1B MATERIAL ACCOUNTING POLICIES
This Note provides a list of the material accounting
policies adopted in the preparation of these Standalone
Financial Statements.
1 Statement of compliance
Standalone Financial Statements have been
prepared in accordance with the accounting
principles generally accepted in India including
Indian Accounting Standards (Ind AS) prescribed
under the section 133 of the Companies Act, 2013
(‘the Act’) read with rule 3 of the Companies (Indian
Accounting Standards) Rules, 2015 (as amended
from time to time) and presentation and disclosures
requirement of Division II of revised Schedule III
of the Act, (Ind AS Compliant Schedule III), as
applicable to standalone financial statements.
Accordingly, the Company has prepared these
Standalone Financial Statements which comprise
the Standalone Balance Sheet as at March 31,
2026, the Standalone Statement of Profit and Loss,
the Standalone Statement of Cash Flows and the
Standalone Statement of Changes in Equity for
the year ended as on that date, and accounting
policies and other explanatory information (together
hereinafter referred to as "standalone financial
statements”).
These standalone financial statements are
approved for issue by the Board of Directors on
May 27, 2026.
2 Basis of preparation
The standalone financial statements are prepared
under the historical cost convention except for the
following:
• certain financial assets and liabilities that are
measured at fair value;
• defined benefit plans where plan assets are
measured at fair value; and
• share-based payments at fair value as on the
grant date of options given to employees.
Estimates, judgements and assumptions used in the
preparation of the standalone financial statements
and disclosures are based upon management’s
evaluation of the relevant facts and circumstances
as of the date of the standalone financial
statements, which may differ from the actual results
at a subsequent date. The critical estimates,
judgements and assumptions are presented in Note
no. 1D.
The Company presents assets and liabilities in
the balance sheet based on current / non-current
classification. Deferred tax assets and liabilities are
classified as non-current.
The Company has prepared the standalone
financial statements on the basis that it will continue
to operate as a going concern.
An asset is treated as current when it is:
• Expected to be realised or intended to be sold or
consumed in normal operating cycle
• Expected to be realised 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 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
All other liabilities are classified as non-current.
The operating cycle is the time between the
acquisition of assets for processing and their
realisation in cash and cash equivalents. The
Company has identified twelve months as its
operating cycle.
3 Revenue from contract with customers:
Revenue from contracts with customers is
recognized when control of the goods or services
is transferred to the customer at an amount that
reflects the consideration to which the Company
expects to be entitled in exchange for those goods
or services. The Company has generally concluded
that it is the principal in its revenue arrangements,
because it typically controls the goods or services
before transferring them to the customer.
The recognition criteria for sale of products and
construction contracts is described below:
i. Sale of Products (including Scrap Sales)
Revenue from sale of products including scrap
is recognised when control of the goods is
transferred to the customer, which is usually on
dispatch or delivery of goods to the customer
and there are no unfulfilled obligations that
could affect the customer’s acceptance of
the goods, at an amount (transaction price)
that reflects the consideration to which the
Company expects to be entitled in exchange
for those goods.
ii. Revenue from Projects
Performance obligations with reference to
Engineering Procurement and Construction
(EPC) contracts are satisfied over the period
of time, and accordingly, Revenue from such
contracts is recognized based on progress of
performance determined using input method
with reference to the cost incurred on contract
and their estimated total costs. Transaction
price is the amount of consideration to
which the Company expects to be entitled in
exchange for transferring goods or services to
a customer excluding amounts collected on
behalf of a third party.
Revenue, measured at transaction price,
is adjusted towards liquidated damages,
time value of money and price variations,
escalation, change in scope etc. wherever,
applicable. Variation in contract work and
other claims are included to the extent that
the amount can be measured reliably, and it is
agreed with customer.
Estimates of revenue and costs are
reviewed periodically and revised, wherever
circumstances change, resulting increases
or decreases in revenue determination, are
recognized in the statement of profit and loss
period in which estimates are revised.
The Company evaluates whether each
contract consists of a single performance
obligation or multiple performance obligations.
Where the Company enters into multiple
contracts with the same customer, the
Company evaluates whether the contract is
to be combined or not by evaluating various
factors. Due to the nature of the work required
to be performed on many of the performance
obligations, the estimation of total revenue and
cost at completion is subject to many variables
and requires significant judgement. The
Company considers its experience with similar
transactions and expectations regarding the
contract in estimating the amount of variable
consideration to which it will be entitled and
determining whether the estimated variable
consideration should be constrained. The
Company includes estimated amounts in the
transaction price to the extent it is probable
that a significant reversal of cumulative
revenue recognised will not occur when
the uncertainty associated with the variable
consideration is resolved.
Progress billings are generally issued upon
completion of certain phases of the work as
stipulated in the contract. Billing terms of the
over-time contracts vary but are generally
based on achieving specified milestones.
The difference between the timing of revenue
recognised and customer billings result in
changes to contract assets and contract
liabilities. Contractual retention amounts
billed to customers are generally due upon
expiration of the contract period.
The contracts generally result in revenue
recognised in excess of billings which are
presented as contract assets on the statement
of financial position. Amounts billed and due
from customers are classified as receivables
on the statement of financial position. The
portion of the payments retained by the
customer until final contract settlement is not
considered a significant financing component
since it is usually intended to provide
customer with a form of security for Company’s
remaining performance as specified under the
contract, which is consistent with the industry
practice. Contract liabilities represent amounts
billed to customers in excess of revenue
recognised till date. A liability is recognised
for advance payments and it is not considered
as a significant financing component since it
is used to meet working capital requirements
at the time of project mobilization stage. The
same is presented as contract liability in the
balance sheet.
iii. Sale of Services
The Company provides galvanisation services
to customers, wherein customer-supplied
materials are processed. Revenue is earned in
the form of processing fees.
Revenue from providing services is recognised
at a point in time, upon completion of the
galvanisation process in the accounting period
in which the services are rendered.
4 Insurance Claims
Insurance claims are recognized when there is
reasonable certainty of ultimate collection from
the insurer and the amount of the claim can be
measured reliably. Claims receivable in respect
of loss or damage to inventories, property or
other assets are recognized based on the
amount admitted or expected to be admitted
by the insurance company, as assessed by the
management on the basis of available supporting
documents and correspondence with the insurer.
Insurance claim receipts are recognized in the
Statement of Profit and Loss under other operating
income.
5 Contract balances
a) Contract asset
A contract asset is the right to consideration
in exchange for goods or services transferred
to the customer. If the Company performs by
transferring goods or services to a customer
before the customer pays consideration or
before payment is due, a contract asset is
recognised for the earned consideration that is
conditional.
Contract assets are subject to impairment
assessment. Refer to accounting policies on
impairment of financial assets.
b) Trade receivables
A receivable represents the Company’s
right to an amount of consideration that is
unconditional (i.e., only the passage of time is
required before payment of the consideration
is due).
c) Contract liabilities
A contract liability is the obligation to transfer
goods or services to a customer for which
the Company has received consideration (or
an amount of consideration is due) from the
customer. If a customer pays consideration
before the Company transfers goods or
services to the customer, a contract liability is
recognized when the payment is made or the
payment is due (whichever is earlier). Contract
liabilities are recognised as revenue on
satisfaction of performance obligations under
the contract.
6 Leases:
Company as a lessee:
Right-of-use assets
The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities. The
cost of right-of-use assets includes the amount
of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before
the commencement date less any lease incentives
received. Unless the Company is reasonably certain
to obtain ownership of the leased asset at the end
of the lease term, the recognised right-of-use assets
are depreciated on a straight-line basis over the
shorter of its estimated useful life and the lease term
as follows:
Right-of-use assets are subject to impairment test.
The Company determines the lease term as the
non-cancellable term of the lease, together with any
periods covered by an option to extend the lease
if it is reasonably certain to be exercised, or any
periods covered by an option to terminate the lease,
if it is reasonably certain not to be exercised.
Leases are capitalised at the commencement of
the lease at the inception date fair value of the
leased property or, if lower, at the present value
of the minimum lease payments. Lease payments
are apportioned between finance charges and
reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance
of the liability. Finance charges are recognised in
finance costs in the statement of profit and loss,
unless they are directly attributable to qualifying
assets, in which case they are capitalized in
accordance with the Company’s general policy on
the borrowing costs.
Lease liabilities
At the commencement date of the lease, the
Company recognises lease liabilities measured at
the present value of lease payments to be made
over the lease term. The lease payments include
fixed payments (including in-substance fixed
payments) less any lease incentives receivable,
variable lease payments that depend on an index
or a rate, and amounts expected to be paid under
residual value guarantees. The variable lease
payments that do not depend on an index or a rate
are recognised as expense in the period on which
the event or condition that triggers the payment
occurs.
In calculating the present value of lease payments,
the Company uses the incremental borrowing rate
at the lease commencement date if the interest rate
implicit in the lease is not readily determinable.
After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change
in the lease term, a change in the lease payments
(e.g., changes to future payments resulting from a
change in an index or rate used to determine such
lease payments)
Short-term leases and leases of low-value
assets
The Company applies the short-term lease
recognition exemption to its short-term leases (i.e.,
those leases that have a lease term of 12 months
or less from the commencement date and do not
contain a purchase option). It also applies the
lease of low-value assets recognition exemption to
leases that are considered of low value (i.e., below
' 5,00,000). Lease payments on short-term leases
and leases of low-value assets are recognised as
expense on a straight-line basis over the lease term.
7 Other income:
(1) Interest income on financial asset 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 the financial asset. When calculating the
effective interest rate, the Company estimates
the expected cash flows by considering all the
contractual terms of the financial instruments.
(2) Others:
The Company recognises other income
(including income from claims received, etc.)
on accrual basis. However, where the ultimate
collection of the same is uncertain, revenue
recognition is postponed to the extent of
uncertainty.
8 Property, plant and equipment:
The cost of property, plant and equipment
comprises its purchase price net of any trade
discounts and rebates, any import duties and other
taxes (other than those subsequently recoverable
from the tax authorities), any directly attributable
expenditure on making the asset ready for its
intended use, including relevant borrowing costs
for qualifying assets and any expected costs of
decommissioning. Expenditure incurred after the
property, plant and equipment have been put into
operation, such as repairs and maintenance, are
charged to the Statement of Profit and Loss in the
year in which the costs are incurred.
An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from
the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item of
property, plant and equipment is determined as
the difference between the sales proceeds and the
carrying amount of the asset and is recognised in
Statement of Profit and Loss.
Assets in the course of construction are capitalised
in the assets under Capital work in progress. At the
point when an asset is operating at management’s
intended use, the cost of construction is transferred
to the appropriate category of property, plant and
equipment and depreciation commences. Costs
associated with the commissioning of an asset
and any obligatory decommissioning costs are
capitalised where the asset is available for use but
incapable of operating at normal levels, revenue
(net of cost) generated from production during the
trial period is capitalised.
Property, plant and equipment held for use in the
production, supply or administrative purposes,
are stated in the balance sheet at cost less
accumulated depreciation and accumulated
impairment losses, if any.
Depreciable amount for assets is the cost of
an asset, or other amount substituted for cost,
less its estimated residual value. Depreciation is
recognised so as to write off the cost of assets
(other than freehold land and properties under
construction) less their residual values over
their useful lives, using straight-line method as
per the useful life prescribed in Schedule II to
the Companies Act, 2013 except in respect of
following categories of assets, in whose case the
life of the assets has been assessed as under
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 etc.
When significant parts of plant and equipment are
required to be replaced at intervals, the Company
depreciates them separately based on their specific
useful lives.
The Company reviews the residual value, useful
lives and depreciation method annually and, if
expectations differ from previous estimates, the
change is accounted for as a change in accounting
estimate on a prospective basis.
9 Intangible assets
Intangible assets acquired separately are measured
on initial recognition at cost. The cost of intangible
assets acquired in a business combination is their
fair value at the date of acquisition. Following
initial recognition, intangible assets are carried
at cost less any accumulated amortisation and
accumulated impairment losses. Internally
generated intangibles, excluding capitalised
development costs, are not capitalised and the
related expenditure is reflected in profit or loss in
the period in which the expenditure is incurred.
Intangible assets with finite lives are amortised
over the useful economic life and assessed for
impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation
period and the amortisation method for an
intangible asset with a finite useful life are reviewed
at least at the end of each reporting period.
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
amortisation period or method, as appropriate, and
are treated as changes in accounting estimates.
The amortisation expense on intangible assets with
finite lives is recognised in the P&L unless such
expenditure forms part of carrying value of another
asset.
An intangible asset is derecognised upon disposal
(i.e., at the date the recipient obtains control) or
when no future economic benefits are expected
from its use or disposal. Any gain or loss arising
upon derecognition of the asset (calculated as the
difference between the net disposal proceeds and
the carrying amount of the asset) is included in the
P&L when the asset is derecognised.
10 Impairment of non-financial assets:
The carrying amounts of assets are reviewed at
each balance sheet date if there is any indication
of impairment based on internal/external factors.
An asset is impaired when the carrying amount of
the asset exceeds the recoverable amount. The
recoverable amount is the higher of an asset’s fair
value less costs of disposal and value in use. For
the purposes of assessing impairment, assets
are grouped at the lowest levels for which there
are separately identifiable cash inflows which
are largely independent of the cash inflows from
other assets or groups of assets (cash-generating
units). Impairment loss is charged to the Statement
of Profit & Loss Account in the year in which an
asset is identified as impaired. An impairment
loss recognized in the prior accounting periods is
reversed if there has been change in the estimates
used to determine the assets recoverable amount
since the last impairment loss was recognised.
In assessing value in use, the estimated future cash
flows are discounted to their present value using
a pre-tax discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset. In determining fair value
less costs of disposal, recent market transactions
are taken into account.
Impairment losses are recognised in the statement
of profit and loss.
For assets, an assessment is made at each
reporting date to determine whether there is an
indication that previously recognised impairment
losses no longer exist or have decreased. If such
indication exists, the Company estimates the
asset’s or CGU’s recoverable amount. A previously
recognised impairment loss is reversed only if there
has been a change in the assumptions used to
determine the asset’s recoverable amount since
the last impairment loss was recognised. The
reversal is limited so that the carrying amount of
the asset does not exceed its recoverable amount,
nor exceed the carrying amount that would have
been determined, net of depreciation, had no
impairment loss been recognised for the asset
in prior years. Such reversal is recognised in the
statement of profit or loss unless the asset is carried
at a revalued amount, in which case, the reversal is
treated as a revaluation increase.
11 Financial instruments
Financial assets and financial liabilities are
recognised when an entity becomes a party to the
contractual provisions of the instrument.
Financial assets (except trade receivable,
measured at amortised cost) and financial liabilities
are initially measured at fair value. Transaction
costs that are directly attributable to the acquisition
or issue of financial assets and financial liabilities
(other than financial assets and financial liabilities
at fair value through Statement of Profit and Loss
(FVTPL)) are added to or deducted from the fair
value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of
financial assets or financial liabilities at fair value
through profit and loss are recognised immediately
in Statement of Profit and Loss.
A. Financial assets
a) Recognition and initial measurement
A financial asset is initially recognised at
fair value and, for an item not at FVTPL,
transaction costs that are directly attributable
to its acquisition or issue. Purchases and sales
of financial assets are recognised on the trade
date, which is the date on which the Company
becomes a party to the contractual provisions
of the instrument.
b) Classification of financial assets
Financial assets are classified, at initial
recognition and subsequently measured
at amortised cost, fair value through other
comprehensive income (OCI), and fair value
through profit and loss. A financial asset is
measured at amortised cost if it meets both of
the following conditions and is not designated
at FVTPL:
• The asset is held within a business model
whose objective is to hold assets to collect
contractual cash flows; and
• 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.
A debt instrument is classified as FVTOCI only
if it meets both of the following conditions and
is not recognised at FVTPL;
• The asset is held within a business model
whose objective is achieved by both
collecting contractual cash flows and
selling financial assets; and
• 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.
Debt instruments included within the FVTOCI
category are measured initially as well as at
each reporting date at fair value. Fair value
movements are recognised in the Other
Comprehensive Income (OCI). However,
the Company recognises interest income,
impairment losses & reversals and foreign
exchange gain or loss in the Statement of
Profit and Loss. On derecognition of the
asset, cumulative gain or loss previously
recognised in OCI is reclassified from the
equity to Statement of Profit and Loss. Interest
earned whilst holding FVTOCI debt instrument
is reported as interest income using the EIR
method.
All equity investments in scope of Ind AS 109
are measured at fair value. Equity instruments
which are held for trading and contingent
consideration recognised by an acquirer in
a business combination to which Ind AS 103
applies are classified as at FVTPL. For all other
equity instruments, the Company may make
an irrevocable election to present in other
comprehensive income subsequent changes
in the fair value. The Company makes such
election on an instrument-by-instrument basis.
The classification is made on initial recognition
and is irrevocable. The equity instruments
which are strategic investments and held for
long term purposes are classified as FVTOCI.
If the Company decides to classify an
equity instrument as at FVTOCI, then all fair
value changes on the instrument, excluding
dividends, are recognised in the OCI. There
is no recycling of the amounts from OCI to
Statement of 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 recognised in the Statement of Profit
and Loss.
All other financial assets are classified as
measured at FVTPL.
In addition, on initial recognition, the Company
may irrevocably designate a financial asset
that otherwise meets the requirements to be
measured at amortised cost or at FVTOCI as
at FVTPL if doing so eliminates or significantly
reduces and an accounting mismatch that
would otherwise arise.
Financial assets at FVTPL are measured
at fair value at the end of each reporting
year, with any gains and losses arising on
remeasurement recognised in statement of
profit and loss. The net gain or loss recognised
in statement of profit and loss incorporates any
dividend or interest earned on the financial
asset and is included in the ‘other income’ line
item. Dividend on financial assets at FVTPL is
recognised when:
• The Company’s right to receive the
dividends is established,
• It is probable that the economic benefits
associated with the dividends will flow to
the entity,
• The dividend does not represent a
recovery of part of cost of the investment
and the amount of dividend can be
measured reliably.
c) Derecognition of financial assets
The Company derecognises a financial asset
when the contractual rights to the cash flows
from the asset expire, or when it transfers the
financial asset and substantially all the risks
and rewards of ownership of the asset to
another party.
d) Impairment
The Company recognizes loss allowances on
a forward-looking basis using the expected
credit loss (ECL) model for all the financial
assets except for trade receivables. Loss
allowance for all financial assets is measured
at an amount equal to lifetime ECL. The
Company recognises impairment loss on
trade receivables using expected credit loss
model which involves use of a provision matrix
constructed on the basis of historical credit
loss experience and adjusted for forward
looking information as permitted under Ind AS
109. The expected credit loss is based on the
ageing of the days, the receivables due and
the expected credit loss rate. In addition, in
case of event driven situations as litigations,
disputes, change in customer’s credit risk
history, specific provisions are made after
evaluating the relevant facts and expected
recovery.
The amount of expected credit losses (or
reversal) that is required to adjust the loss
allowance at the reporting date is recognized
as a gain or loss in the Statement of Profit and
Loss.
e) Effective interest method
The effective interest method is a method
of calculating the amortised cost of a debt
instrument and of allocating interest income
over the relevant year. The effective interest
rate is the rate that exactly discounts
estimated future cash receipts (including all
fees and points paid or received that form
an integral part of the effective interest rate,
transaction costs and other premiums or
discounts) through the expected life of the
debt instrument, or, where appropriate, a
shorter year, to the net carrying amount on
initial recognition.
Income is recognised on an effective interest
basis for debt instruments other than those
financial assets classified as at FVTPL. Interest
income is recognised in statement of profit and
loss and is included in the ‘Other income’ line
item.
B. Financial liabilities and equity instruments
a) Classification as debt or equity
Debt and equity instruments issued by a
company are classified as either financial
liabilities or as equity in accordance with the
substance of the contractual arrangements
and the definitions of a financial liability and an
equity instrument.
b) Equity instruments
An equity instrument is any contract that
evidences a residual interest in the assets of
an entity after deducting all of its liabilities.
Equity instruments issued by the Company are
recognised at the proceeds received, net of
direct issue costs.
Repurchase of the Company’s own equity
instruments is recognised and deducted
directly in equity. No gain or loss is recognised
in Statement of Profit and Loss on the
purchase, sale, issue or cancellation of the
Company’s own equity instruments.
c) Financial liabilities
Financial liabilities are classified as either
financial liabilities ‘at FVTPL’ or ‘other financial
liabilities’.
Financial liabilities at FVTPL:
Financial liabilities are classified as at FVTPL
when the financial liability is either held for
trading or it is designated as at FVTPL.
A financial liability is classified as held for
trading if:
• It has been incurred principally for the
purpose of repurchasing it in the near term;
or
• on initial recognition it is part of a portfolio
of identified financial instruments that the
Company manages together and has a
recent actual pattern of short-term profit¬
taking; or
• it is a derivative that is not designated and
effective as a hedging instrument.
A financial liability other than a financial liability
held for trading may be designated as at
FVTPL upon initial recognition if:
• such designation eliminates or significantly
reduces a measurement or recognition
inconsistency that would otherwise arise;
• the financial liability forms part of a group
of financial assets or financial liabilities
or both, which is managed and its
performance is evaluated on a fair value
basis, in accordance with the Company’s
documented risk management or
investment strategy, and information about
the grouping is provided internally on that
basis; or
• it forms part of a contract containing one
or more embedded derivatives, and Ind AS
109 permits the entire combined contract to
be designated as at FVTPL in accordance
with Ind AS 109.
Financial liabilities at FVTPL are stated at
fair value, with any gains or losses arising
on remeasurement recognised in Statement
of Profit and Loss. The net gain or loss
recognised in Statement of Profit and Loss
incorporates any interest paid on the financial
liability and is included in the Statement of
Profit and Loss. For Liabilities designated as
FVTPL, fair value gains/losses attributable to
changes in own credit risk are recognised in
OCI.
The Company derecognises financial liabilities
when, and only when, the Company’s
obligations are discharged, cancelled or they
expire. The difference between the carrying
amount of the financial liability derecognised
and the consideration paid and payable is
recognised in the Statement of Profit and Loss.
Derecognition of financial liabilities:
The Company derecognises financial liabilities
when, and only when, the Company’s
obligations are discharged, cancelled or have
expired. An exchange with a lender of debt
instruments with substantially different terms
is accounted for as an extinguishment of the
original financial liability and the recognition of
a new financial liability. Similarly, a substantial
modification of the terms of an existing
financial liability (whether or not attributable
to the financial difficulty of the debtor) is
accounted for as an extinguishment of the
original financial liability and the recognition of
a new financial liability. The difference between
the carrying amount of the financial liability
derecognised and the consideration paid and
payable is recognised in the Statement of
Profit and Loss.
12 Fair value measurements
The Company measures financial instruments at
fair value at each balance sheet date. 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
The principal or the most advantageous market
must be accessible by the Company. The fair
value of an asset or a liability is measured using
the assumptions that market participants would
use when pricing the asset or liability, assuming
that market participants act in their economic best
interest.
A fair value measurement of a non-financial asset
takes into account a market participant’s ability to
generate economic benefits by using the asset in
its highest and best use or by selling it to another
market participant that would use the asset in its
highest and best use.
The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data is available to measure fair value,
maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is
measured or disclosed in the standalone financial
statements are categorised within the fair value
hierarchy, described as follows, based on the
lowest level input that is significant to the fair value
measurement as a whole:
• Level 1 — It includes financial instruments
measured using quoted prices. For the
Company, the fair valuations in this level of
hierarchy include listed equity instruments
and mutual funds. The fair value of all equity
instruments which are traded in the stock
exchanges is valued using the closing price as
at the reporting period and mutual funds are
valued using closing NAV as at the reporting
period.
• Level 2 — The fair value of financial instruments
that are not traded in an active market (for
example derivatives) is determined using
valuation techniques which maximise the use
of observable market data and rely as little
as possible on entity-specific estimates. If
all significant inputs required to fair value an
instrument are observable, the instrument is
included in Level 2. The fair valuations in this
level of hierarchy for the Company mainly
include derivatives.
• Level 3 — The instrument is included in Level
3 if one or more of the significant inputs is not
based on observable market data. Fair value is
determined in whole or in part, using a valuation
model based on assumptions that are neither
supported by prices from observable current
market transactions in the same instrument nor
are they based on available market data. This
includes investment in unquoted preference
shares. Similarly, unquoted equity instruments
where most recent information to measure fair
value is insufficient, or if there is a wide range
of possible fair value measurements, net asset
value has been considered as best estimate of
fair value which is approximate to cost.
For assets and liabilities that are recognised in
the standalone financial statements on a recurring
basis, the Company determines whether transfers
have occurred between levels in the hierarchy
by re-assessing categorisation (based on the
lowest level input that is significant to the fair
value measurement as a whole) at the end of each
reporting period. External valuers are involved for
valuation of significant assets, such as properties
and unquoted financial assets.
For the purpose of fair value disclosures, the
Company has determined classes of assets and
liabilities on the basis of the nature, characteristics
and risks of the asset or liability and the level of the
fair value hierarchy as explained above.
This note summarises accounting policy for fair
value. Other fair value related disclosures are given
in the relevant notes.
13 Derivative Instruments and Hedge
Accounting
a. Derivative financial instruments
The Company enters into a variety of derivative
financial instruments to manage its exposure
to commodity price and foreign exchange
rate risks, including foreign exchange
forward contracts and commodity forward
contracts - OTC derivatives. Derivatives are
initially recognized at fair value at the date the
derivative contracts are entered into and are
subsequently remeasured to their fair value at
the end of each reporting year. The resulting
gain or loss is recognized in Statement of Profit
and Loss immediately unless the derivative
is designated and effective as a hedging
instrument, in which event the timing of the
recognition in Statement of Profit and Loss
depends on the nature of the hedge item.
b. Hedge accounting
The Company designates certain hedging
instruments, which include derivatives
in respect of foreign currency risk and
commodity price risk, as cash flow hedges.
Hedges of foreign exchange risk and
commodity price risk for highly probable
forecast transactions are accounted for 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 hedged risk.
Cash flow hedges
The effective portion of changes in fair value
of derivatives that are designated and qualify
as cash flow hedges is recognized in other
comprehensive income and accumulated
under the heading of cash flow hedging
reserve. The gain or loss relating to the
ineffective portion is recognized immediately
in Statement of profit and loss. Amounts
previously recognized in other comprehensive
income and accumulated in equity relating
to effective portion as described above are
reclassified to profit and loss in the years
when the hedged item affects profit and loss,
in the same line as the recognized hedged
item. However, when the hedged forecast
transaction results in the recognition of a non¬
financial asset or a non-financial liability, such
gains or losses are transferred from equity
(but not as a reclassification adjustment) and
included in the initial measurement of the cost
of the non-financial asset or non-financial
liability. Hedge accounting is discontinued
when the hedging instrument expires or is
sold, terminated, or exercised, or when it
no longer qualifies for hedge accounting.
Any gain or loss recognized in other
comprehensive income and accumulated in
equity at that time remains in equity and is
recognized when the forecast transaction is
ultimately recognized in profit and loss. When
a forecast transaction is no longer expected to
occur, the gain or loss accumulated in equity
is recognized immediately in profit and loss.
14 Cash and cash equivalents:
Cash and cash equivalents in the balance sheet
and for the purpose of the statement of cash flows,
include cash on hand, other short-term, highly
liquid investments with original maturities of three
months or less that are readily convertible to known
amounts of cash and which are subject to an
insignificant risk of changes in value.
15 Inventories:
Inventories are valued at the lower of cost and net
realisable value. Costs incurred in bringing each
product to its present location and condition are
accounted for as follows:
Raw materials and Stores & Spares: cost includes
cost of purchase and other costs incurred in
bringing the inventories to their present location and
condition. Cost is determined on weighted average
basis.
Finished goods and work in progress: cost includes
cost of direct materials, cost of purchase and other
costs incurred in bringing the inventories to their
present location and condition, labour cost and
a proportion of manufacturing overheads based
on the normal operating capacity but excluding
borrowing costs. Cost is determined on weighted
average basis.
By products are valued at net realisable value.
Net realisable 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.
16 Foreign currency transactions:
Items included in the standalone financial
statements are measured using the currency of
the primary economic environment in which the
Company operates (‘the functional currency’). The
standalone financial statements are presented
in Indian Rupee (INR), which is the Company’s
functional and presentation currency.
a) On initial recognition, all foreign currency
transactions are recorded at the functional
currency spot rate at the date the transaction
first qualifies for recognition.
b) Monetary assets and liabilities in foreign
currency outstanding at the close of reporting
date are translated at the functional currency
spot rates of exchange at the reporting date.
c) Exchange differences arising on settlement of
translation of monetary items are recognised in
the Statement of Profit and Loss.
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 the initial
transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value is
determined. The gain or loss arising on translation
of non-monetary items measured at fair value is
treated in line with the recognition of the gain or
loss on the change in fair value of the item (i.e.,
translation differences on items whose fair value
gain or loss is recognised in OCI or profit or loss are
also recognised in OCI or profit or loss, respectively.
17 Borrowing costs
Borrowing costs directly attributable to the
acquisition, construction or production of qualifying
assets, which are assets that necessarily take a
substantial period of time to get ready for their
intended use or sale, are added to the cost of
those assets, until such time as the assets are
substantially ready for their intended use or sale.
All other borrowing costs are recognised in the
Statement of Profit and Loss in the year in which
they are incurred.
The Company determines the amount of borrowing
costs eligible for capitalisation as the actual
borrowing costs incurred on that borrowing
during the year less any interest income earned
on temporary investment of specific borrowings
pending their expenditure on qualifying assets, to
the extent that an entity borrows funds specifically
for the purpose of obtaining a qualifying asset. In
case if the Company borrows generally and uses
the funds for obtaining a qualifying asset, borrowing
costs eligible for capitalisation are determined by
applying a capitalisation rate to the expenditures on
that asset.
18 Vendor bill discounting
The Company enters into deferred payment
arrangements whereby lender such as banks and
financial institutions make payments to supplier’s
bank for purchase of raw materials and traded
goods. The bank and financial institutions are
subsequently repaid by the company at a later
date providing working capital benefits. These
arrangements are in the nature of credit extended
beyond normal operating cycle and these
arrangements for raw materials and traded goods
are recognised as borrowings. Interest borne by the
company on such arrangements is accounted as
finance cost.
19 Income tax
The income tax expense or credit for the period
is the tax payable on the current period’s taxable
income based on the applicable income tax rate
for the jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to temporary
differences, unused tax losses and unabsorbed
depreciation.
Current and deferred tax is recognized in the
Statement of Profit and Loss except to the extent
it relates to items recognized directly in equity
or other comprehensive income, in which case it
is recognized in equity or other comprehensive
income.
A. Current income tax
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 Company establishes
provisions, wherever appropriate, on the basis
of amounts expected to be paid to the tax
authorities.
Current tax assets and liabilities are offset
when there is a legally enforceable right to
set off current tax assets against current tax
liabilities.
B. Deferred tax
Deferred tax is provided using the Balance
sheet approach, on temporary differences
arising between the tax bases of assets and
liabilities and their carrying amounts in the
standalone financial statements. Deferred tax
is determined using tax rates (and laws) that
have been enacted or substantially enacted
by the end of the reporting period and are
expected to apply when the related deferred
income tax asset is realised or the deferred
income tax liability is settled.
The carrying amount of deferred tax assets is
reviewed at each reporting date and adjusted
to reflect changes in probability that sufficient
taxable profits will be available to allow all or
part of the asset to be recovered.
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.
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.
Deferred tax relating to items recognised
outside profit or loss is recognised outside
profit or loss (either in other comprehensive
income or in equity). Deferred tax items are
recognised in correlation to the underlying
transaction either in OCI or directly in equity.
20 Investment in joint ventures
A joint venture is a type of joint arrangement
whereby the parties that have joint control of the
arrangement have rights to the net assets of the
joint venture. Joint control is the contractually
agreed sharing of control of an arrangement, which
exists only when decisions about the relevant
activities require unanimous consent of the parties
sharing control. Investment in joint venture is
measured at cost.
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