2. Material Accounting Policies for the year ended March 31, 2025
2.1 Basis of Preparation
The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards ("Ind AS”)
notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements
of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the Standalone Financial
Statements.
The standalone financial statement has been prepared on a historical cost basis, except for the following assets and liabilities which have
been measured at fair value:
- Derivative financial instruments
- Certain financial assets and liabilities measured at fair value (refer accounting policies regarding financial instruments)
All assets and liabilities have been classified as current and non-current as per the Company's normal operating cycle which is normally
considered an operating cycle of 12 months.
The statement of cash flows has been prepared under indirect method, whereby profit or loss is adjusted for the effects of transactions
of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense
associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are
segregated. The Company considers all highly liquid investments that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value to be cash equivalents.
The standalone financial statements are presented in Indian Rupees (INR) and all values are rounded to the nearest lakhs (INR 00,000),
except when otherwise indicated.
2.2. Summary of Material Accounting Policies
a. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated
as current when it is:
? Expected to be realised or intended to be sold or consumed in normal operating cycle,
? Held primarily for the purpose of trading,
? Expected to be realised within twelve months after the reporting period, or
? Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after
the reporting period.
All other assets are classified as non-current.
A liability is current when:
? It is expected to be settled in normal operating cycle,
? It is held primarily for the purpose of trading,
? It is due to be settled within twelve months after the reporting period, or
? There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets
and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.
The Company has identified twelve months as its operating cycle.
b. Use of Estimates
The preparation of financial statement requires estimates and assumptions to be made that affect the reported amount of assets
and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting
period. Difference between the results and estimates are recognized in the period in which the results are known / materialized.
c. Foreign currencies
The financial statements are presented in Indian rupees, which is the functional currency of the Company.
Transactions and balances
Transactions in foreign currencies are initially recorded by the Company in INR at spot rates at the date the transaction first
qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at INR spot rates of
exchange at the reporting date. Exchange differences arising on settlement or translation of monetary items are recognised in the
statement of profit and 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 (i.e.,
translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or
profit or loss, respectively).
d. Fair Value Measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date. 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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either:
? In the principal market for the asset or liability, or
? In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in
its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure the fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair
value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
? Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
? Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly
or indirectly observable
? Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the financial statements 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.
The Company determines the policies and procedures for both recurring fair value measurement, such as derivative instruments
and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for distribution in
discontinued operations.
External valuers are involved for valuation of certain unquoted financial assets. Involvement of external valuers is decided upon
annually by the Board after discussion with and approval by the Company's Audit Committee. Selection criteria include market
knowledge, reputation, independence and whether professional standards are maintained. The Management decides, after
discussions with the Company's external valuers, which valuation techniques and inputs to use for each case.
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.
Revenue from contract with customers
Revenue from contracts with customer is recognised when control of the goods or services are transferred to the customer at
an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
The company has concluded that it is the principal in its revenue arrangements because it typically controls the goods or services
before transferring them to the customers.
Ind AS 115 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue
be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring
goods or services to a customer.
Ind AS 115 requires entities to exercise Judgement, taking into consideration all of the relevant facts and circumstances when applying
each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of
obtaining a contract and the cost directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.
The Goods and service Tax (GST) is not received by the Company on its own account. It is a tax collected on value added to the
commodity by the seller on behalf of the government. Accordingly, it has been excluded from revenue.
The specific recognition criteria described below must also be met before revenue is recognised.
Revenue from Sale of goods
Revenue from sale of goods is recognised when all the significant risks and rewards of ownership of the goods have been passed
to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration
received or receivable, net of returns and allowances.
Interest income
For all financial instrument measured at amortised cost, interest income is recorded using effective interest rate (EIR), which is the
rate that exactly discounts the estimated future cash payments or receipts through 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 under the head
"Finance Cost” in the statement of profit and loss.
Dividends
Revenue is recognised when the Company's right to receive the payment is established, which is generally when shareholders
approve the dividend.
Other Operating Income
The Company presents incentives received related to refund of indirect taxes as other operating income in the statement of profit
and loss. Interest on the contract assets/ financial assets arising from the Company's principal or ancillary revenue generating
activities are classified as 'Other operating revenue' in Statement of Profit and Loss.
Other Income
Other Income is accounted for on accrual basis except, where the receipt of income is uncertain.
Foreign currency transactions
Foreign currency transactions are translated into Indian rupee using the exchange rates prevailing on the date of the transaction.
Foreign exchange gains and losses resulting from the settlement of these transactions and from the translation of monetary
assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in profit or loss.
e. Taxes
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the
reporting date in India.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in OCI or in
equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management
periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject
to interpretation and establishes provision where appropriate.
Deferred tax
Deferred tax is provided using the liability method 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 utilized.
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 period/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 (either in OCI or in equity).
Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off
current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied
by the same taxation authority on either the same taxable entity which intends either to settle current tax liabilities and assets on
a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of
deferred tax liabilities or assets are expected to be settled or recovered.
Property, Plant & Equipment
Property, plant and equipment and capital work in progress are stated at cost, net of tax / duty credit availed, less accumulated
depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment
and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of plant and
equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.
All other repair and maintenance costs are recognised in the statement of profit and loss as incurred.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and other costs directly attributable to bringing the asset to a working condition for its intended
use. Borrowing costs that are directly attributable to the construction or production of a qualifying asset are capitalized as part of
the cost of that asset.
Subsequent expenditure related to an item of property, plant and equipment is added to its book value only if it increases the future
benefits from the existing asset beyond its previously assessed standard of performance or extends its estimated useful life.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items
(major components) of property, plant and equipment.
Gains and losses upon 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 recognized net within "other (income)/expense, net”
in the statement of profit and loss.
Depreciation is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management,
which is equal to the life prescribed under the Schedule II to the Companies Act, 2013.
The lives of the assets including Right to Use Assets are as follows:
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.
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 asset (calculated
as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit
and loss when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial
period/year end and adjusted prospectively, if appropriate.
. Intangible Assets
Costs relating to computer software, which is acquired, are capitalized and amortised on a straight-line basis over their estimated
useful lives of three years.
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 assets and are recognised in the statement of profit and loss when the asset is
derecognised.
. Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right
to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of
low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right
to use the underlying assets.
Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-
use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
Lease Liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments variable lease payments, residual value
guarantees, exercise price of a purchase option where 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. 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 incremental borrowing rate. After the commencement date, the amount of lease liabilities
is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments or a change in the
assessment of an option to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of those leases that have a lease term
of 12 months or less from the commencement date and do not contain a purchase option.
h. Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are
expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection
with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the
borrowing costs.
i. Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is determined on weighted average basis Costs incurred
in bringing each product to its present location and conditions are accounted for as follows:
? Raw materials and Components: Materials and other items held for use in the production of inventories are not written
down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost
includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
? Finished goods and work in progress: cost includes cost of direct materials and labour and a proportion of manufacturing
overheads based on the 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 sale.
j. 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 cash-generating unit's (CGU) fair value less costs of disposal and its
value in use. Recoverable amount 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. When 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.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less
costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate
valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded
companies or other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for
each of the Company's CGUs to which the individual assets are allocated.
Impairment losses, including impairment on inventories, are recognised in the statement of profit and loss. An assessment is made
at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or
have decreased. If such indication exists, the Company estimates the asset's or CGU's recoverable amount. A previously recognised
impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount
since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss
been recognised for the asset in prior periods/ years. Such reversal is recognised in the statement of profit and loss unless the asset
is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.
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