2. Summary of material accounting
policies
2.1 Basis of preparation
The standalone financial statements comprise
of the standalone balance sheet as at March
31, 2026, standalone statement of profit and
loss (including other comprehensive income),
standalone statement of cash flows and standalone
changes in equity for year ended March 31, 2026
and notes to the standalone financial statements
including material accounting policies and other
explanatory information (hereinafter collectively
referred to as 'standalone financial statements').
The standalone financial statements have been
prepared in accordance with the provisions of the
Companies Act, 2013 (the 'Act') and the Indian
Accounting Standards (’Ind AS’) prescribed under
section 133 of the Act read with Companies (Indian
Accounting Standards) Rules, 2015, as amended
and other relevant provisions of the Act. All amounts
included in the standalone financial statements are
reported in Indian Rupees ('INR') in Crore, unless
otherwise stated.
The standalone financial statements were approved
and were authorised for issue in accordance with a
resolution of the Board of Directors on May 26, 2026.
2.2 Basis of measurement
The standalone financial statements have been
prepared on going concern basis using accrual
method of accounting and historical cost convention,
except for:
(i) certain financial assets and financial liabilities
that are measured at fair value or amortised
cost in accordance with Ind AS.
(ii) defined benefit plans - plan assets measured at
fair value.
2.3 Functional and presentation currency
The standalone financial statements are presented in
in Indian Rupees ('INR' or 'T) which is the Company’s
functional currency.
Amounts in the standalone financial statements are
presented in ^ in Crore rounded off to two decimal
places as permitted by Schedule III to the Act, unless
otherwise stated.
2.4 Current or non-current classification
The Company presents assets and liabilities in the
standalone balance sheet based on current/non-
current classification. An asset is classified as current
when it is:
a. Expected to be realised or intended to be sold
or consumed in normal operating cycle
b. Held primarily for the purpose of trading
c. Expected to be realised within twelve months
after the reporting period, or
d. Cash or cash equivalents 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:
a. Expected to be settled in normal operating cycle
b. Held primarily for the purpose of trading
c. Due to be settled within twelve months after
the reporting period, or
d. 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 identified twelve months as its
operating cycle.
2.5 Critical accounting judgements,
estimates and assumptions
The preparation of standalone financial
statements in conformity with Ind AS requires the
management to make judgments, estimates and
assumptions that affect the reported amounts of
revenue, expenses, current assets, non-current
assets, current liabilities, non-current liabilities and
disclosure of the contingent liabilities at the end of
each reporting period. Although these estimates
are based on management’s best knowledge of
current events and actions, uncertainty about
these assumptions and estimates could result in
the outcomes requiring a material adjustment
to the carrying value of assets or liabilities in
future periods. These estimates are reviewed
regularly and any change in estimates are
adjusted prospectively.
In the process of applying the Company’s accounting
policies, management has made the following
estimates, assumptions and judgements, which
have significant effect on the amounts recognised
in the standalone financial statements:
Judgements
Government grant/ subsidy
The Company was entitled to receive Industrial
Promotion Subsidy under the Package Scheme
of Incentives, for the period from April 1, 2011 to
March 31, 2023. The aforesaid subsidy is in relation
to investment in property, plant and equipment
at Ratnagiri plant. Accordingly, the same has
been classified as grant related to assets and the
Company recognises the revenue from grant over
the remaining useful life of the property, plant and
equipment, from the date on which the Company is
entitled to receive such grants.
Estimates
Defined benefit plan
The cost of defined benefit gratuity plan and present
value of such obligation are determined using
actuarial valuation. An actuarial valuation involves
making various assumptions that may differ from
actual developments in the future. These include
the determination of the discount rate, future salary
increases, mortality rates and attrition rate. Due to
the long-term nature of the plan, such estimates are
subject to significant uncertainty. All assumption are
reviewed at each reporting date.
The most sensitive parameter is the discount
rate. In determining the appropriate discount
rate, management considers the interest rates of
government bonds in currencies consistent with
the currencies of the post-employment benefit
obligation and extrapolated as needed along the
yield curve to correspond with the expected term of
the defined benefit obligation.
The mortality rate is based on publicly available
mortality tables. Those mortality tables tend to
change only at intervals in response to demographic
changes. Future salary increases are mainly based on
expected future inflation rates for the country.
Useful lives of property, plant and equipment
and intangible assets:
The determination of depreciation and amortisation
charge depends on the useful lives for which
judgements and estimations are required. The
residual values, useful lives, and method of
depreciation of property, plant and equipment and
intangible assets are reviewed at each financial year
end and adjusted prospectively, if appropriate.
Claims, provisions and contingent liabilities:
The Company has ongoing litigations with various
regulatory authorities and third parties. Where an
outflow of funds is believed to be probable and a
reliable estimate of the outcome of the dispute can
be made based on management’s assessment
of specific circumstances of each dispute and
relevant external advice, management provides for
its best estimate of the liability. Such accruals are
by nature complex and can take number of years
to resolve and can involve estimation uncertainty.
Information about such litigations is provided in
notes to the standalone financial statements.
Fair value measurement of financial
instruments:
Some of the Company’s assets and liabilities are
measured at fair value for financial reporting
purposes. In estimating the fair value of an asset
or a liability, the Company uses market-observable
data to the extent it is available. Where Level 1 inputs
i.e., market-observable inputs are not available,
the Company engages third party valuers, where
required, to perform the valuation.
Impairment of financial assets:
The impairment allowance for financial assets
are based on assumptions about risk of default
and expected cash loss rates. The Company uses
judgement in making these assumptions and
selecting the inputs to the impairment calculation,
based on the Company’s past history, existing
market conditions as well as forward-looking
estimates at the end of each reporting period.
Deferred tax
Deferred tax assets are recognised for all deductible
temporary differences including the carry forward
of unused tax credits and any unused tax losses.
Deferred tax assets are recognised 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 utilised.
2.6 Fair value measurements
The Company measures financial instruments, such
as non-current and current investments, at fair value,
at each balance sheet date.
Fair value is the amount for which an asset could
be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length
transaction. Quoted market prices, when available,
are used as the measure of fair value. In cases where
quoted market prices are not available, fair values are
determined using present value estimates or other
valuation techniques which maximise the use of
relevant observable inputs and minimize the use of
unobservable inputs, for example, the present value of
estimated expected future cash flows using discount
rates commensurate with the risks involved. Fair
value estimation techniques normally incorporate
assumptions that market participants would use in
their estimates of values, future revenues, and future
expenses, including assumptions about interest
rates, default, prepayment and volatility. Because
assumptions are inherently subjective in nature,
the estimated fair values cannot be substantiated
by comparison to independent market quotes and,
in many cases, the estimated fair values would
not necessarily be realised in an immediate sale or
settlement of the instrument.
The financial instruments carried at fair value are
categorized under the three levels of the Ind AS fair
value hierarchy as follows:
Level 1: Quoted market prices (unadjusted) in
active markets for identical assets or liabilities that
the Company has the ability to access. This level of
the fair value hierarchy provides the most reliable
evidence of fair value and is used to measure fair
value whenever available.
Level 2: Inputs other than quoted prices included
within level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
Level 3: Inputs for the asset or liability that are not
based on observable market data (unobservable
inputs). These inputs reflect the Company’s own
assumptions about the assumptions that market
participants would use in pricing the asset or liability
(including assumptions about risk). These inputs are
developed based on the best information available
in the circumstances, which include the Company’s
own data. The Company’s own data used to develop
unobservable inputs is adjusted if information
indicates that market participants would use
different assumptions.
For assets and liabilities that are recognised in the
standalone financial statements at fair value 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.
2.7 Inventories
Inventories are valued at the lower of cost and net
realisable value. Costs incurred in bringing each
product to its present location and condition are
accounted for, as follows:
• Raw Purchase cost on a moving
materials weighted average basis
and traded and inward transportation.
goods Refundable indirect taxes and
discounts are excluded from cost.
• Finished Cost of direct raw materials
goods and and labour and a proportion of
work in manufacturing overheads based
progress on normal operating capacity but
excluding borrowing costs
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 sell.
Materials and other supplies held for use in the
production of inventories are not written down
below cost where the finished products in which
they are expected to be incorporated are expected
to be sold at or above cost.
2.8 Property, plant and equipment (‘PPE’)
Items of property, plant and equipment are
measured at cost of acquisition or construction
less accumulated depreciation and/or accumulated
impairment loss, if any. The cost of an item of property,
plant and equipment comprises its purchase price,
including import duties, and other non-refundable
taxes or levies and any directly attributable cost of
bringing the asset to its working condition for its
intended use; any trade discounts and rebates are
deducted in arriving at the purchase price.
Capital work-in-progress comprises cost of property,
plant and equipment that are not yet installed and
not ready for their intended use at the balance
sheet date.
Advances paid towards the acquisition of property,
plant and equipment outstanding at each reporting
date are disclosed as capital advances under ‘Other
non-current assets’.
Subsequent costs
The cost of replacing a part of an item of property,
plant and equipment is recognised in the carrying
amount of the item if it is probable that the future
economic benefits embodied within the part will
flow to the Company, and its cost can be measured
reliably. The carrying amount of the replaced part is
derecognised. The costs of the day-to-day servicing
of property, plant and equipment are recognised
in the standalone statement of profit and loss
as incurred.
Disposal
An item of property, plant and equipment is
derecognised upon disposal or when no future
benefits are expected from its use. Gains and
losses on disposal of an item of property, plant
and equipment are determined by comparing the
proceeds from disposal with the carrying amount of
property, plant and equipment, and are recognised
on net basis within other income/other expenses in
the standalone statement of profit and loss.
Depreciation
Depreciation is calculated over the depreciable
amount, which is the cost of an asset, or other
amount substituted for cost, less its residual value.
Depreciation is recognised in the standalone
statement of profit and loss on a straight-line basis
over the estimated useful lives of each part of an item
of property, plant and equipment as prescribed in
Schedule II of the Act or technical evaluation, which
are as follows:
In the case of Captive Power Plant, the management,
based on a technical evaluation, has estimated the
life of asset to be 25 years which is lower than the
life prescribed in Schedule II. Also, in case of moulds
and water works, management has estimated a
lower life than prescribed in Schedule - II based on
technical evaluation.
The management undertakes a review of the residual
values, useful lives and methods of depreciation of
property, plant and equipment at the end of each
reporting period and any adjustments to useful
lives is accounted for prospectively as a change in
accounting estimate.
2.9 Intangible assets and amortisation
Recognition and measurement
Intangible assets are recognised when the asset is
identifiable, is within the control of the Company, it
is probable that the future economic benefits that
are attributable to the asset will flow to the Company
and cost of the asset can be reliably measured.
I ntangible assets acquired by the Company that
have finite useful lives are measured at cost less
accumulated amortisation and any accumulated
impairment losses.
Subsequent measurement
Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied in
the specific asset to which it relates.
Amortisation
Amortisation is calculated over the cost of the
asset, or other amount substituted for cost, less its
residual value.
Intangible assets developed or acquired with finite
useful life are amortized on straight line basis over
the useful life as specified below:
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 recognised
in the statement of profit or loss when the asset
is derecognised.
2.10 Revenue recognition
Revenue from contracts with customers is
recognised when control of the goods or services
are transferred to the customer based on delivery
terms i.e. when the customer is able to direct the use
of the transferred goods or rendering of services and
obtains substantially all of the remaining benefits at
an amount that reflects the consideration entitled in
exchange for those goods or services. The Company
is generally the principal as it typically controls the
goods or services before transferring them to the
customer. A receivable is recognised by the Company
when the control is transferred as this is the case
of point in time recognition where consideration
is unconditional because only the passage of time
is required. No significant element of financing is
deemed present as the sales are made with a credit
period not exceeding 60 days. The management has
ascertained that the credit period is as per normal
industry practices and is not intended to finance
the customers.
The specific recognition criteria described below
must also be met before revenue is recognised.
Sale of goods
Revenue from sale of goods is recognised when
the significant control of the goods have passed to
the buyer, usually when goods are dispatched or on
delivery, as per the terms of sale. Revenue towards
satisfaction of 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 is
net of variable consideration on account of various
discounts and schemes offered by the Company as
part of the contract.
Interest income
For all financial instruments measured at amortised
cost, interest income is recorded using the effective
interest rate (EIR). The EIR is the rate that exactly
discounts the estimated future cash receipts over
the expected life of the financial instrument or a
shorter period, where appropriate, to the net carrying
amount of the financial asset. Interest income is
included in finance income in the statement of
profit or loss.
The Company presents interest income on financial
assets at fair value through profit or loss separately
from fair value changes on such financials assets.
Dividends
Revenue is recognised when the Company’s right to
receive the payment is established, which is in the
year when shareholders approve the dividend.
2.11 Foreign currency transactions:
Items included in the standalone financial
statements are measured using the currency
of the primary economic environment in which
the Company operates (functional currency). The
standalone financial statements are presented in
INR, which is also the Company’s functional and
presentation currency.
Transactions and balances
Transactions in foreign currencies are recorded
at functional currency spot rates at the date the
transaction first qualifies for recognition.
Monetary assets and liabilities denominated in
foreign currencies are translated at the functional
currency spot rates of exchange at the reporting
date. Exchange differences arising on settlement
or translation of monetary items are recognised in
profit or loss.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial
transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value is
determined. The gain or loss arising on translation
of non-monetary items measured at fair value is
treated in line with the recognition of the gain or loss
on the change in fair value of the item.
2.12 Government grants
Government grants are recognised where there is
reasonable assurance that the grant will be received
and all the attached conditions will be complied with.
When the grant relates to an item of expense, 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.
When loans or similar assistance are provided by
government or related institutions with an interest
rate below the current applicable market rate, the
effect of this favorable interest is regarded as a
government grant.
2.13Taxes
Tax comprises current and deferred tax. Income-tax
expense is recognised in the standalone statement
of profit and loss except to the extent it relates to
items directly recognised in equity or in OCI. 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 under
the Income-tax Act, 1961 adjusted by changes in
deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
In which case, the tax is also recognised in other
comprehensive income or equity.
Current income-tax
Current income-tax assets and liabilities are
measured at the amounts expected to be recovered
from or paid to the taxation authorities; on the basis
of the taxable profits computed for the current
accounting period in accordance with Income-
tax Act, 1961. The tax rates and tax laws used to
compute the amount are those that are enacted
at the reporting date. Management periodically
evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions
where appropriate on the basis of amounts expected
to be paid to the tax authorities.
Current tax assets and tax liabilities are offset where
the entity has a legally enforceable right to offset and
intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
Deferred tax
Deferred tax is provided using the balance sheet
approach on temporary differences between the
tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes at the
reporting date.
Deferred tax liabilities are recognised for all taxable
temporary differences. Deferred tax assets are
recognised for all deductible temporary differences,
the carry forward of unused tax credits and any
unused tax losses. Deferred tax assets are recognised
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 utilised. The
carrying amount of deferred tax assets is reviewed at
each reporting 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 utilised. 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
profit or loss is recognised outside profit or loss.
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.
2.14 Leases
Lease is a contract that provides to the customer
(lessee) the right to use an asset for a period of time
in exchange for consideration.
A lessee is required to recognise assets and liabilities
for all leases with a term that is greater than twelve
months, unless the underlying asset is of low value,
and to recognise depreciation of leased assets
separately from interest on lease liabilities in the
standalone statement of profit and loss.
Initial measurement Right-of-use assets
At the commencement date, the Company measures
the right-of-use assets at cost. The cost of the right-
of-use assets comprise:
• the amount of the initial measurement of the
lease liability
• any lease payments made at or before
the commencement date, less any lease
incentives received;
• any initial direct costs incurred by the lessee; and
• an estimate of costs to be incurred by the lessee
in dismantling and removing the underlying asset,
restoring the site on which it is located or restoring
the underlying asset to the condition required by
the terms and conditions of the lease, unless those
costs are incurred to produce inventories. The
lessee incurs the obligation for those costs either
at the commencement date or as a consequence
of having used the underlying asset during a
particular period.
Lease liabilities
At the commencement date, the Company
measures the lease liabilities at the present value
of the lease payments that are not paid at that
date. 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 its incremental
borrowing rate.
Lease payments included in the measurement of the
lease liabilities comprise the following payments:
• fixed payments (including in-substance fixed
payments), less any lease incentives receivable;
• variable lease payments that depend on an index
or a rate, initially measured using the index or rate
as at the commencement date;
• amounts expected to be payable by the Company
under residual value guarantees;
• the exercise price of a purchase option if the
Company is reasonably certain to exercise that
option; and
• payments of penalties for terminating the lease,
if the lease term reflects the lessee exercising an
option to terminate the lease.
Subsequent measurement
Right-of-use assets
Subsequently the Company measures the right-of-
use assets at cost less any accumulated depreciation
and any accumulated impairment losses.
Lease liabilities
Subsequently the Company measures the lease
liabilities by:
• the carrying amount to reflect interest on the
lease liability at the interest rate implicit in the
lease, if that rate can be readily determined or the
Company's incremental borrowing rate.
• reducing the carrying amount to reflect the lease
payments made; and
• re-measuring the carrying amount to reflect any
reassessment or lease modifications or to reflect
revised in-substance fixed lease payments.
Lease liabilities and right-of-use assets have been
separately presented in the standalone balance
sheet and lease payments have been classified as
financing cash flows.
2.15 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.
2.15.1 Financial assets
Initial recognition and measurement
Financial assets, other than trade receivables that
do not contain a significant financing component,
are recognised initially at fair value. In the case of
financial assets not classified as fair value through
profit or loss, transaction costs that are attributable
to the acquisition of the financial asset are added to
the fair value. Trade receivables that do not contain
a significant financing component are measured at
the transaction price determined under Ind AS 115..
Financial assets are recognised in the standalone balance
sheet when the Company becomes a party to the
contractual provisions of the instrument. A regular way
purchase or sale of financial assets shall be recognised
using trade date or settlement date accounting.
Subsequent measurement
For purposes of subsequent measurement, financial
assets are classified in three categories:
a) At amortised cost
b) At fair value through other comprehensive
income (‘FVOCI’)
c) At fair value through profit or loss (‘FVTPL’)
(a) Financial assets classified as measured at
amortised cost
A financial asset shall be measured at amortised
cost if both of the following conditions are met:
• the financial asset is held within a business
model whose objective is to hold financial
assets 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.
After initial measurement, such financial assets
are subsequently measured at amortised cost
using the effective interest rate (‘EIR’) method,
less impairment. 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 method. The EIR amortisation is
included in finance expense/ other income in
the standalone statement of profit and loss. The
losses arising from impairment are recognised
in the standalone statement of profit and loss.
This category generally applies to trade
receivables, loans, certain investments, security
and other deposits, and other financial assets
held by the Company.
(b) Financial assets classified as measured at
FVOCI
A financial asset shall be measured at fair value
through OCI if both of the following conditions
are met:
• the financial asset 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.
After initial measurement, such financial assets,
until they are derecognised or reclassified,
are subsequently measured at fair value with
unrealised gains or losses recognised in OCI
except for interest income, impairment gains
or losses and foreign exchange gains and
losses which are recognised in the standalone
statement of profit and loss.
On de-recognition of the asset, cumulative
gain or loss previously recognised in OCI
is reclassified from equity to standalone
statement of profit and loss.
(c) Financial assets classified as measured at
FVTPL
A Financial asset is to be measured at FVTPL,
unless it is measured at amortised cost or at
FVOCI. The Company classifies all equity or
puttable financial instruments held for trading
as measured at FVTPL. Such instruments are
measured at fair value at initial recognition as
well as at each reporting date. The fair value
changes are recognised in the standalone
statement of profit and loss. Further, the
Company may make an irrevocable election
to designate a financial asset as FVTPL, at
initial recognition, to reduce or eliminate a
measurement or recognition inconsistency.
De-recognition
The Company derecognises 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 substantially all of the risks
and rewards of ownership of the financial asset
are transferred or in which the company neither
transfers nor retain substantially all of the risks
and rewards of ownership and it does not retain
control of the financial asset
Impairment of financial assets
The Company applies expected credit loss
(‘ECL’) model for measurement and recognition
of impairment loss on the following financial
assets and credit risk exposure:
• Financial assets measured at
amortised cost
• Financial assets measured at FVOCI,
except investments in equity instruments
designated as such by the Company.
• Trade receivables
The Company applies the simplified approach
for recognition of lifetime expected credit losses
(‘ECL’) on trade receivables. For recognition of
impairment loss on other financial assets and
credit risk exposure, the Company assesses
whether there has been a significant increase
in credit risk since initial recognition; if credit risk
has not increased significantly, a twelve-month
ECL is recognised, and if credit risk has increased
significantly, lifetime ECL is recognised.
In making this assessment, the Company
considers reasonable and supportable
information available without undue cost or
effort, including historical credit loss experience,
ageing and past-due status, current conditions,
changes in customer or counterparty credit
quality and other business factors that may
affect the expected collectability of contractual
cash flows.
For financial assets other than trade receivables,
significant increase in credit risk is assessed based
on changes in the risk of default occurring over
the expected life of the instrument, considering
quantitative and qualitative indicators such as
payment behaviour, days past due etc.
Reclassification of financial assets
The Company determines classification
of financial assets and liabilities on initial
recognition. After initial recognition, no
reclassification is made for financial assets
which are equity instruments and financial
liabilities. For financial assets which are debt
instruments, a reclassification 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 operations.
Such changes are evident to external parties. A
change in the business model occurs when the
Company either begins or ceases to perform an
activity that is significant to its operations. If the
Company reclassifies financial assets, it applies
the reclassification prospectively from the
reclassification date which is the first day of the
immediately next reporting period following
the change in business model. The Company
does not restate any previously recognised
gains, losses (including impairment gains or
losses) or interest.
2.15.2 Financial liabilities
Initial recognition and measurement
Financial liabilities are recognised initially at fair value
net of, in the case of financial liabilities not classified
as measured at FVTPL, transaction costs that are
attributable to the issue of the financial liability.
Financial liabilities are recognised in the standalone
balance sheet when the Company becomes a party
to the contractual provisions of the instrument.
(d) Financial liabilities classified as measured
at FVTPL
Financial liabilities classified as measured
at FVTPL include financial liabilities held for
trading and financial liabilities designated as
such upon initial recognition. Financial liabilities
are classified as held for trading if they are
incurred for the purpose of repurchasing in
the near term. This category also includes
derivative financial instruments entered into
by the Company that are not designated as
hedging instruments in hedge relationships as
defined by Ind-AS 109. Separated embedded
derivatives are also classified as held for
trading unless they are designated as effective
hedging instruments.
Gains or losses on liabilities held for trading
are recognised in the standalone statement of
profit and loss. Financial liabilities designated
as such upon initial recognition at the initial
date of recognition, if the criteria in Ind AS
109, ‘Financial Instruments’ are satisfied. For
liabilities designated as FVTPL, fair value gains/
losses attributable to changes in own credit risks
are recognised in OCI. These gains/ losses are
not subsequently transferred to the standalone
statement of profit and loss. However, the
Company may transfer the cumulative gain
or loss within equity. All other changes in fair
value of such liabilities are recognised in the
standalone statement of profit and loss.
The Company has not designated any financial
liability measured at FVTPL.
(e) Financial liabilities classified as measured
at amortised cost
This is the most relevant category to the
Company. The Company generally classifies
interest bearing borrowings as financial
liabilities carried at amortised cost. After
initial recognition, these instruments are
subsequently measured at amortised cost
using the EIR method. Gains and losses are
recognised in the standalone statement of profit
and loss when the liabilities are derecognised as
well as through the EIR amortisation process.
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. The EIR amortisation is included as finance
costs in the standalone statement of profit
and loss.
De-recognition
A financial liability is derecognised 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 derecognition of the original
liability and the recognition of a new liability. The
difference in the respective carrying amounts
is recognised in the standalone statement of
profit and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are
offset and the net amount is reported in the
standalone 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.
2.16 Impairment of non-financial assets
The Company assesses at each reporting date
whether there is an indication that an asset may be
impaired. If any indication exists, or when annual
impairment testing for an asset is required, the
Company estimates the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an
asset’s or 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 groups 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.
2.17 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand,
balances with banks and short-term deposits with a
maturity of three months or less, which are subject
to an insignificant risk of changes in value.
Cash equivalents are short term, highly liquid
investments that are readily convertible into known
amounts of cash and are subject to an insignificant
risk of changes in value.
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