A. General Information
Astec LifeSciences Limited ("the Company") is a public limited company, which is domiciled and incorporated in the Republic of India with its
registered office situated at Godrej One, 3rd Floor, Pirojsha Nagar, Eastern Express Highway, Vikhroli East, Mumbai - 400 079. The Company
was incorporated under the Companies Act, 1956 on January 25, 1994. The Company manufactures a wide range of Agrochemical active
ingredients and pharmaceutical intermediates.
B. Basis of preparation and measurement
(1) Basis of preparation
The standalone financial statements have been prepared in accordance with Indian Accounting Standards ("Ind AS") as notified by
Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 ('Act') read with the Companies (Indian Accounting
Standards) Rules, 2015 as amended and other relevant provisions of the Act. The accounting policies are applied consistently to all the
years presented in the standalone financial statements.
The standalone financial statements of the Company for the year ended March 31, 2026 were authorized for issue in accordance with
a resolution of the Board of Directors on 27 April 2026.
Current versus non-current classification
All assets and liabilities have been classified as per the Company's normal operating cycle and other criteria set out in Schedule III to
the Companies Act, 2013. Based on the nature of the products and the time taken between acquisition of assets for processing and
their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of the
classification of assets and liabilities into current and non-current.
(2) Basis of measurement
These standalone financial statements have been prepared on a historical cost basis, except for the following:
- certain financial assets and liabilities (including derivative instruments) that is measured at fair value (refer- Accounting policy
regarding financials instruments 8);
- defined benefit plans - plan assets measured at fair value less present value of defined benefit obligation; and
- share-based payments - measured at fair value
(3) Functional and presentation currency
These standalone financial statements are presented in Indian rupees, which is the Company's functional currency. All amounts have
been rounded off to the nearest lakh, unless otherwise indicated.
C. Key estimates and assumptions
While preparing these financial statements in conformity with Ind AS, the management has made certain estimates and assumptions that
require subjective and complex judgments. These judgments affect the application of accounting policies and the reported amount of assets,
liabilities, income and expenses, disclosure of contingent liabilities at the balance sheet date and the reported amount of income and expenses
for the reporting period. Future events rarely develop exactly as forecasted and the best estimates require adjustments, as actual results may
differ from these estimates under different assumptions or conditions.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.
Judgement, estimates and assumptions are required in particular for:
(1) Determination of the estimated useful lives
Useful lives of property, plant and equipment are based on the life prescribed in Schedule II of the Companies Act, 2013. In cases,
where the useful lives are different from that prescribed in Schedule II and in case of intangible assets, they are based on technical
advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history
of replacement, anticipated technological changes, manufacturers' warranties and maintenance support.
(2) Recognition and measurement of defined benefit obligations
The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include
discount rate, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market
yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds correspond to the
probable maturity of the post-employment benefit obligations. Due to complexities involved in the valuation and its long term nature,
defined benefit obligation is sensitive to changes in these assumptions. All assumptions are reviewed at each reporting period.
(3) Recognition of deferred tax assets and liabilities
Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying
values of assets and liabilities and their respective tax bases, and unutilized business loss and depreciation carry-forwards and tax
credits. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which
the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilized.
(4) Recognition and measurement of other provisions
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and
on past experience and circumstances known at the balance sheet date. The actual outflow of resources at a future date may therefore,
vary from the amount included in other provisions.
(5) Discounting of long-term financial assets / liabilities
All financial assets / liabilities are required to be measured at fair value on initial recognition. In case of financial liabilities/assets which
are required to subsequently be measured at amortised cost, interest is accrued using the effective interest method.
(6) Fair valuation of employee share options
The fair valuation of the employee share options is based on the Black-Scholes model used for valuation of options. Key assumptions
made with respect to expected volatility includes share price, expected dividends and discount rate, under this option pricing model.
(7) Determining whether an arrangement contains a lease
Ind AS 116 requires lessee to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or
terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on
a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will
be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken
over the lease term, costs relating to the termination of the lease and the importance of the underlying asset taking into account
the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to
ensure that the lease term reflects the current economic circumstances. After considering current and future economic conditions, the
Company has concluded that no changes are required to lease period relating to the existing lease contracts.
(8) Fair value of financial instruments
Derivatives are carried at fair value. Derivatives includes foreign currency forward contracts. Fair value of foreign currency forward
contracts are determined using the fair value reports provided by respective bankers.
(9) Liability for Sales Return
Accruals for estimated product returns, which are based on historical experience of actual sales returns and adjustment on account of
current market scenario is considered by Company to be reliable estimate of future sales returns.
(10) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation because of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each
balance sheet date and adjusted to reflect the current best estimates.
Contingent assets are neither recognised nor disclosed in the standalone financial statements.
D. Measurement of fair values
The Company's accounting policies and disclosures require the measurement of fair values for, both financial and non-financial assets and
liabilities. The Company has an established control framework with respect to the measurement of fair values. The management regularly
reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is
used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such
valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of a financial asset or a financial liability, the Company uses observable market data as far as possible. Fair
values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value
measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire
measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has
occurred.
E. Material accounting policies
(1) Revenue and Other income :
i. Sale of goods
Revenue from operations comprises of sales of goods after the deduction of discounts, goods and service tax and estimated
returns. Discounts given by the Company includes trade discounts, volume rebates and other incentive given to the customers.
Accumulated experience is used to estimate the provision for discounts. Revenue is only recognized to the extent that it is
highly probable a significant reversal will not occur.
Revenue is measured based on the consideration specified in a contract with a customer. Revenue from the sale of goods are
recognized when control of the goods has transferred to our customer and when there are no longer any unfulfilled obligations
to the customer, This is generally when the goods are delivered to the customer depending on individual customer terms,
which can be at the time of dispatch or delivery. This is considered the appropriate point where the performance obligations in
our contracts are satisfied as the Company no longer have control over the inventory.
Our customers have the contractual right to return goods only when authorized by the Company. As at 31st March 2026, an
estimate has been made of goods that will be returned and a liability has been recognized for this amount. An asset has also
been recorded for the corresponding inventory that is estimated to return to the Company using a best estimate based on
accumulated experience.
ii. Dividend income
Dividend income is recognised only when the right to receive the same is established, it is probable that the economic benefits
associated with the dividend will flow to the Company, and the amount of dividend can be measured reliably.
iii. Interest income
For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR),
which is the rate that discounts the estimated future cash payments or receipts through the expected life of the financial
instruments or a shorter period, where appropriate, to the net carrying amount of the financial assets. Interest income is
included in other income in the Statement of Profit and Loss.
(2) Foreign currency :
(i) Transaction and balances
Transactions in foreign currencies are translated into the respective functional currencies of the Company at the exchange
rates at the dates of the transactions or an average rate if the average rate approximates the actual rate at the date of the
transaction. Foreign currency transactions are recorded on initial recognition in the functional currency, using the exchange
rate at the date of the transaction. At each balance sheet date, foreign currency monetary items are reported using the closing
exchange rate. 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 recognized as income and expenses in the period in which they arise.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates
at the dates of transactions. Non-monetary items that are measured at fair value in a foreign currency shall be translated using
the exchange rates at the date when the fair value was measured.
Exchange differences are generally recognised in the Statement of Profit and Loss, except exchange differences arising from
the translation of the following item which are recognized in OCI:
- Qualifying cash flow hedges to the extent that the hedges are effective.
(3) Employment Benefits
(i) Short-term obligations
All employee benefits payable wholly within twelve months of rendering services are classified as short-term employee
benefits. Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount
expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.
Short-term benefits such as salaries, wages, short-term compensation absences, etc., are determined on an undiscounted basis
and recognized in the period in which the employee renders the related service. The Company has a scheme of Performance
Linked Variable Remuneration (PLVR) which is fully written off to the Standalone Statement of Profit & Loss. The Scheme
rewards its employees based on the achievement of key performance indicators and profitability, as prescribed in the scheme.
(ii) Other long-term employee benefit obligations
Liability toward Long-term Compensated Absences is provided for on the basis of an actuarial valuation, using the Projected
Unit Credit Method, as at the date of the Balance Sheet. Actuarial gains / losses comprising of experience adjustments and the
effects of changes in actuarial assumptions are immediately recognised in the Statement of Profit and 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
The Company operates the following post-employment schemes:
(a) defined benefit plans such as gratuity, and
(b) defined contribution plans such as provident fund.
Gratuity obligations
The following post - employment benefit plans are covered under the defined benefit plans:
Gratuity :
The Company's net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that
employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan
assets.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit
method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value
of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in
the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement
of changes in equity and in the balance sheet.
Defined contribution plans
The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The
Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as
defined contribution plans and the contributions are recognised as employee benefit expense when they are due.
(iv) Share-based payments
Share-based compensation benefits are provided to employees via the Astec LifeSciences Limited Employee Stock Option
Plan.
Employee options:
The fair value of options granted under the Astec LifeSciences Limited Employee Stock Option Plan is recognised as an
employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by
reference to the fair value of the options granted:
- including any market performance conditions (e.g., the entity's share price)
- excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales growth
targets and remaining an employee of the entity over a specified time period), and
- including the impact of any non-vesting conditions (e.g. the requirement for employees to save or holdings shares for a
specific period of time).
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest
based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in
profit or loss, with a corresponding adjustment to equity.
(v) Bonus plans
The Company recognises a liability and an expense for bonuses. The Company recognises a provision where contractually
obliged or where there is a past practice that has created a constructive obligation.
(vi) Terminal benefits
All terminal benefits are recognized as an expense in the period in which they are incurred.
(4) Income-tax
Income tax expense comprises current and deferred tax. It is recognised in the Statement of Profit and Loss except to the extent that
it relates to a business combination, or items recognised directly in equity or in the OCI.
(i) Current tax
Current tax is the amount of tax payable (recoverable) in respect of the taxable profit / (tax loss) for the year determined in
accordance with the provisions of the Income-Tax Act, 1961. Current income tax for current and prior periods is recognized at
the amount expected to be paid to or recovered from the tax authorities, using tax rates and tax laws that have been enacted
or substantively enacted at the reporting date.
Current tax assets and liabilities are offset only if, the Company:
a) has a legally enforceable right to set off the recognised amounts; and
b) intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously."
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination
and that affects neither accounting nor taxable profit or loss;
- temporary differences related to investments in subsidiaries and associates to the extent that the Company is able
to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the
foreseeable future; and
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent
that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed
at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised;
such reductions are reversed when the probability of future taxable profits improves.Unrecognized deferred tax assets are
reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be
available against which they can be used.
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.
Taxes relating to items recognized directly in equity or OCI is recognized in equity or OCI and not in the statement of profit and
loss.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company
expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if:
a) the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on
the same taxable entity.
(5) Inventories
Inventories are carried in the balance sheet as follows:
(a) Raw materials, Packing materials, Stock in Trade and Stores & Spares: At lower of cost, on weighted average basis and net
realisable value
(b) Work-in-progress / project in progress-: At lower of cost of materials, plus appropriate production overheads and net realizable
value.
c) Finished Goods: At lower of cost of materials, plus appropriate production overheads and net realizable value, Net realizable
value is the estimated selling price in the ordinary course of business less estimated cost of completion and selling expenses
necessary to make the sale.The cost of inventories have been computed to include all cost of purchases, cost of conversion and
other related costs incurred in bringing the inventories to the present location and condition. Slow and non-moving material,
obsolescence, defective inventories are duly provided for and valued at net realizable value. Goods and materials in transit
are valued at actual cost incurred upto the date of balance sheet. Materials and supplies held for use in the production of
inventories are not written down if the finished products in which they will be used are expected to be sold at or above cost.
(6) Property, plant and equipment (including Capital work in progress)
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment
losses, if any.
The cost of an item of property, plant and equipment comprises:
a) its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and
rebates.
b) any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of
operating in the manner intended by management.
c) the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the
obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item
during a particular period for purposes other than to produce inventories during that period.
d) Items of property, plant and equipment (including capital-work-in progress) are measured at cost, which includes
capitalised borrowing costs, less accumulated depreciation and any accumulated impairment losses
Income and expenses related to the incidental operations, not necessary to bring the item to the location and condition
necessary for it to be capable of operating in the manner intended by management, are recognised in the Statement of Profit
and Loss.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted and
depreciated for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in the Statement of Profit and Loss.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure
will flow to the Company.
(iii) Depreciation/ Amortizations
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated
useful lives specified in schedule II to the Companies Act, 2013 except for the following:
(a) Computer Hardware:
Depreciated over its estimated useful life of 4 years.
(b) Right of use Asset:
Amortized over the primary lease period.
(c) Leasehold improvements and equipments:
Amortised over the Primary lease period
Assets costing less than ' 5,000 are fully depreciated in the year of purchase/acquisition. Depreciation methods, useful lives
and residual values are reviewed at each reporting date and adjusted 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 proceeds with carrying amount. These are included in profit or loss
within other gains/(losses).
(7) Intangible assets
(i) Computer software
Recognition and measurement
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will
flow to the Company and the cost of the asset can be measured reliably.
Intangible assets viz. Computer software and product registration, which are acquired by the Company and have finite useful
lives are measured at cost less accumulated amortisation and any accumulated impairment losses.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line
method over their estimated useful lives, and is generally recognised in profit or loss.
The intangible assets are amortised over the estimated useful lives as given below:
- Computer software 6 years
- Product Registration 5 years
(ii) Research and development
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible
asset under development when the Company can demonstrate: -
- The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
- Its intention to complete and its ability and intention to use or sell the asset
- It is probable that future economic benefits will flow to the Company and the Company has control over the asset
Cost of Product Registration generally comprise of direct costs of manpower, other fixed cost and depreciation
towards production of samples, creating product dossiers, fees paid to registration consultants, application fees to the
government authorities. Following initial recognition of the development expenditure as an asset, the asset is carried
at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when
development is complete, and the asset is available for use. It is amortised over the period of expected future benefit.
(8) Borrowing costs
General and specific 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.
Other borrowing costs are expensed in the period in which they are incurred.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost
also includes exchange difference to the extent regarded as an adjustment to the borrowing costs.
(9) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker
("CODM") of the Company. The CODM, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the Managing Director and Chief Operating Officer of the Company. The Company has identified
only one segment i.e. Agrochemicals as reporting segment based on the information reviewed by CODM.
(10) 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 instruments also include derivative contracts such as foreign currency foreign exchange forward contracts.
Financial instruments also covers contracts to buy or sell a non-financial item that can be settled net in cash or another financial
instrument, or by exchanging financial instruments, as if the contracts were financial instruments, with the exception of contracts that
were entered into and continue to be held for the purpose of the receipt or delivery of a non-financial item in accordance with the
entity's expected purchase, sale or usage requirements.
Derivatives are currently recognized at fair value on the date on which the derivative contract is entered into and are subsequently
re-measured to their fair value at the end of each reporting period.
(11) Hedge accounting
The Company designates certain hedging instruments in respect of foreign currency risk, interest rate risk and commodity price risk as
cash flow hedges. At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument
and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is
highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.
The effective portion of changes in the fair value of the designated portion of derivatives that qualify as cash flow hedges is recognised
in other comprehensive income and accumulated under equity. The gain or loss relating to the ineffective portion is recognised
immediately in statement of profit or loss.
Amounts previously recognised in other comprehensive income and accumulated in equity relating to effective portion as described
above are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised
hedged item. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial
liability, such gains and losses are transferred from equity and included in the initial measurement of the cost of the non-financial asset
or non-financial liability.
Hedge accounting is discontinued prospectively when the hedging instrument expires or is sold, terminated, or exercised, or when it
no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity at
that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast
transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in the statement profit or
loss.
i. Financial assets
Classification
The Company classifies its financial assets in the following measurement categories:
- Where assets are measured at fair value, gains and losses are either recognized entirely in the Statement of Profit and
Loss (i.e. fair value through profit or loss), or recognized in Other Comprehensive Income (i.e. fair value through other
comprehensive income).
- A financial asset that meets the following two conditions is measured at amortized cost (net of any write down for
impairment) unless the asset is designated at fair value through profit or loss under the fair value option.
Business model test: The objective of the Company's business model is to hold the financial asset to collect the contractual cash
flows (rather than to sell the instrument prior to its contractual maturity to realize its fair value changes).
Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Initial recognition and measurement
At initial recognition, the Company measures a financial asset at fair value plus, in the case of a financial asset not recorded at
fair value through the Statement of Profit and Loss, transaction costs that are attributable to the acquisition of the financial
asset.
Equity investments
- All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading
are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at FVOCI
or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial
recognition and is irrevocable.
- If the Company decides to classify an equity instrument as FVOCI, then all fair value changes on the instrument,
excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to profit and loss, even
on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
- Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the
Statement of Profit and Loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily
derecognised (i.e. removed from the Company's balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the
Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred
nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement,
it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor
retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues
to recognise the transferred asset to the extent of the Company's continuing involvement. In that case, the Company also
recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the
rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original
carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets:
In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of
impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, deposits, and bank balance.
b) Trade receivables - The application of simplified approach does not require the Company to track changes in credit
risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial
recognition. Trade receivables are tested for impairment on a specific basis after considering the sanctioned credit
limits, security like letters of credit, security deposit collected etc. and expectations about future cash flows.
ii. Financial liabilities
Classification
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.
The Company classifies all financial liabilities as subsequently measured at amortised cost, except for financial liabilities at fair
value through the Statement of Profit and Loss. Such liabilities, including derivatives that are liabilities, shall be subsequently
measured at fair value.
Initial recognition and measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial
liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly
attributable and incremental transaction cost.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
The Company's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial
guarantee contracts and derivative financial instruments.
Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse
the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms
of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction
costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of
the amount of loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognised less
cumulative amortisation.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement
of profit and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently
enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets
and settle the liabilities simultaneously.
Derivative financial instruments
The Company uses derivative financial instruments, such as forward currency contracts and interest rate swaps, to hedge its
foreign currency risks and interest rate risks respectively. Such derivative financial instruments are initially recognised at fair
value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. The accounting
for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the
nature of item being hedged and the type of hedge relationship designated.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
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