2. SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of significant accounting
policies adopted in the presentation of these financial
statements. These policies have been consistently
applied to all the years presented, unless otherwise
stated.
2.1 Basis of Preparation
(i) Compliance with Ind AS
The Financial statements (FS) of the company have
been prepared in accordance with Indian Accounting
Standards (Ind AS) notified under Section 133 of the
Companies Act, 2013 ('the Act') [Companies (Indian
Accounting Standards) Rules, 2015, as amended by
notification dated March 31,2016] and other provisions
of the Act.
Effective April 1, 2016, the Company has adopted all the
Ind AS standards and the adoption was carried out in
accordance with Ind AS 101 First time Adoption of Indian
Accounting Standards, with April 1, 2015 as the transition
date. The transition was carried out from Indian
Accounting Principles generally accepted in India as
prescribed under Section 133 of the Act, read with Rule 7
of the Companies (Accounts) Rules, 2014 (IGAAP) which
was the previous GAAP.
These financial statements are authorized for issue on
31st March, 2025 in accordance with a resolution of the
Board of Directors permits the revision to the financial
statements after obtaining necessary approvals or at
the instance of regulatory authorities as per provisions
of the Companies Act, 2013.
(ii) Historical Cost Convention
The Financial Statements have been prepared on a
historical cost basis, except the following:
• Certain financial assets and liabilities which are
measured at fair value/amortized cost.
• Defined Benefit Plans - plan assets measured at fair
value.
(iii) Current v/s Non Current Classification
The Company presents assets and liabilities in
the balance sheet based on current/non-current
classification. An asset is classified as current when it is:
• Expected to be realized or intended to sold or
consumed in normal operating cycle,
• Held primarily for the purpose of trading,
• Expected to be realized within twelve months after
the reporting period, or
• Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in normal operating
cycle,
• It is held primarily for the purpose of trading,
• It is due to be settled within twelve months after the
reporting period, or
• There is no unconditional right to defer the
settlement of the liability for at least twelve months
after the reporting period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non¬
current assets and liabilities
The operating cycle is the time between the acquisition
of assets for processing and its realization in cash and
cash equivalents. The Company has identified twelve
months as its operating cycle.
2.2 Property, Plant & Equipment
Property, plant and equipment are stated at historical
cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition
of the items.
Subsequent costs are included in the asset's carrying
amount or recognized 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 are recognized in profit or loss
during the reporting period, in which they are incurred.
Capital work-in-progress includes cost of property, plant
and equipment under installation/under development
as at the balance sheet date.
Depreciation methods, estimated useful lives and
residual value
Depreciation is provided on a pro-rata basis on the
Straight Line method (SLM) over the estimated useful lives
of assets, based on the rates prescribed under Schedule
II to the Companies Act, 2013, as applicable on the last
date of accounting period. The useful life of assets has
been used as per Schedule - II of the companies Act 2013.
The property, plant and equipment acquired under
finance leases and other leasehold improvements
are depreciated over the assets' useful life or over the
shorter of the assets' useful life and the lease term if
there is no reasonable certainty that the Company will
obtain ownership at the end of the lease term.
The asset's useful lives and methods of depreciation
are reviewed at the end of each reporting period and
adjusted prospectively, if appropriate.
An asset's carrying amount is written down immediately
to its recoverable amount if the asset's carrying amount
is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by
comparing net disposal proceeds with carrying amount
of the asset. These are included in profit or loss within
other income.
2.3 Intangible Assets
Intangible assets acquired separately are measured on
initial recognition at historical cost. Intangibles assets
have a finite life and are subsequently carried at cost
less any accumulated amortization.
Intangible assets with finite lives are amortized over the
useful life. The amortization period and the amortization
method for an intangible asset with a finite useful life are
reviewed at least at the end of each reporting period.
Changes in the expected useful life or the expected
pattern of consumption of future economic benefits
embodied in the asset are considered to modify the
amortization period or method, as appropriate, and
are treated as changes in accounting estimates. The
amortization expense on intangible assets with finite
lives is recognized in the statement of profit and loss
unless such expenditure forms part of carrying value of
another asset.
2.4 Revenue Recognition
Revenue is recognized to the extent that it is probable
that the economic benefits will flow to the Company
and the revenue can be reliably measured, regardless
of when the payment is received. The Company has
concluded that it is the principal in all of its revenue
arrangements since it is the primary obligor in all the
revenue arrangements as it has pricing latitude and is
also exposed to inventory and credit risks.
Revenue is measured at the fair value of the consideration
received or receivable, taking into account contractually
defined terms of payment and excludes taxes/duties
collected on behalf of the government.
(a) Sale of goods
Revenue from the sale of goods is recognized, when the
significant risks and rewards of ownership of the goods
have passed to the buyer, usually on delivery of the
goods. Revenue from the sale of goods is measured at
the fair value of consideration received or receivable,
net of returns and allowances, trade discounts, volume
rebates. Accordingly, revenues from sale of goods are
stated gross of GST, sales tax and value added tax (VAT)
are not received by the company on its own account but
collected on behalf of the government and accordingly,
are excluded from revenue.
(b) Interest income
Interest income is recognized using the time proportion
basis, based on the underlying interest rates.
(c) Rental Income
Rental income is recognized on a time-apportioned
basis in accordance with the underlying substance of
the relevant contract.
(d) Dividend
Dividend is recognized when the company's right to
receive the payment is established, which is generally
when shareholders approve the dividend.
2.5 Inventories
Inventories are valued at the lower of cost (including
prime cost and other overheads incurred in bringing the
inventories to their present location and condition) and
net realizable value.
The comparison of cost and net realizable value is made
on an item-by-item basis.
Raw materials, goods in transit, packing materials and
stores and spares are valued at cost. The cost includes
purchase price, inward freight and other incidental
expenses net of refundable duties, levies and taxes,
where applicable.
Finished goods and work-in-progress are valued at lower
of cost and net realizable value. Cost is determined
on the basis of actual cost and comprises material,
labour and applicable overhead expenses including
depreciation. The net realizable value of materials in
process is determined with reference to the selling prices
of related finished goods. Stores and spares are valued
at cost.
Traded Goods are valued on actual cost. The cost
includes cost of purchase and other costs incurred
in bringing the inventories to their present location
and condition.
Net realizable value is the estimated selling price in
the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make
the sale.
2.6 Fair Value Measurement
Accounting policies and disclosures require measurement
of fair value for both financial and non-financial assets.
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.
The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the
liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most
advantageous market for the asset or liability.
2.7 Borrowing Costs
General and specific borrowing costs that are directly
attributable to the acquisition, construction or
production of a qualifying asset are capitalized 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 capitalization. Other borrowing costs are
expensed in the period in which they are incurred.
2.8 Financial Instruments
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.
Financial Assets
(a) Initial recognition and measurement:
All financial assets are recognized initially at fair value
and, in the case of financial assets not recorded at fair
value through profit or loss, transaction costs that are
attributable to the acquisition of the financial asset.
(b) Subsequent measurement:
For purposes of subsequent measurement financial
assets are classified in two broad categories:
Financial assets at fair value
Financial assets at amortized cost
(c) Classification:
The Company classifies financial assets as subsequently
measured at amortized cost, fair value through other
comprehensive income or fair value through profit or
loss on the basis of its business model for managing
the financial assets and the contractual cash flows
characteristics of the financial asset.
(d) Financial assets measured at fair value through
other comprehensive income (FVTOCI):
Financial assets under this category are measured
initially as well as at each reporting date at fair value.
Fair value movements are recognized in the other
comprehensive income.
(e) Financial assets measured at fair value through
profit or loss (FVTPL):
Financial assets under this category are measured
initially as well as at each reporting date at fair value
with all changes recognized in profit or loss.
Financial Liabilities
(a) Initial recognition and measurement:
All financial liabilities are recognized initially at fair value
and, in the case of loans, borrowings and payables,
net of directly attributable transaction costs. Financial
liabilities include trade and other payables, loans and
borrowings including bank overdrafts and derivative
financial instruments.
(b) Classification & Subsequent measurement:
If a financial instrument that was previously recognized
as a financial asset is measured at fair value through
profit or loss and its fair value decreases below zero, it
is a financial liability measured in accordance with Ind
AS. Financial liabilities are classified as held for trading, if
they are incurred for the purpose of repurchasing in the
near term.
(c) Financial liabilities measured at fair value through
profit or loss:
Financial liabilities at fair value through profit or loss
include financial liabilities held for trading. At initial
recognition, such financial liabilities are recognized at
fair value.
Financial liabilities at fair value through profit or loss
are, at each reporting date, measured at fair value
with all the changes recognized in the Statement of
Profit and Loss.
Offsetting financial instruments:
Financial assets and liabilities are offset and the net
amount reported in the balance sheet when there is
a legally enforceable right to offset the recognized
amounts and there is an intention to settle on a net basis
to realize the asset and settle the liability simultaneously.
Subsequent recoveries of amounts previously written off
are credited to Other Income.
2.9 Leases
As a lessee
The Company's lease asset classes primarily consist
of leases for land. The Company assesses whether
a contract 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 recognizes 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 low
value leases. For these short-term and low value leases,
the Company recognizes the lease payments as an
operating expense on a straight-line basis over the
term of the lease.
Certain lease arrangements includes the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that they
will be exercised. The right-of-use assets are initially
recognized 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.
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. Right of use assets are evaluated for recoverability
whenever events or changes in circumstances indicate
that their carrying amounts may not be recoverable.
For the purpose of impairment testing, the recoverable
amount (i.e. the higher of the fair value less cost to sell
and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash
flows that are largely independent of those from other
assets.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments
have been classified as financing cash flows.
As a lessor
Leases for which the Company is a lessor is classified
as a finance or operating lease. Whenever the
terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee,
the contract is classified as a finance lease. All
other leases are classified as operating leases.
When the Company is an intermediate lessor, it accounts
for its interests in the head lease and the sublease
separately. The sublease is classified as a finance or
operating lease by reference to the right-of-use asset
arising from the head lease. For operating leases, rental
income is recognized on a straight line basis over the
term of the relevant lease.
2.10 Employee Benefit
Employee benefits include provident fund, employee
state insurance scheme, gratuity, compensated
absences and performance incentives.
(i) Short-term obligations
Liabilities for wages and salaries, including nonmonetary
benefits that are expected to be settled wholly within
12 months after the end of the period in which the
employees render the related service are recognized
in respect of employees' services up to the end of the
reporting period and are measured at the amounts
expected to be paid when the liabilities are settled. The
liabilities are presented as current employee benefit
obligations in the Balance Sheet.
The cost of short-term 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.
(ii) Other long-term employee benefit obligations
The liabilities for compensated absences are not
expected to be settled wholly within 12 months after
the end of the period in which the employees render
the related service. They are therefore measured as the
present value of expected future payments to be made
in respect of services provided by employees up to the
end of the reporting period using the projected unit credit
method. The benefits are discounted using the market
yields at the end of the reporting period that have terms
approximating to the terms of the related obligation.
Remeasurements as a result of experience adjustments
and changes in actuarial assumptions are recognized in
profit or loss. The obligations are presented as current
liabilities in the balance sheet if the entity does not have
an unconditional right to defer settlement for at least
twelve months after the reporting period, regardless of
when the actual settlement is expected to occur.
(iii) Post-employment obligations
Defined contribution plans:
The Company's contribution to provident fund are
considered as defined contribution plans and are
charged as an expense based on the amount of
contribution required to be made and when services are
rendered by the employees.
Defined benefit plan:
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. Actuarial gains
and losses are recognized in the Other Comprehensive
Income in the period in which they occur. Past service
cost is recognized immediately to the extent that the
benefits are already vested and otherwise is amortized.
2.11 Income Taxes
Tax Expense is the aggregate amount included in the
determination of profit or loss for the period in respect of
current tax and current tax.
Current Income Taxes
Current income tax is measured at the amount expected
to be paid to the tax authorities in accordance with
the Income Tax Act, 1961 and rules thereunder. Current
income tax assets and liabilities are measured at the
amount expected to be recovered from or paid to the
taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or
substantively enacted, at the reporting date. Current
income tax relating to items recognized outside profit
or loss is recognized outside profit or loss (either in OCI
or in equity).
Current tax items are recognized in correlation to the
underlying transaction either in OCI or directly in equity.
Management periodically evaluates positions taken
in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation
and establishes provisions where appropriate.
Deferred Tax
Deferred tax is provided using the liability method
on temporary differences between the tax bases of
assets and liabilities and their book bases. Deferred tax
liabilities are recognized for all temporary differences,
the carry forward of unused tax credits and any
unused tax losses. Deferred tax assets are recognized
to the extent that it is probable that taxable profit will
be available against which the deductible temporary
differences, and the carry forward of unused tax
credits and unused tax losses can be utilized. Deferred
tax assets and liabilities are measured at the tax rates
that are expected to apply in the year when the asset
is realized or the liability is settled, based on tax rates
(and tax laws) that have been enacted or substantively
enacted at the reporting date.
Deferred tax relating to items recognized outside profit
or loss is recognized outside profit or loss. Deferred tax
items are recognized in correlation to the underlying
transaction either in OCI or directly in equity. The
carrying amount of deferred tax assets is reviewed at
each reporting date and reduced to the extent that
it is no longer probable that sufficient taxable pro fit
will be available to allow all or part of the deferred
tax asset to be utilized. Unrecognized deferred tax
assets are re-assessed at each reporting date and are
recognized to the extent that it has become probable
that future taxable profits will allow the deferred tax
asset to be recovered.
Deferred tax assets and deferred tax liabilities
are offset if a legally enforceable right exists to
set off current tax assets against current tax
liabilities and the deferred taxes relate to the same
taxable entity and the same taxation authority.
Minimum Alternate Tax ("MAT”) credit is recognized as an
asset only when and to the extent there is convincing
evidence that the relevant members of the Company
will pay normal income tax during the specified period.
Such asset is reviewed at each reporting period end and
the adjusted based on circumstances then prevailing.
2.12 Share Capital and Securities Premium
Reserve
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 securities premium reserve.
2.13 Earnings per Share
As per Ind AS 33, Earning Per Share, Basic earnings per
share are computed by dividing the net profit for the
year attributable to the shareholders' and weighted
average number of shares outstanding during the
year. The weighted average numbers of shares also
includes fixed number of equity shares that are issuable
on conversion of compulsorily convertible preference
shares, debentures or any other instrument, from the date
consideration is receivable (generally the date of their
issue) of such instruments. Diluted earnings per share is
computed using the net profit for the year attributable
to the shareholder' and weighted average number of
equity and potential equity shares outstanding during
the year including share options, convertible preference
shares and debentures, except where the result would be
anti-dilutive. Potential equity shares that are converted
during the year are included in the calculation of diluted
earnings per share, from the beginning of the year or
date of issuance of such potential equity shares, to the
date of conversion.
2.14 Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet
comprise cash on hand and at bank, deposits held
at call with banks, other short-term highly liquid
investments with original maturities of three months or
less that are readily convertible to a known amount of
cash and are subject to an insignificant risk of changes
in value and are held for the purpose of meeting short¬
term cash commitments.
For the purpose of the statement of cash flows, cash
and cash equivalents consist of cash and short-term
deposits, as defined above, net of outstanding bank
overdrafts as they are considered an integral part of the
Company's cash management.
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