2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation of financial statements
The financial statements have been prepared in 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 financial statements have been prepared on a historical
cost basis, except certain assets and liabilities measured at
fair value (refer accounting policies). The financial statements
are presented in INR, except where otherwise stated.
These financial statements have been prepared on the basis
of the going concern assumption, which contemplates the
realization of assets and settlement of liabilities in the normal
course of business.
The management has evaluated the Company's operational
and financial performance, available funding lines, and
projected cash flows for the foreseeable future. Based on
this assessment, there are no material uncertainties that
may cast significant doubt about the Company's ability to
continue as a going concern. Accordingly, these financial
statements do not include any adjustments relating to
the recoverability or classification of recorded assets and
liabilities that may be necessary if the Company were unable
to continue as a going concern.
These Financial statements do not reflect the effects of events
that occurred after the respective dates of the board meeting
held for the approval of the financial statements as at and for
the year ended March 31, 2025, as mentioned above.
The accounting policies are applied consistently and
presented in the financial statement except where a newly
issued accounting standard is initially adopted or a revision
to an existing accounting standard requires a change in
accounting policy hitherto in use.
The financial statements of the Company for the year ended
March 31, 2025 were approved for issue in accordance with
the resolution of the Board of Directors on May 26, 2025.
Summary of material accounting policies
2.2 Overall Consideration
The financial statements have been prepared using the
significant accounting policies and measurement basis
summarised below. These were used throughout all periods
presented in the financial statements.
2.3 Basis of preparation
The financial statements have been prepared on the historical
cost basis except for certain financial instruments that are
measured at fair values at the end of each reporting period,
as explained in the accounting policies below.
Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
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, regardless of
whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of
an asset or a liability, the Company takes into account the
characteristics of the asset or liability if market participants
would take those characteristics into account when pricing
the asset or liability at the measurement date. Fair value for
measurement and/or disclosure purposes in these financial
statements is determined on such a basis, except for leasing
transactions that are within the scope of Ind AS 116, and
measurements that have some similarities to fair value but
are not fair value, such as net realisable value in Ind AS 2 or
value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2, or 3 based on
the degree to which the inputs to the fair value measurements
are observable and the significance of the inputs to the fair
value measurement in its entirety, which are described as
follows:
Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the
entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included
within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or
liability."
2.4 Current Versus Non-Current Classification
The Company presents assets and liabilities in the balance
sheet based on current/non-current classification. An asset is
classified as current when it is:
• Expected to be realised or intended to 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 classified as 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
All other liabilities are classified 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 determined its operating
cycle, as explained in Schedule III of the Companies Act, 2013,
as twelve months, having regard to the nature of business
being carried out by the Company. The same has been
considered for classifying assets and liabilities as 'current' and
’non-current' while preparing the financial statements.
2.5 Key Accounting Estimates & Judgements
The preparation of financial statements requires management
to make judgements, estimates and assumptions in the
application of accounting policies that affect the reported
amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates. Continuous evaluation
is done on the estimation and judgements based on historical
experience and other factors, including expectations of
future events that are believed to be reasonable. Revisions to
accounting estimates are recognised prospectively.
Information about critical judgements 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 included in
the following note. The areas involving critical estimates or
judgement are
a) Estimation of Employee benefit obligation - Please refer
note no -40.
b) Probable outcome of matters included under Contingent
Liabilities - please refer notes no - 36
c) Estimation of Deferred Tax Asset - Please refer notes
no. - 20.
2.6 Foreign currency translation
Functional and presentation currency
The financial statements are presented in Indian Rupee ('INR')
which is also the functional and presentation currency of the
Company.
Transactions and balances
Foreign currency transactions are recorded in the functional
currency, by applying to the exchange rate between the
functional currency and the foreign currency at the date of
the transaction.
Foreign currency monetary items are converted to functional
currency using the closing rate. Non-monetary items
denominated in a foreign currency which are carried at
historical cost are reported using the exchange rate at the
date of the transactions.
Exchange differences arising on monetary items on settlement,
or restatement as at reporting date, at rates different from
those at which they were initially recorded, are recognized in
the statement of profit and loss in the year in which they arise.
2.7 Revenue Recognition
(i) Sale of goods
Revenue from sale transaction is recognized as and when
significant risks and rewards attached to ownership in the
good is transferred to the buyer. The Company collect Goods
and Service taxes (GST) on behalf of the government, and,
therefore, these are not economic benefits flowing to the
Company. Hence, they are excluded from revenue.
(ii) Sale of Services
Revenue from sale of services is recognised when related
services are rendered.
(iii) Rental Income
Rent income is accounted on accrual basis.
(iv) Interest Income
Interest income is accrued on a time proportion basis, by
reference to the principal outstanding and the effective
interest rate applicable.
(v) Dividend income
Dividend income from investments is recognized when the
Company's rights to receive payments have been established.
2.8 Borrowing Cost
General and specific borrowing costs directly attributable to
the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of
time to get ready for their intended use or sale, are added
to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale. All other
borrowing costs are recognized as expenses in Statement of
Profit and Loss in the period in which they are incurred.
2.9 Property, Plant and Equipment & Right of
Use Assets
Recognition and initial measurement
Property, plant and equipment are stated at their cost of
acquisition. The cost comprises purchase price, borrowing cost
if capitalization criteria are met and directly attributable cost
of bringing the asset to its working condition for the intended
use. Any trade discount and rebates are deducted in arriving
at the purchase price. 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.
All other repair and maintenance costs are recognized in
statement of profit or loss as incurred.
Subsequent measurement (Depreciation and Useful
Lives)
Depreciation on property, plant and equipments are provided
to the extent of depreciable amount on the straight line (SLM)
Method. Depreciation is provided at the rates and in the
manner prescribed in Schedule II to the Companies Act, 2013.
The residual values, useful lives and methods of depreciation/
amortization of property, plant and equipment are reviewed
at each financial year end and adjusted prospectively, if
appropriate.
Advances and Capital Work in Progress
Advances paid towards the acquisition of property, plant
and equipment outstanding at each balance sheet date is
classified as capital advances under other non-current assets
and the cost of assets not put to use before such date are
disclosed under ’Capital work-in-progress'.
The factory leasehold land has been classified as Right of use
of assets as per requirement of IND AS 116 Leases.
De-recognition
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 de-recognition of the
2.10 Intangible Assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired
separately are carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is
recognised on a straight-line basis over their estimated useful
lives. The estimated useful life and amortisation method
are reviewed at the end of each reporting period, with the
effect of any changes in estimate being accounted for on
a prospective basis. Intangible assets with indefinite useful
lives that are acquired separately are carried at cost less
accumulated impairment losses.
The Company has elected to continue with the carrying
value of all its intangible assets recognised as on April 1, 2020
measured as per the previous GAAP and use that carrying
value as its deemed cost as on transition date.
De-recognition of intangible assets
An intangible asset is derecognised on disposal, or when no
future economic benefits are expected from use or disposal.
Gains or losses arising from derecognition of an intangible
asset, measured as the difference between the net disposal
proceeds and the carrying amount of the asset, are recognised
in profit or loss when the asset is derecognised.
Useful Lives of Intangibles
Estimated useful lives of the intangible assets are as follows:
Computer Software 5 Years on straight line basis based on
management estimate
2.11 Impairment testing of non-financial assets
At each reporting date, the Company assesses whether
there is any indication based on internal/external factors, that
an asset may be impaired. If any such indication exists, the
Company estimates the recoverable amount of the asset.
If such recoverable amount of the asset or the recoverable
amount of the cash generating unit to which the asset belongs
is less than its carrying amount, the carrying amount is reduced
to its recoverable amount and the reduction is treated as an
impairment loss and is recognised in the statement of profit
and loss. If, at the reporting date there is an indication that
a previously assessed impairment loss no longer exists, the
recoverable amount is reassessed and the asset is reflected
at the recoverable amount. Impairment losses previously
recognized are accordingly reversed in the statement of profit
and loss.
2.12 Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.
Classification
The Company classifies financial assets as subsequently
measured at amortized cost, fair value through other
comprehensive income or fair value through profit or loss
on the basis of its business model for managing the financial
assets and the contractual cash flows characteristics of the
financial asset.
The Company classifies all financial liabilities as subsequently
measured at amortized cost, except for financial liabilities
at fair value through profit or loss. Such liabilities, including
derivatives that are liabilities, shall be subsequently measured
at fair value."
Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value and
transaction cost that is attributable to the acquisition of the
financial asset is also adjusted.
Subsequent measurement
For purposes of subsequent measurement financial assets
are classified in below categories:
Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost
if it is held within a business model whose objective is to hold
the asset in order to collect contractual cash flows and the
contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Financial assets at fair value through other
comprehensive income
A financial asset is subsequently measured at fair value
through other comprehensive income if it is held within a
business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets and the
contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding. The Company
has made an irrevocable election for its investments which
are classified as equity instruments to present the subsequent
changes in fair value in other comprehensive income based
on its business model.
Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above
categories are subsequently fair valued through profit or loss.
De-recognition of financial assets
A financial asset is primarily de-recognized when the rights
to receive cash flows from the asset have expired or the
Company has transferred its rights to receive cash flows from
the asset.
Financial liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and
transaction cost that is attributable to the acquisition of
the financial liabilities is also adjusted. Financial liabilities are
classified as amortised cost.
Subsequent measurement
These liabilities include are borrowings and deposits.
Subsequent to initial recognition, these liabilities are measured
at amortized cost using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognized when the obligation
under the liability is discharged or cancelled or expires. When
an existing financial liability is replaced by another from the
same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an
exchange or modification is treated as the de-recognition of
the original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognized in
the statement of profit or loss.
Offsetting 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 recognized amounts and
there is an intention to settle on a net basis, to realize the
assets and settle the liabilities simultaneously.
2.13 Impairment of financial assets
In accordance with Ind-AS 109, the Company applies expected
credit loss (ECL) model for measurement and recognition of
impairment loss for financial assets.
ECL is the difference between all contractual cash flows that
are due to the Company in accordance with the contract
and all the cash flows that the Company expects to receive.
When estimating the cash flows, the Company is required to
consider:
• All contractual terms of the financial assets (including
prepayment and extension) over the expected life of the
assets.
• Cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
Trade receivables
The Company applies approach permitted by Ind AS 109
Financial Instruments, which requires expected lifetime losses
to be recognized from initial recognition of receivables.
Other financial asset
For recognition of impairment loss on other financial assets and
risk exposure, the Group determines whether there has been
a significant increase in the credit risk since initial recognition
and if credit risk has increased significantly, impairment loss is
provided.
2.14 Leases
The Company's lease asset classes primarily consist of leases
for land and buildings. The Company assesses whether a
contract contains a lease, at inception of a contract. A contract
is, or contains, a lease if the contract conveys the right to
control the use of an identified asset for a period of time in
exchange for consideration. To assess whether a contract
conveys the right to control the use of an identified asset,
the Company assesses whether: (i) the contract involves the
use of an identified asset (ii) the Company has substantially
all of the economic benefits from use of the asset through
the period of the lease and (iii) the Company has the right to
direct the use of the asset.
At the date of commencement of the lease, the Company
recognizes a right-of-use asset ("ROU") and a corresponding
lease liability for all lease arrangements in which it is a lessee,
except for leases with a term of twelve months or less (short¬
term leases) and low value leases. For these short-term
and low value leases, the Company recognizes the lease
payments as an operating expense on a straight-line basis
over the term of the lease.
Certain lease arrangements includes the options to extend or
terminate the lease before the end of the lease term. ROU
assets and lease liabilities includes these options when it is
reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct costs.
They are subsequently measured at cost less accumulated
depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the lease term
and useful life of the underlying asset. Right of use assets are
evaluated for recoverability whenever events or changes in
circumstances indicate that their carrying amounts may not
be recoverable.
The lease liability is initially measured at amortized cost at
the present value of the future lease payments. The lease
payments are discounted using the interest rate implicit in
the lease or, if not readily determinable, using the incremental
borrowing rates in the country of domicile of these leases.
Lease liabilities are remeasured with a corresponding
adjustment to the related right of use asset if the Company
changes its assessment if whether it will exercise an extension
or a termination option.
Lease liability and ROU asset have been separately presented
in the Balance Sheet and lease payments have been classified
as financing cash flows."
2.15 Inventories
Inventories are valued at cost or net realizable value,
whichever is lower.
The cost in respect of the various items of inventory is
computed as under:
In case of raw materials at weighted average cost plus direct
expenses. The cost includes cost of purchase and other costs
incurred in bringing the inventories to their present location
and condition.
In case of stores and spares at weighted average cost plus
direct expenses. The cost includes cost of purchase and
other costs incurred in bringing the inventories to their present
location and condition.
In case of work in progress at raw material cost plus conversion
costs depending upon the stage of completion.
In case of finished goods at raw material cost plus conversion
costs, packing cost, non recoverable indirect taxes (if
applicable) and other overheads incurred to bring the goods
to their present location and condition.
Net realizable value is the estimated selling price in ordinary
course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.
2.16 Income tax
Tax expense is the aggregate amount included in the
determination of profit or loss for the period in respect of
current tax and deferred tax.
Current income tax is measured at the amount expected
to be paid to the tax authorities in accordance with the
Indian Income Tax Act. 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 other comprehensive income
or directly in equity.
Deferred income taxes are calculated using the liability
method. Deferred tax liabilities are generally recognised in full
for all taxable temporary differences. Deferred tax assets are
recognised to the extent that it is probable that the underlying
tax loss, unused tax credits or deductible temporary difference
will be utilised against future taxable income. This is assessed
based on the Company's forecast of future operating results,
adjusted for significant non-taxable income and expenses
and specific limits on the use of any unused tax loss or credit.
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 realised or the liability is settled, based on tax rates (and
tax laws) that have been enacted or substantively enacted at
the reporting date. Deferred tax relating to items recognised
outside statement of profit and loss is recognised outside
statement of profit and loss (either in OCI or in equity).
As per the Guidance note issued by the Institute of Chartered
Accountants of India, on accounting for credit available in
respect of Minimum Alternative Tax (MAT) under the Income
Tax Act 1961, MAT credit is source controlled by the Company
as a result of past event,(viz., payment of MAT).MAT credit
has expected future economic benefits in the form of its
adjustments against the discharge of the normal tax liability
if the same arises during the specified period and accordingly
MAT credit is an asset. And it should be recognized as asset
only when and to the extent there is convincing evidence that
the Company will pay normal income tax during the specified
period. The Company has recognized MAT credit asset as
there is convincing evidence to the effect that the Company
will pay normal income tax during the specified period.
2.17 Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and
demand deposits with banks/corporations, together with
other short-term, highly liquid investments (original maturity
less than 3 months) that are readily convertible into known
amounts of cash and which are subject to an insignificant risk
of changes in value.
2.18 Post-employment benefits and short-term
employee benefits
Short-term Employee Benefits:
A liability is recognized for benefits accruing to employees in
respect of wages and salaries in the period the related service
is rendered at the undiscounted amount of the benefit that is
expected to be paid in exchange for that service.
Post-employment benefit plans
The Company provides post-employment benefits through
defined contribution and defined benefit plans.
Defined contribution plans
The Company has contributed towards Provident Fund
and Employees State Insurance Corporation fund, and the
same is accounted on the basis of Defined contribution plan.
The Company contributes on defined basis to employees
provident fund and Employees State Insurance Corporation
fund towards post employment benefits, which is administered
by the Regional Provident Fund Authorities and Employees
State Insurance Corporation respectively and has no further
obligation beyond making its contribution, which is charged to
the Statement of Profit and Loss.
Defined benefit plan - Gratuity
For defined benefit retirement benefit plans, the cost of
providing benefits is determined using the projected unit
credit method, with actuarial valuations being carried out at
the end of each annual reporting period. Re-measurement,
comprising actuarial gains and losses, the effect of the
changes to the asset ceiling (if applicable) and the return on
plan assets (excluding net interest), is reflected immediately
in the balance sheet with a charge or credit recognised in
other comprehensive income in the period in which they
occur. Re-measurement recognised in other comprehensive
income is reflected immediately in retained earnings and is
not reclassified to profit or loss. Past service cost is recognised
in profit or loss in the period of a plan amendment. Net interest
is calculated by applying the discount rate at the beginning of
the period to the net defined benefit liability or asset. Defined
benefit costs are categorised as follows:
a. service cost (including current service cost, past service
cost, as well as gains and losses on curtailments and
settlements);
b net interest expense or income; and
c. re-measurement.
The Company presents the first two components of defined
benefit costs in profit or loss in the line item 'Employee benefits
expense'.
The retirement benefit obligation recognised in the balance
sheet represents the actual deficit or surplus in the Company's
defined benefit plans."
|