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Company Information

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CENTUM ELECTRONICS LTD.

24 July 2025 | 12:00

Industry >> Electronics - Equipment/Components

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ISIN No INE320B01020 BSE Code / NSE Code 517544 / CENTUM Book Value (Rs.) 134.68 Face Value 10.00
Bookclosure 25/07/2025 52Week High 2690 EPS 1.67 P/E 1,365.31
Market Cap. 3351.32 Cr. 52Week Low 1140 P/BV / Div Yield (%) 16.92 / 0.26 Market Lot 1.00
Security Type Other

ACCOUNTING POLICY

You can view the entire text of Accounting Policy of the company for the latest year.
Year End :2025-03 

2.3. Summary of material accounting policies

a. Current versus non-current classification

The Company presents assets and liabilities in
the standalone Ind AS balance sheet based on
current/ non-current classification. An asset is
treated as current when it is:

i. Expected to be realised or intended to be sold
or consumed in normal operating cycle,

ii. Held primarily for the purpose of trading,

iii. Expected to be realised within twelve months
after the reporting period, or

iv. 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:

i. It is expected to be settled in normal operating
cycle,

ii. It is held primarily for the purpose of trading,

iii. It is due to be settled within twelve months
after the reporting period, or

iv. There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period

The terms of the liability that could, at the option of
the counterparty, result in its settlement by the issue
of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as
non-current assets and liabilities.

Advance tax paid is classified as non-current assets.

The operating cycle is the time between the acquisition
of assets for processing and their realisation in cash
and cash equivalents.

b. Fair value measurement

The Company measures financial instruments,
such as, derivatives 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:

a) In the principal market for the asset or
liability, or

b) 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 best economic 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 are 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 Ind AS
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 - Quoted (unadjusted) market prices in
active markets for identical assets or liabilities;

Level 2 - Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is directly or indirectly
observable;

Level 3 - Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable.

For assets and liabilities that are recognised
in the standalone Ind AS 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.

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.

• Disclosures for valuation methods,

significant estimates and assumptions

• Quantitative disclosures of fair value

measurement hierarchy

• Investment in unquoted equity shares

• Financial instruments (including those
carried at amortised cost)

c. Revenue Recognition

Revenue from contracts with customers is
recognised when control of the goods or
services are 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 specific recognition criteria described below
must also be met before revenue is recognised.

Sale of products and services

Revenue from sale of products is recognised at
the point in time when control of the asset is
transferred to the customer, generally on delivery
of the products. Revenue from sale of services
is recognized as the service is performed and
there are no unfulfilled obligations.

The Company considers whether there are
other promises in the contract that are separate
performance obligations to which a portion of
the transaction price needs to be allocated if
any. In determining the transaction price for
the sale of goods, the Company considers the
effects of variable consideration, the existence
of significant financing components, non-cash
consideration, and consideration payable to the
customer (if any).

Revenue towards satisfaction of a performance
obligation is measured at the amount of
transaction price (net of variable consideration)
allocated to that performance obligation. The
transaction price of goods sold and services
rendered is net of variable consideration on
account of various discounts and schemes
offered by the Company as part of the contract.
This variable consideration is estimated based
on the expected value of outflow. Revenue (net
of variable consideration) is recognized only to
the extent that it is highly probable that the
amount will not be subject to significant reversal

when uncertainty relating to its recognition is
resolved.

Scrip Sales

Export entitlements in the form of Merchandise
Export from India (MEIS) are recognized in
the standalone Ind AS statement of profit and
loss when the right to receive credit as per the
terms of the scheme is established in respect of
exports made and when there is no significant
uncertainty regarding the ultimate collection of
the relevant export proceeds.

Management fees income

Income from management fees is recognised as
per the terms of the agreement on the basis of
services rendered.

Interest income

For all financial instruments measured either
at amortised cost or at fair value through
other comprehensive income, interest income
is recorded using the effective interest rate
(EIR). EIR is the rate that exactly discounts the
estimated future cash payments or receipts over
the expected life of the financial instrument or
a shorter period, where appropriate, to the
gross carrying amount of the financial asset
or to the amortised cost of a financial liability.
When calculating the effective interest rate, the
Company estimates the expected cash flows
by considering all the contractual terms of
the financial instrument but does not consider
the expected credit losses. Interest income is
included in finance income in the statement of
profit and loss.

Rental income

Rental income from lease of premises under
operating lease is recognized in the income
statement on a straight line basis over the term
of the lease.

Commission income

Commission income is recognised at the time
when services are rendered in accordance with
the rates as per the agreements entered into
with the parties.

Contract balances

Contract assets

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 transferred to receivables
when the rights become unconditional and
contract liabilities are recognized as and when
the performance obligation is satisfied.

Contract assets are subject to impairment
assessment. Refer to accounting policies on
impairment of financial assets.

Trade receivables

A receivable is recognised if an amount of
consideration that is unconditional (i.e., only the
passage of time is required before payment of
the consideration is due).

Contract liabilities

A contract liability is recognised if a payment
is received or a payment is due (whichever is
earlier) from a customer before the Company
transfers the related goods or services. Contract
liabilities are recognised as revenue when the
Company performs under the contract (i.e.,
transfers control of the related goods or services
to the customer).

d. Government grants

Government grants are recognised where
there is reasonable assurance that the grant
will be received and all attached conditions
will be complied with. When the grant relates
to an expense item, it is recognised as income
on a systematic basis over the periods that
the related costs, for which it is intended to
compensate, are expensed. When the grant
relates to an asset, it is recognised as income in
equal amounts over the expected useful life of
the related asset.

e. Taxes on income
Current income tax

Tax expense for the year comprises current
and deferred tax. The tax currently payable is
based on taxable profit for the year. Taxable
profit differs from net profit as reported in
the statement of profit and loss because it
excludes items of income or expense that are
taxable or deductible in other years and it
further excludes items that are never taxable
or deductible. Current income tax assets and
liabilities are measured at the amount expected
to be recovered from or paid to the taxation
authorities. The Company's liability for current
tax is calculated using the tax rates and tax
laws that have been enacted or substantively
enacted by the end of the reporting period.

Current income tax relating to items recognised
outside profit or loss is recognised outside
profit or loss (either in other comprehensive

income or in equity). Current tax items are
recognised 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 considers
whether it is probable that a taxation authority
will accept an uncertain tax treatment. The
Company shall reflect the effect of uncertainty
for each uncertain tax treatment by using either
most likely method or expected value method,
depending on which method predicts better
resolution of the treatment.

Deferred tax

Deferred tax is the tax expected to be payable
or recoverable on differences between the
carrying values of assets and liabilities in the
financial statements and the corresponding tax
bases used in the computation of the taxable
profit and is accounted for using the balance
sheet liability model. Deferred tax liabilities
are generally recognised for all the taxable
temporary differences. In contrast, deferred
tax assets are only recognised to the extent
that is probable that future taxable profits
will be available against which the temporary
differences can be utilised.

Deferred tax assets are recognized for all
deductible temporary differences, carry forward
of unused tax credits and unused tax losses, 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.

The carrying amount of deferred tax assets
is reviewed at each balance sheet date and
reduced to the extent that it is no longer
probable that sufficient taxable profit will be
available to allow all or part of the deferred tax
asset to be utilized. Unrecognised deferred tax
assets are re-assessed at each reporting date
and are recognised 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 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 balance sheet date.

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.

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.

f. Property, plant and equipment ('PPE')

On transition to Ind AS, the Company has
elected to continue with the carrying value of all
of its property, plant and equipment recognised
as at March 31, 2016 measured as per the
previous GAAP and use that carrying value as
the deemed cost of the property, plant and
equipment as on April 1, 2016.

Capital work in progress includes cost of
property, plant and equipment under installation
/ under development, net of accumulated
impairment loss, if any, as at the balance sheet
date. Plant and equipment are stated at cost, net
of accumulated depreciation and accumulated
impairment losses, if any. Such cost includes the
cost of replacing part of the plant and equipment
and borrowing costs for long-term construction
projects if the recognition criteria are met.
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. All other repair and
maintenance costs are recognised in profit or
loss as incurred.

Subsequent costs are included in the asset's
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with
the item will flow to the Company and the
cost of the item can be measured reliably. The
carrying amount of any component accounted
for as a separate assets are derecognised when
replaced. All other repairs and maintenance are
charged to profit and loss during the reporting
period in which they are incurred.

The Company identifies and determines cost of
each component/ part of the asset separately,
if the component/ part has a cost which is
significant to the total cost of the asset having
useful life that is materially different from that
of the remaining asset. These components
are depreciated over their useful lives; the
remaining asset is depreciated over the life of
the principal asset.

Depreciation is calculated on a straight-line
basis over the estimated useful lives of the
assets as follows:

* The Company, based on technical assessment
made by the technical expert and management
estimate, depreciates certain items of plant and
equipment (including the related intellectual
property) over estimated useful lives which
are different from the useful life prescribed in
Schedule II to the Companies Act, 2013.

Land is carried at historical cost and is not
depreciated. Leasehold improvements are
depreciated over the period of lease or estimated
useful life, whichever is lower, on straight line
basis

The management believes that these estimated
useful lives are realistic and reflect fair
approximation of the period over which the
assets are likely to be used.

The residual values, useful lives and methods of
depreciation of property, plant and equipment
are reviewed at each financial year end and
adjusted prospectively, if appropriate.

An item of property, plant and equipment
and any significant part initially recognised
is derecognised upon disposal or when no
future economic benefits are expected from
its use or disposal. Any gain or loss arising on
derecognition of the asset (calculated as the
difference between the net disposal proceeds
and the carrying amount of the asset) is
included in the statement of profit and loss
when the asset is derecognised.

g. 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, if any. 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.

The useful lives of intangible assets are assessed
as either finite or indefinite.

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 with the affect of any
change in the estimate being accounted for on
a prospective basis. 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 statement
of profit and loss unless such expenditure forms
part of carrying value of another asset.

Intangible assets with indefinite useful lives are
not amortised, but are tested for impairment
annually, either individually or at the cash¬
generating unit level. The assessment of
indefinite life is reviewed annually to determine
whether the indefinite life continues to be
supportable. If not, the change in useful life
from indefinite to finite is made on a prospective
basis.

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 statement of profit
and loss when the asset is derecognised.

A summary of the policies applied to the
Company's intangible assets is, as follows:

h. Borrowing cost

Borrowing costs directly attributable to the
acquisition, construction or production of an
asset that necessarily takes a substantial period
of time to get ready for its intended use or sale
are capitalised as part of the cost of the asset until
such time as the assets are substantially ready
for the intended use or sale. All other borrowing
costs are expensed in the period in which they
occur. Borrowing costs consist of interest and
other costs that an entity incurs in connection
with the borrowing of funds. Borrowing cost
also includes exchange differences to the extent
regarded as an adjustment to the borrowing
costs.

i. Leases

The Company has lease contracts for office
spaces, various items of plant and machinery
and other equipment. The Company assesses
at contract inception whether a contract is,
or contains, a lease. That is, if the contract
conveys the right to control the use of an
identified asset for a period of time in exchange
for consideration.

Company as a lessee

The Company applies a single recognition and
measurement approach for all leases, except
for short-term leases and leases of low-value
assets. The Company recognises lease liabilities
to make lease payments and right-of-use assets
representing the right to use the underlying
assets.

i) 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. Right-of-use assets
are depreciated on a straight-line basis
over the shorter of the lease term and the
estimated useful lives of the assets.

If ownership of the leased asset transfers
to the Company at the end of the lease
term or the cost reflects the exercise
of a purchase option, depreciation is
calculated using the estimated useful life
of the asset.

The right-of-use assets are also subject
to impairment. Refer to the accounting
policies in section (l) Impairment of non¬
financial assets.

ii) 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 lease payments also
include the exercise price of a purchase
option reasonably certain to be exercised
by the Company and payments of penalties
for terminating the lease, if the lease term
reflects the Company exercising the option
to terminate. Variable lease payments
that do not depend on an index or a rate
are recognised as expenses (unless they
are incurred to produce inventories) in the
period in which the event or condition that
triggers the payment occurs.

In calculating the present value of
lease payments, the Company uses its
incremental borrowing rate at the lease
commencement date because 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) or a
change in the assessment of an option to
purchase the underlying asset.

iii) Short-term leases and leases of low-
value assets

The Company applies the short-term lease
recognition exemption to its short-term
leases of machinery and equipment (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 of
office equipment that are considered to be
low value. 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.

The Company applies the low-value asset
recognition exemption on a lease-by-lease
basis, if the lease qualifies as leases of
low-value assets, with a value when new
of up to ^ 0.18 million. In making this
assessment, the Company also factors
below key aspects:

• The assessment is conducted on an
absolute basis and is independent of
the size, nature, or circumstances of
the lessee.

• The assessment is based on the
value of the asset when new,
regardless of the asset's age at the
time of the lease.

• The lessee can benefit from the
use of the underlying asset either
independently or in combination
with other readily available
resources, and the asset is not
highly dependent on or interrelated
with other assets.

• If the asset is subleased or expected
to be subleased, the head lease
does not qualify as a lease of a low-
value asset.

Based on the above criteria, the Company
has classified leases of IT equipment for
individual employees as leases of low
value assets.

Company as a lessor

Leases in which the Company does not
transfer substantially all the risks and
rewards incidental to ownership of an
asset is classified as operating leases.
Rental income arising is accounted for
on a straight-line basis over the lease
terms. Initial direct costs incurred in
negotiating and arranging an operating
lease are added to the carrying amount
of the leased asset and recognised over
the lease term on the same basis as rental
income. Contingent rents are recognised
as revenue in the period in which they are
earned.

j. Inventories

Inventories are valued at lower of cost and
net realisable value. However, materials and
other items held for use in the production of
inventories are not written down below cost
if the finished products in which they will be

incorporated are expected to be sold at or
above cost.

Costs incurred in bringing each product to its
present location and condition are accounted
for as follows:

a) Raw materials and stores and spares: cost
includes cost of purchase and other costs
incurred in bringing the inventories to
their present location and condition.

b) Finished goods and work in progress:
cost includes cost of direct materials and
labour and a proportion of manufacturing
overheads based on the normal operating
capacity, but excluding borrowing costs.

Cost of raw materials, stores and spares, work-
in-progress and finished goods is determined on
a weighted average basis.

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.

k. Impairment of non-financial assets and
investments in subsidiaries and associates

As at the end of each accounting year, the
Company reviews the carrying amounts of
its PPE, intangible assets, including goodwill
and investments in subsidiary and associates
to determine whether there is any indication
that those assets have suffered an impairment
loss. If such indication exists, the said assets
are tested for impairment so as to determine
the impairment loss, if any. Goodwill and the
intangible assets with indefinite life are tested
for impairment each year.

Impairment loss is recognised when the carrying
amount of an asset exceeds its recoverable
amount. Recoverable amount is determined:

(i) in the case of an individual asset, at
the higher of the fair value less costs of
disposal and the value in use; and

(ii) in the case of a cash generating unit (a
group of assets that generates identified,
independent cash flows), at the higher of
the cash generating unit's net fair value
less costs of disposal and the value in use.

The amount of value in use is determined as
the present value of estimated future cash
flows from the continuing use of an asset and
from its disposal at the end of its useful life.
For this purpose, the discount rate (pre-tax) is
determined based on the weighted average cost
of capital of the company suitably adjusted for
risks specified to the estimated cash flows of
the asset.

For this purpose, a cash generating unit is
ascertained as the smallest identifiable group
of assets that generates cash inflows that are
largely independent of the cash inflows from
other assets or groups of assets.

If recoverable amount of an asset (or cash
generating unit) is estimated to be less than
its carrying amount, such deficit is recognised
immediately in the Statement of Profit and Loss
as impairment loss and the carrying amount of
the asset (or cash generating unit) is reduced to
its recoverable amount.

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. If no such
transactions can be identified, an appropriate
valuation model is used. These calculations are
corroborated by valuation multiples, quoted
share prices for publicly traded companies or
other available fair value indicators.

The Company bases its impairment calculation
on detailed budgets and forecast calculations,
which are prepared separately for each of the
Company's CGUs to which the individual assets
are allocated. To estimate cash flow projections
beyond periods covered by the most recent
budgets/forecasts, the Company extrapolates
cash flow projections in the budget using a
steady or declining growth rate for subsequent
years, unless an increasing rate can be justified.

Impairment losses of continuing operations,
including impairment on inventories, are
recognised in the statement of profit and loss.

For assets excluding goodwill, 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. Impairment losses relating to
goodwill cannot be reversed in future periods.