This note provides a list of the material accounting policies adopted in the preparation of these
financial statements. These policies have been consistently applied to all the years presented,
unless otherwise stated.
(a) Basis of preparation
(i) Compliance with Ind AS
The financial statements comply in all material aspects with Indian Accounting Standards (Ind
AS) notified under section 133 of the Companies Act, 2013 (the "Act") [Companies (Indian
Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
The Board of Directors have authorized these financial statements for issue on February 18,
2025.
(ii) Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the
following:
a. Certain financial assets and liabilities which are measured at fair value;
b. Defined benefit plans - plan assets measured at fair value.
The financial statements are presented in Indian Rupees in Lakhs, except when otherwise
indicated.
(iii) Current/ Non-current classification
All assets and liabilities have been classified as current or non-current as per the Company's
operating cycle and other criteria set out in the Schedule III of the Companies Act, 2013.
Based on the nature of products and the time between the acquisition of assets for
processing and their realization in cash and cash equivalents, the Company has ascertained
its operating cycle as 12 months for the purpose of current and non-current classification of
assets and liabilities.
(b) Revenue recognition
The Company manufactures a wide range of specialty chemicals for electrical insulation and
construction industries, which includes Primary Insulation, Secondary Insulation and Electronic &
Engineering Materials.
(i) Revenue from contracts with customers
Revenue is recognized when a customer obtains control of a promised good or service and
thus has the ability to direct the use and obtain the benefits from the good or service in an
amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods and services.
Revenue is recognised at point in time when control of goods is transferred to the customer -
based on delivery terms, payment terms, customer acceptance and other indicators of
control as mentioned above; at an amount that reflects the consideration which the
Company expects to be entitled in exchange for those goods.
The five-step process that is applied before revenue can be recognised:
(i) identify contracts with customers;
(ii) identify the separate performance obligation;
(iii) determine the transaction price of the contract;
(iv) allocate the transaction price to each of the separate performance obligations, and
(v) recognise the revenue as each performance obligation is satisfied.
The timing of when the Company transfers the goods may differ from the timing of the
customer's payment. Amounts disclosed as revenue are net of returns, trade allowances,
rebates, taxes and amounts collected on behalf of third parties such as Goods and Services
Tax (GST).
The Company does not expect to have any contracts where the period between the transfer
of goods or services to the customer and payment by the customer exceeds one year. As a
consequence, the Company does not adjust any of the transaction prices for the time value of
money.
(ii) Export incentives
Export incentives are accounted for in the year of export of goods, if the entitlements can be
estimated with reasonable accuracy and conditions precedent to claim are reasonably
expected to be fulfilled.
(c) Property, plant and equipment
Freehold land and Capital work in progress are carried at historical costs. All other items of
property, plant and equipment are stated at historical cost, net of accumulated depreciation and
accumulated impairment losses, if any. Such historical cost includes the cost of replacing part of
the property, plant and equipment and borrowing costs if the recognition criteria are met. No
decommissioning liabilities are expected or be incurred on the assets of plant and equipment.
Expenditure directly relating to construction activity is capitalised. Indirect expenditure incurred
during construction period is capitalised as part of the construction costs to the extent the
expenditure can be attributable to construction activity or is incidental there to.
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 Company and the cost of the item can be measured reliably. The carrying amount of any
component accounted for as a separate asset is derecognized when replaced. All other repairs and
maintenance are charged to profit or loss during the reporting period in which they are incurred.
Depreciation methods, estimated useful lives and residual value
Depreciation on property, plant and equipment is provided on straight line method to allocate the
cost of the assets, net of their residual values, over their estimated useful lives as follows.
Depreciation commences when the assets are ready for their intended use.
The Company, based on technical assessments made by technical experts and management
estimates, depreciates the certain items of property, plant and equipment over estimated useful
lives which are different from the useful life prescribed in Schedule II to the Companies Act, 2013.
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. Table below provide the
details of the useful lives followed by the management and useful lives prescribed under Schedule
II of the Companies Act, 2013:
The leasehold improvements and property, plant and equipment acquired under leases is
depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease
term, unless the entity expects to use the assets beyond the lease term.
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 or loss when the asset is derecognised.
The asset's residual values and useful lives are reviewed and adjusted if appropriate, at the end of
the reporting period. An asset's carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These
are included in profit or loss within other income/ other expenses respectively.
(d) Investment properties
Investment properties (held to earn rentals or for capital appreciation or both) are stated in the
balance sheet at cost, less any subsequent accumulated depreciation and subsequent
accumulated impairment losses. Transfer to, or from, investment property is done at the carrying
amount of the property.Subsequent expenditure is capitalized to the asset's carrying amount only
when it is probable that the future economic benefits associated with the expenditure will flow to
the company and the cost of the item can be measured reliably. All other repairs and maintenance
costs are expensed when incurred. When part of an investment property is replaced, the carrying
amount of the replaced part is derecognized.
Investment property includes office building, that has an useful life of 60 years. Depreciation for
office building is provided for on the straight-line method over the useful life.
(e) Intangible assets
Intangible assets are recognised when it is probable that the future economic benefits that are
attributable to the assets will flow to the Company and the cost of the asset can be measured
reliably.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost less accumulated amortisation and accumulated
impairment losses. Internally generated intangible assets, excluding capitalised development
costs, are not capitalised and the expenditure is recognised in the Statement of Profit and Loss in
the period in which the expenditure is incurred.
Intangible assets with finite lives are amortised over their useful economic lives 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 statement of profit or loss.
Research costs are expensed as incurred.
Technical Know-how, Customer Relationships and Non-Compete Rights acquired in a business
combinati'on/assets acquisition are recognised at fair value at the acquisition date. They have a
finite useful life and are subsequently carried at cost less accumulated amortization.
Gains or losses arising from the retirement or disposal of an intangible asset are determined as the
difference between the net disposal proceeds and the carrying amount of the asset and
recognized as income or expense in the profit or loss.
The amortisation period and the amortisation method are reviewed at least at each financial year
end. If the expected useful life of the asset is significantly different from previous estimates, the
amortisation period is changed accordingly.
The Company has tested the carrying value of Intangible Asset under Development for impairment
as at reporting date and no impairment has been identified.
(f) Investments and other Financial assets
(i) Classification & Recognition
The Company classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value (either through other
comprehensive income, or through profit or loss), and
• those measured at amortized cost.
The classification depends on the entity's business model for managing the financial
assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss
or other comprehensive income.
(ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the
case of a financial asset not at fair value through profit or loss, transaction costs that are
directly attributable to the acquisition of the financial asset. Transaction costs of
financial assets carried at fair value through profit or loss are expensed in profit or loss
statement.
The Company classifies its financial assets as follows:
• Amortized cost: Assets that are held for collection of contractual cash flows where
those cash flows represent solely payments of principal and interest are measured
at amortized cost. A gain or loss on interest income from these financial assets is
included in other income using the effective interest rate method.
• Fair value through other comprehensive income (FVOCI): Assets that are held for
collection of contractual cash flows and for selling the financial assets, where the
assets' cash flows represent solely payments of principal and interest, are
measured at fair value through other comprehensive income (FVOCI). Foreign
exchange gains and losses and impairment expenses are presented as separate
lines item in the financial statements.
• Fair value through profit or loss: Assets that do not meet the criteria for amortised
cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a
financial assets that is subsequently measured at fair value through profit or loss is
recognised in profit or loss and presented net in the statement of profit and loss
within other gains/(losses) in the period in which it arises. Interest income from
these financial assets is included in other income.
(iii) Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated
with its assets carried at amortized cost. The impairment methodology applied depends
on whether there has been a significant increase in credit risk. Refer note 38 for details of
how the company determines whether there has been a significant increase in credit
risk.
For trade receivables, the Company applies the simplified approach permitted by Ind AS
109 Financial Instruments, which requires expected lifefime losses to be recognized
from inifial recognifion of the receivables.
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for
measurement and recognifion of impairment loss on the following financial assets. The
Company follows 'simplified approach' for recognifion of impairment loss allowance on:
• Trade receivables and
• All lease receivables resulfing from transacfions within the scope of Ind AS 116
The applicafion of simplified approach does not require the Company to track changes in
credit risk. Rather, it recognises impairment loss allowance based on lifefime ECLs at
each reporting date, right from its inifial recognifion. The company has used a pracfical
expedient by compufing the expected credit loss allowance for trade receivables based
on provision matrix. The provision matrix takes into account historical credit loss
experience and adjusted for forward looking informafion.
The Company does not have any purchased or originated credit-impaired (POCI)
financial assets, i.e., financial assets which are credit impaired on purchase/ originafion.
(iv) Derecognifion of financial assets
A financial asset is derecognized only when
• The Company has transferred the rights to receive cash flows from the financial
asset or
• retains the contractual rights to receive the cash flows of the financial asset, but
assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the company evaluates whether it has
transferred substanfially all risks and rewards of ownership of the financial asset. In such
cases, the financial asset is derecognized. Where the enfity has not transferred
substanfially all risks and rewards of ownership of the financial asset, the financial asset
is not derecognized.
Where the enfity has neither transferred a financial asset nor retains substanfially all
risks and rewards of ownership of the financial asset, the financial asset is derecognized
if the Company has not retained control of the financial asset. Where the Company
retains control of the financial asset, the asset is confinued to be recognized to the
extent of continuing involvement in the financial asset.
(v) Reclassificafion of financial assets
The Company determines classificafion of financial assets and liabilities on inifial
recognifion. After inifial recognifion, no reclassificafion is made for financial assets
which are equity instruments and financial liabilifies. For financial assets which are debt
instruments, a reclassificafion is made only if there is a change in the business model for
managing those assets. Changes to the business model are expected to be infrequent.
The Company's senior management determines change in the business model as a
result of external or internal changes which are significant to the Company's operafions.
Such changes are evident to external parfies. A change in the business model occurs
when the Company either begins or ceases to perform an acfivity that is significant to its
operafions. If the Company reclassifies financial assets, it applies the reclassificafion
prospecfively from the reclassificafion date which is the first day of the immediately next
reporfing period following the change in business model. The Company does not restate
any previously recognised gains, losses (including impairment gains or losses) or interest
(vi) Income recognifion
Dividend income from investments is recognized when the right to receive payment is
established.
Interest income is recognized on a fime proporfion basis taking into account the amount
outstanding and the rate applicable.
(g) Taxation
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 adjusted by changes in deferred tax
assets and liabilifies attributable to temporary differences and to unused tax losses.
Current Tax
The current income tax charge is calculated on the basis of the tax laws enacted or
substanfively enacted at the end of the reporfing period. Management periodically evaluates
positions taken in tax returns with respect to situafions in which applicable tax regulafion is
subject to interpretafion. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorifies.
Deferred tax
Deferred income tax is provided in full, using the liability method, on temporary differences
arising between the tax bases of assets and liabilifies and their carrying amounts in the
financial statements. Deferred income tax is also not accounted for if it arises from inifial
recognifion of an asset or liability in a transacfion other than a business combinafion that at
the fime of the transacfion affects neither accounfing profit nor taxable profit (tax loss).
Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporfing period and are expected to apply when the
related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred tax assets are recognized for all deducfible temporary differences and unused tax
losses only if it is probable that future taxable amounts will be available to ufilize those
temporary differences and losses.
Deferred tax assets and liabilifies are offset when there is a legally enforceable right to offset
current tax assets and liabilifies and when the deferred tax balances relate to the same
taxation authority. Current tax assets and tax liabilifies are offset where the enfity has a legally
enforceable right to offset and intends either to settle on a net basis, or to realize the asset
and settle the liability simultaneously.
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