
includes expenditure that is directly attributable to the acquisition of the item. Acquisition cost may also include
transfers from equity of any gains or losses on qualifying cash flow hedges of foreign currency purchases of
property, plant and equipment.
Subsequent costs are included in the carrying amount of asset 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 Company and
the cost of the item can be measured reliably. All other repairs and maintenance expenses are charged to the
Standalone Statement of Profit and Loss during the period in which they are incurred.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon
disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on
de-recognition of an item of PPE is determined as the difference between the net disposal proceeds and the
carrying amount of the asset and is recognised in the Standalone Statement of Profit and Loss.
Spare parts, stand-by equipment and servicing equipment are recognised as property, plant and equipment if
they are held for use in the production or supply of goods or services, for rental to others, or for administrative
purposes and are expected to be used during more than one period.
Depreciation methods, estimated useful lives and residual value
The charge in respect of periodic depreciation is derived after determining an estimate of expected useful life and
the expected residual value of the assets at the end of its useful life. The lives are based on historical experience
with similar assets as well as anticipation of future events, which may impact their life.
Depreciation is computed on a pro-rata basis on the straight-line method from the month of acquisition | installation
till the month the assets are sold or disposed off.
The useful lives have been determined based on technical evaluation done by the Management | experts, which
are different from the useful life prescribed in Part C of Schedule II to the Companies Act, in order to reflect the
actual usage of the assets. The residual values are not more than 5% of the original cost of the asset. The residual
values, useful lives and method of depreciation of property, plant and equipment are reviewed annually and
adjusted prospectively, if appropriate.
The carrying amount of an asset is written down immediately to its recoverable amount if the carrying amount
of the asset is greater than its estimated recoverable amount.
Land accounted under finance lease is amortised on a straight-line basis over the primary period of lease.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as own
assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease
term, assets are depreciated over the shorter of the lease term and their useful lives.
g) Capital work-in-progress
The cost of property, plant and equipment under construction at the reporting date is disclosed as ‘Capital work-
in-progress.' The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly
attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates
are deducted in arriving at the purchase price. Advances paid for the acquisition | construction of property, plant
and equipment which are outstanding at the Balance Sheet date are classified under the ‘Capital Advances'.
h) Intangible assets
Computer software includes enterprise resource planning application and other costs relating to such software
that provide significant future economic benefits. These costs comprise license fees and cost of system integration
services.
Development expenditure qualifying as an intangible asset, if any, is capitalised, to be amortised over the economic
life of the product | patent.
Computer software cost is amortised over a period of three years using the straight-line method.
i) Impairment
The carrying amount of assets are reviewed at each Standalone Balance Sheet date to assess if there is any
indication of impairment based on internal | external factors. An impairment loss on such assessment is recognised
wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of the assets
is net selling price or value in use, whichever is higher. While assessing value in use, the estimated future cash
flows are discounted to the present value by using weighted average cost of capital. A previously recognised
impairment loss is further provided or reversed depending on changes in the circumstances and to the extent
that carrying amount of the assets does not exceed the carrying amount that will be determined if no impairment
loss had previously been recognised.
j) Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits with bank and other short-term (three months
or less from the date of investment), highly liquid investments that are readily convertible into cash and which
are subject to an insignificant risk of changes in value.
k) Statement of cash flows
Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of
transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments
and item of income or expenses associated with investing or financing cash flows. The cash generated from |
(used) in operating, investing and financing activities of the Company are segregated.
l) Trade receivables
Trade receivables are recognised at the amount of transaction price (net of variable consideration) when the right
to consideration becomes unconditional. These assets are held at amortised cost, using the effective interest rate
method where applicable, less provision for impairment based on expected credit loss. Trade receivables overdue
more than 180 days are considered in which there is significant increase in credit risk.
m) Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial
year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due
within 12 months from the reporting date. They are recognised initially at their fair value and subsequently
measured at amortised cost using the effective interest rate method.
n) Inventories
Inventories are stated at cost or net realisable value, whichever is lower. Cost is determined on periodic moving
weighted average basis.
Net realisable value represents the estimated selling price for inventories less all estimated costs of completion
and costs necessary to effect the sale.
Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventory to the
present location and condition.
Due allowances are made for slow | non-moving, defective and obsolete inventories based on estimates made
by the Company.
Items such as spare parts, stand-by equipment and servicing equipment that are not plant and machinery get
classified as inventory.
o) Investments and other financial assets
Classification and measurement
The Company classifies its financial assets in the following measurement categories:
i) those to be measured subsequently at fair value (either through other comprehensive income, or through
profit or loss)
ii) those measured at amortised cost
iii) those measured at carrying cost for equity instruments of subsidiary company
The classification depends on business model of the Company for managing financial assets and the contractual
terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive
income. For investments in debt instruments, this will depend on the business model in which the investment is held.
For investments in equity instruments, this will depend on whether the Company has made an irrevocable election
at the time of initial recognition to account for the equity investment at fair value through other comprehensive
income.
Debt instruments:Initial recognition and measurement
Financial asset is recognised when the Company becomes a party to the contractual provisions of the instrument.
Financial asset is recognised initially at fair value plus, in case the financial asset is not recorded at fair value
through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction
costs of financial asset carried at fair value through profit or loss are expensed in the Standalone Statement of
Profit and Loss.
Subsequent measurement
Subsequent measurement of debt instruments depends on the business model of the Company for managing
the asset and the cash flow characteristics of the asset. There are three measurement categories into which the
Company classifies its debt instruments:
Measured at amortised cost
Financial assets that are held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortised
cost using the effective interest rate method less impairment, if any, the amortisation of effective interest rate
and loss arising from impairment, if any is recognised in the Standalone Statement of Profit and Loss.
Measured at fair value through other comprehensive income (FVTOCI)
Financial assets that are held within a business model whose objective is achieved by both, selling financial
assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently
measured at fair value through other comprehensive income. Fair value movements are recognised in the other
comprehensive income. Interest income measured using the effective interest rate method and impairment
losses, if any are recognised in the Standalone Statement of Profit and Loss. On derecognition, cumulative gain |
(loss) previously recognised in other comprehensive income is reclassified from the equity to other income in the
Standalone Statement of Profit and Loss.
Measured at fair value through profit or loss (FVTPL)
A financial asset not classified as either amortised cost or FVTOCI, is classified as FVTPL. Such financial assets
are measured at fair value with all changes in fair value, including interest income and dividend income if any,
recognised as other income in the Standalone Statement of Profit and Loss.
Equity instruments
The Company subsequently measures all investments in equity instruments other than subsidiary company at
fair value. The Company has elected to present fair value gains and losses on such equity investments through
FVTPL, and there is no subsequent reclassification of these fair value gains and losses to other comprehensive
income. Dividends from such investments continue to be recognised in profit or loss as other income when the
right to receive payment is established.
Changes in the fair value of financial assets at FVTPL are recognised in the Standalone Statement of Profit and
Loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVTOCI are not
reported separately from other changes in fair value.
Investment in subsidiary company
Investments in subsidiary company is carried at cost less accumulated impairment losses, if any. 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 subsidiary company the difference between net disposal
proceeds and the carrying amounts are recognised in the Standalone Statement of Profit and Loss.
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its financial
assets carried at amortised cost and FVTOCI debt instruments. The impairment methodology applied depends
on whether there has been a significant increase in credit risk. Note 28.7 details how the Company determines
whether there has been a significant increase in credit risk.
For trade and lease receivables only, the Company applies the simplified approach permitted by Ind AS 109
Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of such
receivables. The Company computes expected lifetime losses based on a provision matrix, which takes into
account historical credit loss experience and adjusted for forward-looking information.
Derecognition
A financial asset is derecognised only when the Company has transferred the rights to receive cash flows from
the financial asset, the asset expires or the Company retains the contractual rights to receive the cash flows of
the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, the Company evaluates whether it has transferred substantially all
risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised through
the Standalone Statement of Profit and Loss or other comprehensive income as applicable. Where the Company
has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is
not derecognised.
Where the Company has neither transferred a financial asset nor retained substantially all risks and rewards of
ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the
financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised
to the extent of continuing involvement in the financial asset.
Financial liabilities
i) Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance
of the contractual arrangements entered into and the definitions of a financial liability and an equity
instrument.
ii) Initial recognition and measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the
instrument. Financial liabilities are initially measured at the fair value.
iii) Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using the effective interest rate method.
Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in
fair value recognised in the Standalone Statement of Profit and Loss.
iv) Derecognition
A financial liability is derecognised when the obligation specified in the contract is discharged or cancelled
or expired.
p) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the Standalone Balance Sheet where
there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net
basis or realise the assets and settle the liabilities simultaneously.
q) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest rate method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent
that it is probable that some or all of the facility will be drawn down. If not, the fee is deferred until the draw
down occurs.
Borrowings are removed from the Standalone Balance Sheet when the obligation specified in the contract is
discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has
been extinguished or transferred to another party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit or loss as other income | (expense).
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting period.
r) Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are
capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale.
Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use
or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure
on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Other borrowing costs are
expensed in the period in which they are incurred.
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