2.1 Summary of material accounting policies
(a) Recent accounting pronouncements
Ministry of Corporate Affairs (“MCA") notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules
as issued from time to time. For the year ended March
31, 2026, MCA has notified Amendments to Ind AS
applicable to the Company w.e.f. April 1, 2025.
Ind AS 21 - The Effects of Changes in Foreign Exchange
Rates - Lack of Exchangeability
Ind AS 12 - Income Taxes relating to International
Tax Reform - Pillar Two Model Rules - Exception to
recognition and disclosure of deferred tax
Ind AS 7 - Cash flow statement and Ind AS 107 -
Financial Instrument - Disclosures relating to supplier
finance arrangements
Ind AS 1- Presentation of Financial Statements-
Classification of Liabilities as current or non- current
and non- current liabilities with covenants
The Company has reviewed the new pronouncements
and based on its evaluation has determined that it
does not have any significant impact in its Standalone
financial statements.
(b) New and amended standards issued but not
effective:
The MCA has issued certain amendments to Indian
Accounting Standards which are not yet effective as at
March 31, 2026. The Company has not early adopted
any standard, interpretation or amendment that has
been issued but is not yet effective.
(c) 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.
(d) Foreign currencies
The standalone financial statements are presented in
Indian rupees, which is the functional currency of the
Company and the currency of the primary economic
environment in which the Company operates.
Transactions and balances
Transactions in foreign currencies are initially recorded
by the Company at its 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 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.
(e) Fair value measurement
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 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 standalone 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
standalone 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's chief financial officer determines
the appropriate valuation techniques and inputs for
fair value measurements. 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 are not available, the Company engages third
party qualified valuers to perform the valuation. Any
change in the fair value of each asset and liability is also
compared with relevant external sources to determine
whether the change is reasonable.
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.
[f) Revenue recognition
Revenue from contracts with customers is recognised
when control of the goods or services is 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 generally concluded that it is the principal
in its revenue arrangements, because it typically
controls the goods or services before transferring them
to the customer.
Sale of products
Revenue from sale of goods is recognised at the
point in time when control of the goods is transferred
to the customer and is net of trade discounts, sales
returns and goods and services tax (GST), where
applicable, and the additional amount of profit share
in case of exclusive arrangement, is recognised based
on the terms of the agreement entered into with the
customers, in the period when the collectability of the
profit share becomes probable and a reliable measure
of the profit share is available. Revenue includes
shipping and handling costs billed to the customer.
Revenue towards satisfaction of a performance
obligation is measured at the amount of transaction
price (net of variable consideration) allocated to that
performance obligation. The point at which control
passes is determined based on the terms and conditions
by each customer arrangement, but generally occurs
on dispatch to the customer.
Profit share revenues
The Company from time to time enters into marketing
arrangements with certain customers for the sale of its
products in certain markets. Under such arrangements,
the Company sells its products to the customers at
a non-refundable base price agreed upon in the
arrangement and is also entitled to a profit share which
is over and above the base price. The profit share is
typically dependent on the customer's ultimate net
sale proceeds or net profits, subject to any reductions
or adjustments that are required by the terms of the
arrangement. Such arrangements typically require the
customer to provide confirmation of units sold and
net sales or net profit computations for the products
covered under the arrangement.
Revenue in an amount equal to the base price is
recognised in these transactions upon dispatch
of goods to the customer. An additional amount
representing the profit share component on the
dispatched goods is recognised as revenue only to
the extent that it is highly probable that a significant
reversal will not occur. At the end of each reporting
period, the Company recognises the estimated variable
consideration to represent the circumstances present
at the end of the reporting period and the changes in
circumstances during the reporting period.
Sale of services
Revenue from sale of dossiers/licenses/services
is recognised in accordance with the terms of the
relevant agreements and is net of goods and service
tax (GST), where applicable as accepted and agreed
with the customers.
These arrangements typically consist of an initial up¬
front payment on inception of the agreement and
subsequent payments dependent on achieving certain
milestones in accordance with the terms prescribed
in the agreement. Non-refundable up-front amounts
received in connection with these agreements are
deferred and recognised over the period in which
the Company has pending performance obligations.
Milestone payments which are contingent on achieving
certain milestones are recognised as revenues either
on achievement of such milestones or over the
performance period depending on the terms of the
contract.
Contract balances
Contract assets
A contract asset is the right to consideration that is
conditional upon factors other than the passage of
time. A contract asset is recognised when the Company
transfers goods or services to a customer before the
customer pays consideration or before payment is due.
Contract assets primarily relate to unbilled amounts
and are classified as non-financial assets.
Trade receivables
A receivable represents the Company's right to an
amount of consideration that is unconditional (i.e., only
the passage of time is required before payment of the
consideration is due).
Contract liabilities
A contract liability is the obligation to transfer goods
or services to a customer for which the Company has
received consideration (or the amount is due) from the
customer. If a customer pays consideration before the
Company transfers goods or services to the customer,
a contract liability is recognised when the payment
is made, or the payment is due (whichever is earlier).
Contract liabilities are recognised as revenue when the
Company performs its obligation under the contract.
Unearned Revenue
Unearned revenue is recognised when there are billings
in excess of revenues. The billing schedules agreed
with customers could include periodic performance-
based payments and/or milestone-based progress
payments. Invoices are payable within a contractually
agreed credit period.
Interest income
Interest income is recognised on a time proportion
basis taking into account the amount outstanding and
the applicable interest rate. Interest income is included
under the head “Other income" in the Statement of
Profit and Loss.
Export benefits, incentives and licenses
Export benefits on account of duty drawback and
export promotion schemes are accrued and accounted
in the period of export and are included in Other
operating revenue.
(g) 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 the
countries where the Company operates and generates
taxable income.
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 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 assets to be
recovered.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the period 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
other comprehensive income or in equity). 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.
Goods and Services Taxes paid on acquisition of
assets or on incurring expenses
Expenses and assets are recognised net of the amount
of goods and service taxes paid, except:
• When the tax incurred on a purchase of assets
or services is not recoverable from the taxation
authority, in which case, the tax paid is recognised
as part of the cost of acquisition of the asset or as
part of the expense item, as applicable
• When receivables and payables are stated with the
amount of tax included
The net amount of tax recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables in the Balance Sheet.
(h) Property, plant and equipment
Property, plant and equipment are stated at cost,
net of accumulated depreciation and accumulated
impairment losses, if any. Such cost includes purchase
price net of discounts, if any including import duties
and other non-refundable taxes or levies and directly
attributable cost of bringing the asset to its working
condition for its intended use and the initial estimate of
decommissioning, restoration and similar liabilities, 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. Likewise,
when a major inspection is performed, its cost is
recognised in the carrying amount of the plant and
equipment as a replacement if the recognition criteria
are satisfied. All other expenses on existing property,
plant and equipment, including day-to-day repair and
maintenance expenditure and cost of replacing parts,
are charged to the Statement of Profit and Loss for the
period during which such expenses are incurred.
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.
An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or
loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in
the Statement of Profit and Loss when the asset is
derecognised.
Capital work-in-progress is stated at cost, net of
accumulated impairment loss, if any.
Depreciation
Depreciation on property, plant and equipment is
calculated on a straight-line basis using the rates
arrived at based on the useful lives estimated by the
management which are in line with Schedule II. The
management has estimated, supported by independent
assessment by professionals, the useful lives of the
following classes of assets:
The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial period end and adjusted
prospectively, if appropriate.
(i) Inventories
Inventories are valued at the lower of cost and net
realisable value. Cost is determined on First in First Out
(FIFO) basis.
Costs incurred in bringing each product to its present
location and condition are accounted for as follows:
• Raw materials and packing material: 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.
• Traded goods: Cost includes cost of purchase and
other costs incurred in bringing the inventories to their
present location and condition.
• Stores and spares and consumables are valued at the
lower of cost and net realisable value.
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 of continuing operations, including impairment
on inventories, are recognised in the Statement of
Profit and Loss, except for properties previously
revalued with the revaluation surplus taken to OCI. For
such properties, the impairment is recognised in OCI
up to the amount of any previous revaluation surplus.
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. 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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