2. MATERIAL ACCOUNTING POLICY INFORMATION
The Company has disclosed accounting policy information material
to its financial statements in accordance with amendments in Ind
AS 1 as notified in the Companies (Indian Accounting Standards)
Amendment Rules, 2023.
(a) Statement of Compliance
The financial statements of the Company comply in all
material aspects with Indian Accounting Standards (Ind AS)
notified under Section 133 of the Companies Act, 2013 (“the
Act”) [the Companies (Indian Accounting Standards) Rules,
2015] as amended from time to time and other relevant
provisions of the Act.
(b) Basis of Preparation
The financial statements have been prepared on the
historical cost basis, except certain financial instruments and
defined benefit plans, which are measured at fair values.
These financial statements have been prepared on a Going
Concern basis.
All assets and liabilities, other than deferred tax assets and
liabilities, have been classified as current or non-current as
per the Company's normal operating cycle and other criteria
set out in the Schedule III (Division II) to the Act.
These standalone financial statements were approved by the
Board of Directors and authorised for issue, on April 25, 2025.
(c) Revenue Recognition
(i) Sales
Revenue towards satisfaction of performance
obligation is measured at transaction price. Amounts
disclosed as revenue are net of Value Added Taxes,
Goods and Services Tax (GST), Returns, Discounts,
Rebates and Incentives. The Company recognises
revenue, when it has transferred to the buyer the
significant risks and rewards associated with the
ownership of goods, no significant performance
obligation is pending and the amount of revenue can
be reliably measured and it is probable that future
economic benefits will flow to the Company.
Trade Receivables that do not contain a significant
financing component are measured at transaction
price.
(ii) Other Incomes
Other incomes are recognised when it is probable that
the economic benefit will flow to the Company and the
amount of income can be measured reliably.
(iii) Cost Recognition
Costs and expenses are recognised when incurred and
are classified according to their nature. Expenditure
are capitalised where appropriate internally generated
capital items (tangible and intangible assets) and
various product development projects undertaken by
the Company, for the introduction of new products and
development of Engines and existing product variants.
(d) Inventories
Inventories are valued at lower of their cost or net realisable
value. The cost of raw materials, stores and consumables is
measured on moving weighted average basis.
Inventories comprise all costs of purchase, conversion
and other costs incurred in bringing the inventories to their
present location and condition.
Raw materials and bought out components are valued at the
lower of cost or net realisable value. Cost is determined on
the basis of the weighted average method.
Finished Goods and work-in-progress are carried at cost or
net realisable value, whichever is lower.
Stores, spares and tools other than obsolete and slow
moving items are carried at cost. Obsolete and slow moving
items are valued at cost or estimated net realisable value,
whichever is lower.
(e) Property, Plant and Equipment
Property, plant and equipment, except land, are carried at
historical cost of acquisition, construction or manufacturing
cost, as the case may be, less accumulated depreciation and
amortisation. Freehold land is carried at cost of acquisition.
Cost represents all expenses directly attributable to bringing
the asset to its working condition capable of operating in the
manner intended.
Costs incurred to manufacture property, plant and equipment
and intangibles are reduced from the total expense under
the head ‘Expenditure included in above items capitalised' in
the Statement of Profit and Loss.
The residual values, useful lives and methods of depreciation
of property, plant and equipment are reviewed at regular
intervals and adjusted prospectively, if appropriate.
(f) Intangible Assets
I ntangible Assets acquired are stated at acquisition cost,
less accumulated amortisation and impaired losses, if any.
Intangible Assets internally generated
Expenditure incurred by the Company on development of
know-how researched, is recognised as an intangible asset,
only if future economic benefits attributable to the use of
such know-how are probable to flow to the Company and the
costs/expenditure can be measured reliably.
(g) Investment Property
I nvestment property is measured at cost less accumulated
depreciation.
(h) Impairment of assets
Assets are tested periodically for impairment. Impairment is
carriedout whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
(i) Depreciation & Amortisation
(i) Property, Plant and Equipment
• The Depreciation on Property, Plant and
Equipment is provided on straight-line method
and as per Schedule-II to the Companies Act,
2013.
• Leasehold land is amortised over the period of
lease.
(ii) Intangible Assets
• Software and their implementation costs are
written off over the period of 5 years.
• Technical Know-how acquired and internally
generated is amortised over the useful life of the
assets, not exceeding 10 years.
(j) Borrowing Costs
Cost of borrowings incurred for acquisition, construction or
production of qualifying asset is capitalised.
(k) Research and Development Expenses
Revenue expenditure on Research and Development is
charged off as an expense in the year in which incurred and
capital expenditure is grouped with Assets under appropriate
heads and depreciation is provided as per rates applicable.
(l) Leases
(i) Where the Company is the Lessee
• The Company recognises a right-of-use asset
and a lease liability at the lease commencement
date. The right-of-use asset is initially measured
at cost, which comprises the initial amount of the
lease liability adjusted for any lease payments
made at or before the commencement date,
plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the
underlying asset or to restore the underlying
asset or the site on which it is located, less any
lease incentives received.
• The right-of-use asset is subsequently
depreciated using the straight-line method over
the useful life of the right-of-use asset or the end
of the lease term.
Short-term leases and leases of low-value assets
• The Company has elected not to recognise
right-of-use assets and lease liabilities for
short-term leases that have a lease term of 12
months or less and leases of low-value assets.
The Company recognises the lease payments
associated with these leases as an expense on
a straight-line basis over the lease term.
(ii) Where the Company is the Lessor
Lease rentals are recognised in the Statement of
Profit and Loss. Costs, including depreciation, are
recognised as an expense in the Statement of Profit
and Loss.
(m) Investment in Subsidiary and Joint Venture
The Company has elected to recognise its investments in
Subsidiary and Joint Venture at cost in accordance with
the option available in Ind AS 27, ‘Separate Financial
Statements'.
(n) Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise
cash at banks and cash on hand and short-term deposits
with an original maturity of three months or less, which are
subject to an insignificant risk of changes in value.
(o) Earnings per Share
Basic earnings per share are computed by dividing the profit
after tax by the weighted average number of equity shares
outstanding during the period.
(p) Foreign currency transactions
Transactions and balances
(i) Foreign Currency transactions are recorded at the rate
of exchange on the date of the transaction.
(ii) Monetary items of Assets and Liabilities booked
in foreign currency are translated in to rupee at the
exchange rate prevailing at the Balance Sheet date.
(iii) Exchange difference resulting from settlement of such
transaction and from translation of monetary items of
Assets and Liabilities are recognised in the Statement
of Profit and Loss.
(iv) Exchange difference arising on translation of foreign
currency liabilities for acquisition of Property, Plant
and Equipments are adjusted to the Statement of
Profit and Loss.
(v) The date of the transaction for the purpose of
determining the exchange rate to use on initial
recognition of the related asset, expense or income
(or part of it) is the date on which an entity initially
recognises the non-monetary asset or non-monetary
liability arising from the payment or receipt of advance.
(q) Functional and presentation currency
These financial statements are presented in Indian Rupees,
which is the Company's functional currency. All amounts
disclosed in the financial statements and notes have been
rounded off to nearest lacs, unless otherwise stated.
(r) Employee Benefits
Defined benefit plans
(i) The accruing liability of Gratuity is covered by
Employees Group Gratuity Scheme of Life Insurance
Corporation of India (LIC) and the premium is
accounted for in the year of accrual. The additional
liability, if any, due to deficit in the Plan assets
managed by LIC as compared to the present value of
accrued liability on the basis of actuarial valuation, is
recognised and provided for.
(ii) Provident fund contributions are made to Company's
Provident Fund Trust. The contributions are accounted
for as defined benefit plans and are recognised as
employee benefits expense when they are due.
Deficits, if any, of the fund as compared to liability on
the basis of an independent actuarial valuation is to be
additionally contributed by the Company.
(iii) Current service cost and net interest on defined benefit
obligation are directly recognised in the Statement of
Profit and Loss.
(iv) Re-measurement gains and losses arising from
experience adjustments and changes in actuarial
assumptions are recognised in the period in which they
occur, directly in other comprehensive income. They
are included in retained earnings in the Statement of
Changes in Equity and in the Balance Sheet.
Defined contribution plans
(i) The Company's superannuation scheme is a defined
contribution plan. The contributions are recognised as
employee benefit expense when they are due.
(ii) Benefits in respect of compensated absence payable
after 12 months are provided for, based on valuation,
as at the Balance Sheet date, made by independent
actuaries.
(iii) Defined contribution to Employees Pension Scheme
1995 is made to Government Provident Fund Authority
and recognised as expense as and when due.
(s) Taxation
Current tax is determined as the amount of tax payable
in respect of taxable income for the year. The Company's
current tax is calculated using tax rates that have been
enacted or substantively enacted by the end of the reporting
period.
Deferred tax is recognised on temporary differences between
the tax base of assets and liabilities and their carrying
amount in the financial statements. Deferred tax liabilities are
recognised for all deductible temporary differences. Deferred
tax assets are recognised to the extent it is probable that
future taxable income will be available against which the
deductible temporary differences could be utilised. Deferred
tax is determined using tax rates that have been enacted or
substantively enacted by the end of the reporting period.
Current and deferred taxes are recognised in profit or
loss, except to the extent that it relate to the items that are
recognised in other comprehensive income or directly in
equity, in this case, the current and deferred taxes are also
recognised in other comprehensive income or directly in
equity respectively.
Minimum Alternate Tax (MAT) paid in accordance with the
tax laws, which gives future economic benefits in the form of
adjustment to future income tax liability, is considered as an
asset, if there is convincing evidence that the Company will pay
normal income tax against which the MAT paid will be adjusted.
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