2). MATERIAL ACCOUNTING POLICIES
The material accounting policies applied by the Company in the preparation of its financial
statements are listed below. Such accounting policies have been applied consistently to all the
periods presented in these financial statements and in preparing the Ind AS Balance Sheet,
Statement of Profit and Loss Account, Statement of Cash Flow, Statement of changes in equity
and notes forming part of financials.
a. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
These Standalone financial statements have been prepared in accordance with the Indian
Accounting Standards (hereinafter referred to as the 'Ind AS') as notified by Ministry of
Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 read with Rule 3 of the
Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time.
The standalone financial statements have been prepared on accrual and going concern basis.
The accounting policies are applied consistently to all the periods presented in the standalone
financial statements.
All assets and liabilities have been classified as current or non-current as per the Company's
normal operating cycle, the Company has considered an operating cycle of 12 months
Financial statements are presented in Indian Rupee (') which is the functional currency, and
all values are rounded to the nearest Lakhs as per the requirement of Schedule III to the
Companies Act, 2013, except where otherwise indicated. The Company has prepared the
financial statements on the basis that it will continue to operate as a going concern.
Foreign currency transactions are recorded at exchange rates prevailing on the date of the
transaction. Foreign currency denominated monetary assets and liabilities are retranslated
at the exchange rate prevailing on the balance sheet dates and exchange gains and losses
arising on settlement and restatement are recognised in the statement of profit and loss.
b. USE OF ESTIMATES
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 ofassets and liabilities, disclosures relating
to 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 recognised in the period
in which the estimates are revised and future periods are affected. Estimates and judgements
are continually evaluated. They are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the company and that are
believed to be reasonable under the circumstances. Information about critical judgments
in applying accounting policies, as well as estimates and assumptions that have the most
significant effect to the carrying amounts of assets and liabilities within the next financial year,
are as follows:
• Determination of the estimated useful lives of tangible assets and the assessment as to
which component of the cost may be capitalized - refer point 1 (d) of material accounting
policies
• Determination of the estimated useful lives of Intangible assets and the assessment as to
which component of the cost may be capitalized - refer point 1 (e) of material accounting
policies
• Recognition of deferred tax assets - refer note no. 6
• Recognition and measurement of defined benefit obligations - refer note no. 34
• Provisions and Contingent Liabilities - refer note no. 35
c. CURRENT AND NON - CURRENT CLASSIFICATION
The Company presents assets and liabilities in the balance sheet based on current/ non¬
current classification.
An asset is treated as current when it is:
• Expected to be realised or intended to be sold or consumed in normal operating cycle
• Held primarily for the purpose of trading
• 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 held primarily for the purpose of trading
• It is due to be settled within twelve months after the reporting period, or
• There is no unconditional right to defer the settlement of the liability for at least twelve
months after the reporting period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their
realisation in cash and cash equivalents. The Company has identified twelve months as its
operating cycle.
d. PROPERTY, PLANT AND EQUIPMENT
Property, Plant and Equipment are stated at acquisition cost, net of accumulated depreciation
and accumulated impairment losses, if any. Capital work-in-progress is stated at cost less any
recognised impairment loss, if any. Cost includes acquisition cost and any capital expenditure
directly attributable to the cost of acquisition. All other repair and maintenance costs that do
not enhance the life or benefit of the property, plant and equipment are recognised in profit or
loss as incurred.
Gains or losses arising on retirement or disposal of property, plant and equipment are
recognised in the Statement of Profit and Loss.
DEPRECIATION METHODS, ESTIMATED USEFUL LIFE AND RESIDUAL VALUE:
Depreciation is provided on the Written Down method on the estimated useful life as
prescribed under Schedule II to the Companies Act, 2013 to allocate the cost of assets, net
of their residual values, over their estimated useful lives. Depreciation is calculated on a
pro-rata basis from the date of acquisition/installation till the date the assets are sold or
disposed of:
The residual values are not more than 5% of the original cost of the asset. The residual values,
useful lives and method of depreciation of property, plant and equipment is reviewed at each
financial year end and adjusted prospectively, if appropriate.
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 disposal or retirement of an item of property, plant and equipment is determined as
the difference between sales proceeds and the carrying amount of the asset and is recognised
in profit or loss. Fully depreciated assets still in use are retained in financial statements at
residual value.
e. INTANGIBLE ASSETS
Intangible assets are amortized on straight-line basis over the useful life prescribed in
Schedule II to the Companies Act, 2013 or technical estimate made by the Company. Intangible
Assets are recognized only when future economic benefits arising out of the assets flow to
the enterprise and are amortised over their useful life of 3 years/ 10 years as decided by the
management. 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 Statement of Profit and Loss in the period in which the expenditure
is incurred. Gains or losses arising from derecognition of an intangible asset are measured as
the difference between the net disposal proceeds and the carrying amount of the asset and are
recognised in the Statement of Profit and Loss when the asset is derecognised. Kindly refer to
Note No. 4 of the Standalone Financials for recognition and amortisation details for the year.
f. INVESTMENT IN SUBSIDIARIES AND ASSOCIATES
Investments in subsidiaries and associates are carried at cost less accumulated impairment
losses, if any. Where an indication of impairment exists, the carrying amount of the investment
is assessed and written down immediately to its recoverable amount. Any disposal of
investments in subsidiaries, the difference between net disposal proceeds and the carrying
amounts are recognized in the Statement of Profit and Loss.
g. INVENTORIES
Inventories are valued at the lower of cost and net realizable value. Cost includes cost of
purchase and other cost incurred in bringing the inventories to their present location and
condition, net of discounts and rebates. Cost is determined on First in First out (FIFO) basis. Net
realizable value is the estimated selling price in the ordinary course of business, less estimated
costs of completion and the estimated costs necessary to make the sale.
h. CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments, which are readily convertible into
known amounts of cash that are subject to an insignificant risk of change in value, to be cash
equivalents. Cash and cash equivalents consist of balances with banks, Cash in hand and short¬
term deposits with an original maturity of three months or less that are readily convertible to
known amounts of cash, which are unrestricted for withdrawal and usage.
Other bank balances represent balances held with banks that are not readily available for use
by the Company in its day-to-day operations and do not meet the definition of cash and cash
equivalents. Such balances primarily include:
• Margin money deposits against borrowings, guarantees, or other commitments, and
• Unpaid dividend accounts
These balances are carried at amortised cost using the effective interest rate method, where
applicable.
CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby profit for the period is adjusted
for the effects of transactions of non-cash nature, any deferrals or accruals of operating cash
receipts or payments and items of income or expenses associated with investing or financing
cash flows. The cash flows from operating, investing and financing activities of the Company
are segregated based on the nature of transactions.
i. FINANCIAL INSTRUMENTS
Financial assets and liabilities are recognised when the Company becomes a party to the
contractual provisions of the instrument. Financial assets and 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 profit or loss) are added to or deducted from the fair value measured on
initial recognition of financial asset or financial liability.
FINANCIAL ASSETS AT AMORTISED COST
Financial assets are subsequently measured at amortised cost if these financial assets are
held within a business whose objective is to hold these assets in order to collect contractual
cash flows and the contractualterms of the financial assets give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount outstanding.
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (FVTOCI)
Financial assets are measured at fair value through other comprehensive income if these
financial assets are held within a business whose objective is achieved by both collecting
contractual cash flows that give rise on specified dates to solely payments of principal and
interest on the principal amount outstanding and by selling financial assets.
The Company has made an irrevocable election to present subsequent changes in the fair
value of equity investments not held for trading in Other Comprehensive Income
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)
Financial assets are measured at fair value through profit or loss unless it is measured at
amortised cost or at fair value through other comprehensive income on initial recognition.
The transaction costs directly attributable to the acquisition of financial assets and liabilities
at fair value through profit or loss are immediately recognised in profit or loss.
FINANCIAL LIABILITIES
All financial liabilities are recognised initially at fair value and in the case of loans and
borrowings and payables, net of directly attributable transaction costs.
The Company's financial liabilities include trade and other payables, loans and borrowings
including bank overdrafts and other current liabilities.
After initial recognition, interest-bearing loans and borrowings are subsequently measured
at amortised cost using the EIR method. Amortised cost is calculated by taking into account
any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
Gains and losses are recognised in profit or loss when the liabilities are derecognised as well
as through the EIR amortisation process. The EIR amortisation is included as finance costs in
the Statement of Profit and Loss.
OFF SETTING OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are offset and the net amount is reported in the
Balance Sheet if there is a currently enforceable legal right to offset the recognised amounts
and there is an intention to settle on a net basis, to realise the assets and settle the liabilities
simultaneously.
DE-RECOGNITION FINANCIAL ASSETS AND FINANCIAL LIABILITIES
FINANCIAL ASSETS
The Company de-recognises a financial asset when the contractual rights to the cash flows
from the financial asset expire, or it transfers the rights to receive the contractual cash flows
in a transaction in which substantial risks and rewards of ownership of the financial asset
are transferred, or in which the Company neither transfers nor retains substantial risks and
rewards of ownership and does not retain control of the financial asset. If the Company enters
into transactions whereby it transfers assets recognised on its balance sheet but retains either
all or substantially all of the risks and rewards of the transferred assets, the transferred assets
are not derecognised. On de-recognition of a financial asset in its entirety, the difference
between the asset's carrying amount and the sum of the consideration received and receivable
is recognised as gain or loss in the statement of profit and loss.
FINANCIAL LIABILITIES
The Company de-recognises financial liabilities when and only when, the Company's
obligations are discharged, cancelled or have expired. The difference between the carrying
amount of the financial liability de-recognised and the consideration paid and payable is
recognised in statement of profit and loss.
j. FAIR VALUE MEASUREMENT
i. Some of the Company's accounting policies or disclosures require the measurement of fair
value for both financial and non-financial assets and liabilities. 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 under current market conditions
regardless of whether that price is directly observable or estimated using another valuation
technique. 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.
ii. 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.
iii. 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.
iv. All assets and liabilities for which fair value is measured or disclosed in the 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 - This hierarchy uses quoted (unadjusted) market prices in active markets for
identical assets or liabilities.
• Level 2 - The fair value of financial instruments that are not traded in an active market
is determined using valuation techniques which maximize the use of observable
market data and rely as little as possible on company specific estimates.
• Level 3 - If the lowest level input that is significant to the fair value measurement is
not based on observable market data.
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