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.
iv) Recent accounting pronouncements
New and amended Ind ASs effective from April 01, 2024
The Ministry of Corporate Affairs (MCA) notifies new standards | amendments to the existing standards
under the Companies (Indian Accounting Standards) Rules as issued from time to time. For the year
ended on March 31, 2025, the MCA has notified Ind AS 117 Insurance Contracts and amendments to
Ind AS 116 Leases, relating to sale and leaseback transactions, applicable to the Company effective
from April 01, 2024. The Company has evaluated the new pronouncements | amendments and there
is no material impact on its Financial Statements.
New and revised Ind ASs in issue but not yet effective
The Ministry of Corporate Affairs (MCA) notifies new standards or amendments to the existing
standards. There is no such notification which will be applicable from April 01, 2025.
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) Leases
As 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. 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 items. 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 PPE 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 of.
Estimated useful lives of the assets are as follows:
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 PPE 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 PPE 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 acquisition), 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 (EIR) 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 EIR 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 EIR method less impairment, if any, the amortisation of EIR 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 OCI. Interest income measured using the EIR method and impairment losses, if any
are recognised in the Standalone Statement of Profit and Loss. On derecognition, cumulative gain | (loss)
previously recognised in OCI 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 OCI.
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 27.7 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 it expires.
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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