III. MATERIAL ACCOUNTING POLICIES INFORMATION:
A. Property, plant and equipment (PPE)
i) Recognition and measurement
Items of property, plant and equipment are stated at cost of acquisition, net of recoverable taxes, trade discount and rebates less
accumulated depreciation/ amortization (other than land) and impairment losses. Such costs includes purchase price, borrowing
cost, taxes (other than those subsequently recoverable from tax authorities), duties, freight and any cost directly attributable to
bringing the assets to its working condition for its intended use net of charges on foreign exchange contracts and adjustments
arising from exchange rate variations attributable to the assets.
ii) Subsequent expenditure
Subsequent expenditure incurred such as repairs and maintenance, are normally charged to the statement of profit and loss in the
period in which the costs are incurred. Major inspection and overhauling expenditure is capitalized, if the recognition criteria are
met. The policy of the company is that subsequent costs are included in the asset's carrying amount or recognized as separate
asset, as appropriate, only when it is probable that the future economic benefits associated with the items will flow to the entity
and the cost of the same can be measured reliably.
iii) Replacement of significant part of assets
When significant parts of property, plant and equipment are required to be replaced at intervals, the Company depreciates them
separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the
carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied.
iv) Disposal of Property, Plant or Equipment
Gains and losses on disposal of an item of property, plant and equipments are determined by comparing the proceeds from
disposal with the carrying amount of property, plant and equipment, and are recognized net within other income/other expenses in
statement of profit and loss.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no
future economic benefits are expected from its use. 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 derecognized.
v) Capital Work-in-Progress
Expenses incurred relating to a project; net of income earned during the project development stage prior to its intended use, are
considered as pre-operative expenses and disclosed under Capital Work- in-Progress.
vi) Provisions
Provision of decommissioning & restoration & other liabilities are not made.
vii) Presentation
Property plant and equipment has been shown at gross value in the books of accounts since Depreciation has been separately
credited to Depreciation Reserve account and in the financial statement; Property, plant and equipment shown at Gross Value
along with accumulated depreciation and Net Written Down Value for the current financial year in comparison with previous
financial year.
viii) Government Grants and subsidies
The Company recognises government grants only when there is reasonable assurance that the conditions attached to them will be
complied with, and the grants will be received.
The Government grants in the form of subsidy are presented in the balance sheet by deducting it from carrying amount of the
eligible assets on a pro rata basis. The grant is recognized in the Statement of Profit and loss over the life of a depreciable asset as
a reduced depreciation expense.
ix) Depreciation:
Depreciation on Property, plant & equipment is provided on the straight-line method based on useful life of the assets as prescribed in
Part C of Schedule II to the Companies Act, 2013 or based on estimated useful lives of the assets determined by the management as per
historical practices. Each part of an item of Property, Plant & Equipment with a cost that is significant in relation to total cost of the
Machine is depreciated separately, if its useful life is different than the life ofthe Machine.
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.
Depreciation is not recorded on capital work-in-progress until construction and installation is complete and the asset is ready for its
intended use.
B. Revenue Recognition
The Company's contracts with customers include promises to provide services to the customers. Judgment is required to determine the
transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable
consideration with elements such as schemes, incentives and cash discounts, among others. The estimated amount of variable
consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognized will not occur and is reassessed at the end of each reporting period.
Estimates of rebates and discounts are sensitive to changes in circumstances and the Company's past experience regarding rebate
entitlements may not be representative of customers' actual rebate entitlements in the future.
The Company earns revenue primarily from providing contract testing and analytical services.
Revenue is recognized applying the 5 step approach:
a. Identifying contract with customer as a first step.
b. Having identified a contract, the entity next identifies the performance obligations with that contract. A performance obligation is
a promise in a contract with a customer to transfer either a good or service or a bundle of goods or services that are distinct.
c. Third step in the model is to determine the transaction price and then
d. as fourth step, such transaction price needs to be allocated to the performance obligation identified in step 2.
e. In accordance with this Standard, entity is required to recognize revenue when the entity satisfies the performance obligation.
Revenue is recognized upon transfer of control of promised services to customers in an amount that reflects the consideration which
the Company expects to receive in exchange for those services. Revenue is measured based on the transaction price, which is the
consideration, adjusted for volume discounts, service level credits, performance bonuses, price concessions and incentives, if any, as
specified in the contract with the customer. Revenue also excludes taxes collected from customers. Invoices are payable within
contractually agreed credit period.
Specific Revenue Recognition for Testing Services:
• For testing services: Revenue is recognized when testing is completed and results are delivered to the customer
• For multi-stage testing projects: Revenue is recognized based on completion of distinct performance obligations
• For calibration services: Revenue is recognized upon completion of calibration and certification
• Contract assets are recognized for work completed but not yet billed
• Contract liabilities are recognized for advance payments received from customers
Dividend income is recorded when the right to receive payment is established. Interest income is recognized using the effective
interest method.
C. FINANCIAL INSTRUMENTS
i.) Derivative financial instruments and Hedge Accounting
The Company uses various derivative financial instruments such as currency swaps, forwards & options to mitigate the risk of
changes in exchange rates arising from FCNR(B) loans and foreign currency transactions. Such derivative financial instruments are
initially recognised at fair value on the date on which a derivative contract is entered into and are also subsequently measured at fair
value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is
negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss, except for
the effective portion of cash flow hedges which is recognised in Other Comprehensive Income and later to Statement of Profit and Loss
when the hedged item affects profit or loss or treated as basis adjustment if a hedged forecast transaction subsequently results in the
recognition of a non-financial assets or non-financial liability.
ii. ) Hedges that meet the criteria for hedge accounting are accounted for as follows
Cash Flow Hedge The Company designates derivative contracts or non-derivative financial assets / liabilities as hedging instruments
to mitigate the risk of movement in interest rates and foreign exchange rates for foreign exchange exposure on highly probable future
cash flows attributable to a recognised asset or liability or forecast cash transactions. When a derivative is designated as a cash flow
hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in the cash flow hedging reserve
being part of other comprehensive income. Any ineffective portion of changes in the fair value of the derivative is recognised
immediately in the Statement of Profit and Loss.
If the hedging relationship no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If
the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in
cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the underlying transaction
occurs. The cumulative gain or loss previously recognised in the cash flow hedging reserve is transferred to the Statement of Profit and
Loss upon the occurrence of the underlying transaction. If the forecasted transaction is no longer expected to occur, then the amount
accumulated in cash flow hedging reserve is reclassified in the Statement of Profit and Loss.
Fair Value Hedge The Company designates derivative contracts or non-derivative financial assets / liabilities as hedging instruments
to mitigate the risk of change in fair value of hedged item due to movement in interest rates, foreign exchange rates and commodity
prices. Changes in the fair value of hedging instruments and hedged items that are designated and qualify as fair value hedges are
recorded in the Statement of Profit and Loss. If the hedging relationship no longer meets the criteria for hedge accounting, the
adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to Statement of Profit
and Loss over the period of maturity.
iii. ) Financial Assets Classification and Measurement
All financial assets are initially recognized at fair value. Transaction costs that are directly attributable to the acquisition are adjusted to
the fair value on initial recognition (except for FVTPL instruments).
Subsequent Measurement:
• Amortized Cost: Debt instruments held to collect contractual cash flows (principal and interest only)
• FVTOCI: Debt instruments held to collect and sell, with SPPI characteristics
• FVTPL: All other financial assets including derivative instruments
Impairment of Financial Assets: The Company applies the expected credit loss (ECL) model for measurement and recognition of
impairment loss on trade receivables. For trade receivables, the Company follows a simplified approach and recognizes lifetime
expected credit losses using a provision matrix based on historical credit loss experience and adjusted for forward-looking factors
specific to the debtors and economic environment.
iv. ) Financial Liabilities
Financial liabilities are initially recognized at fair value and subsequently measured at amortized cost using the effective interest
method, except for derivative instruments which are measured at fair value.
D. INVENTORIES
a. Items of inventories are measured at lower of cost or net realizable value, except obsolescence/ defective products which are valued
at net realizable value. Cost of inventories comprises of cost of purchase and other costs including other expenses incurred in bringing
them to their respective present location and condition. b. The comparison of cost and the net realizable value is made on an item-by¬
item basis. c. The cost formulas used are on FIFO basis.
Industry-Specific Inventory Treatment:
• Chemicals, reagents, and consumables used in testing operations
• Reference standards and calibration materials
• Sample preservation materials
E. Borrowing Costs
i) Capitalization Policy
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the
cost of such assets until the assets are substantially ready for their intended use or sale. A qualifying asset is one that necessarily takes
substantial period of time (generally more than 12 months) to get ready for its intended use.
ii) Borrowing Costs Eligible for Capitalization
• Interest on specific borrowings for qualifying assets after deducting income earned on temporary investment of such borrowings
• Interest on general borrowings to the extent used for qualifying assets using weighted average cost of borrowings
• Exchange differences on foreign currency borrowings (including FCNR(B) loans) to the extent regarded as adjustment to interest
costs
• Other borrowing costs directly attributable to qualifying assets
iii) Other Borrowing Costs
All other borrowing costs are recognized as expense in the period in which they occur, including interest on working capital
facilities and term loans for completed assets.
F. Government Grants
i) Recognition
Government grants are recognized only when there is reasonable assurance that the conditions attached to them will be complied
with, and the grants will be received.
ii) Asset-Related Grants
Grants related to assets are presented in the balance sheet by deducting from the carrying amount of the eligible assets. The grant
is recognized in the Statement of Profit and Loss over the life of the depreciable asset as reduced depreciation expense.
iii) Income-Related Grants
Grants to compensate for expenses incurred are recognized in Statement of Profit and Loss in the period when related expenses
are incurred.
G. Fair Value Measurement
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.
i) Fair Value Hierarchy
• Level 1: Quoted prices in active markets for identical assets or liabilities
• Level 2: Observable inputs other than quoted prices (most derivatives fall here)
• Level 3: Unobservable inputs requiring significant management judgment
ii) Application to Financial Instruments
• Derivative instruments: Based on forward rates and present value techniques
• FCNR(B) loans: Present value using current market rates for similar instruments
• Other financial instruments: Various valuation techniques as appropriate
IV. OTHER ACCOUNTING POLICIES:A. Current and Non-current classification:
All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria
set out in the Schedule III to the Companies Act, 2013 and IndAS 1, Presentation ofFinancial Statements.
Assets: An asset is classified as current when it satisfies any of the following criteria: a. It is expected to be realized in, or is intended
for sale or consumption within the Company's normal operating cycle; b. It is held primarily for the purpose of being traded, c. It is
expected to be realized within twelve months after the reporting date; or d. It is cash or a cash equivalent unless it is restricted from
being exchanged or used to settle a liability for at least twelve months after the reporting date.
Liabilities: A liability is classified as current when it satisfies any of the following criteria: a. It is expected to be settled in the
Company's normal operating cycle; b. It is held primarily for the purpose of being traded; c. It is due to be settled within twelve months
after the reporting date; or d. The Company does not have an unconditional right to defer settlement of the liability for at least twelve
months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of
equity instruments do not affect its classification.
Based on the nature of services rendered to customers and time elapsed between deployment of resources and the realization in cash
and cash equivalents ofthe consideration for such services rendered, the Company has considered an operating cycle of 12 months.
Current assets and liabilities include the current portion of non-current assets and liabilities respectively. All other assets and liabilities
are classified as non-current. Deferred tax assets and liabilities are always disclosed as non-current.
B. Cash flow statement:
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes 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 ofchanges in value.
Statement of Cash Flows is prepared in accordance with the Indirect Method prescribed in the Indian Accounting Standard-7
"Statement of Cash Flows"
C. Recoverability of trade receivable
Judgments are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those
receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future
payments and any possible actions that can be taken to mitigate the risk of non-payment.
D. Provisions
Provisions are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past
operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the
liability requires the application of judgment to existing facts and circumstances, which can be subject to change. The carrying
amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
E. Provisions for doubtful debts
Exposures to customers outstanding at the end of each reporting period are reviewed to determine incurred and expected credit losses
and the Company establishes an allowance for doubtful debts and impairment that represents its estimate of expected losses in respect
of trade receivables. Historical trends of impairment of trade receivables do not reflect any significant credit losses. Given that the
macro-economic indicators have undergone change, it has not affected the customers of the Company substantially; hence the
Company expects the historical trend of minimal credit losses to continue. The Provision for doubtful debt as at March 31,2026 related
to customers that have defaulted on their payments to the Company and are not expected to be able to pay their outstanding balances,
mainly due to economic circumstances.
The loss allowance on trade receivable has been computed on the basis of Ind AS 109, Financial Instruments which require such
allowance to be made even for trade receivable considered good on the basis that credit risk exists even though it may be very low. The
Company exposure to credit and currency risk and loss allowance related to trade receivable are disclosed in Note no.11, 36.
F. Impairment of Non-Financial Assets
The Company assesses the chances of an asset getting impaired on each reporting date. If any indication exists, the Company estimates
the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or Cash Generating Units (CGU's) fair value
less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or a group of assets. Where the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using 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.
G. Impairment of Financial Assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss rates. The
Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on Company's past
history, existing market conditions as well as forward looking estimates at the end of each reporting period.
The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires the
management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures
of contingent liabilities as at the date of the financial statements and the reported amounts of income and expense for the periods
presented.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the
period in which the estimates are revised and future periods are affected.
Key sources of estimation of uncertainty at the date of the financial statements, which may cause a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are in respect of impairment of investments, useful lives of property,
plant and equipment, valuation of deferred tax assets and fair value measurement of financial instruments, these are discussed below.
Key sources of estimation of uncertainty in respect of revenue recognition, employee benefits and provisions and contingent liabilities
have been discussed in their respective policies.
H. Leases:
i) As Lessee
The Company, as a lessee, recognises a right of-use asset and a lease liability for its leasing arrangements, if the contract conveys the
right to control the use of an identified asset. The contract conveys the right to control the use of an identified asset, if it involves the use
of an identified asset and the Company has substantially all of the economic benefits from use of the asset and has right to direct the use
of the identified asset. The cost of the right of-use asset shall comprise of the amount of the initial measurement of the lease liability
adjusted for any lease payments made at or before the commencement date plus any initial direct costs incurred. The right-of-use
assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any
re-measurement of the lease liability. The right of-use assets is depreciated using the straight line method from the commencement
date over the shorter of lease term or useful life of right-of-use asset.
ii) Lease Liability
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the
lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate
cannot be readily determined, the Company uses incremental borrowing rate.
iii) Short-term and Low-value Leases
For short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over
the lease term.
I. Intangible Asset
Intangible Assets are stated at cost of acquisition net of recoverable taxes, trade discount and rebates less accumulated amortization
/depletion and impairment loss, if any. Such cost includes purchase price, borrowing costs, and any cost directly attributable to
bringing the asset to its working condition for the intended use, net charges on foreign exchange contracts and adjustments arising
from exchange rate variations attributable to the intangible assets.
Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Amortization is recognized in the statement of profit and loss on a straight-line basis over the estimated useful lives of intangible
assets. The amortization expense is recognized in the statement of profit and loss account in the expense category that is consistent
with the function of the intangible asset. Intangible assets that are not available for use are amortized from the date they are available
for use.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and
the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.
Intangible assets comprises of computer software. Cost of computer software includes cost such as expenditure incurred on
development of the computer software and is amortized on straight line basis over a period of useful life, which in management's
estimate represents the period during which economic benefits will be derived from their use.
J. Capital work in progress
a. Expenditure incurred on assets under construction (including a project) is carried at cost under Capital Work-in-Progress. Such costs
comprises purchase price of asset including import duties and non-refundable taxes after deducting trade discounts and rebates and
costs that are 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.
b. Cost directly attributable to projects under construction include expenditure in relation to survey and investigation activities of the
projects, cost of site preparation, initial delivery and handling charges, installation and assembly costs, professional fees, expenditure
on maintenance and up gradation, among others of common public facilities, depreciation on assets used in construction of project,
interest during construction and other costs if attributable to construction ofprojects. Such costs are accumulated under 'Capital Work-
in-Progress' and subsequently allocated on systematic basis over major assets, other than land and infrastructure facilities, on
commissioning ofprojects.
c. Capital expenditure incurred for creation of facilities, over which the Company does not have control but the creation of which is
essential principally for construction of the project is capitalized and carried under 'Capital work-in-progress' and subsequently
allocated on systematic basis over major assets, other than land and infrastructure facilities, on commissioning of projects, keeping in
view the 'attributability' and the 'Unit of Measure' concepts in Ind AS 16- 'Property, Plant & Equipment'. Expenditure of such nature
incurred after completion of the project, is charged to Statement of Profit and Loss.
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