1. General information
Godrej Agrovet Limited. ("the Company") is a public limited company, which is domiciled and incorporated in the Republic of India with its
registered office situated at 3rd Floor, Godrej One, Pirojshanagar, Vikhroli (East), Mumbai - 400 079. The Company, an erstwhile division of
Godrej Soaps Limited was incorporated under the Companies Act, 1956 on November 25, 1991. The Company is a diversified agribusiness
company and its principal activities include manufacturing and marketing of high quality animal nutrition, innovative crop care & agricultural
inputs and vegetable oil & allied products. The Company is a public company limited by shares and is listed on the Bombay Stock Exchange
(BSE) and the National Stock Exchange (NSE).
2. Basis of preparation and measurement
(i) Basis of preparation:
The standalone financial statements have been prepared in accordance with Indian Accounting Standards ("Ind AS") as notified by
Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 ('Act') read with the Companies (Indian Accounting
Standards) Rules, 2015 as amended and other relevant provisions of the Act. The accounting policies are applied consistently to all
the years presented in the standalone financial statements.
The standalone financial statements of the Company for the year ended March 31, 2026 were authorized for issue in accordance with
a resolution of the Board of Directors on April 30, 2026.
Current versus non-current classification: All assets and liabilities have been classified as per the Company's normal operating cycle
and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of the products and the time taken between
acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating
cycle as twelve months for the purpose of the classification of assets and liabilities into current and non-current.
(ii) Basis of measurement
The standalone financial statements have been prepared on a historical cost basis, except for the following:
• certain financial assets and liabilities (including derivative instruments) that are measured at fair value (refer accounting
policy regarding financial instruments)
• asset held for sale and biological assets - measured at fair value less cost to sell;
• defined benefit plans - plan assets measured at fair value less present value of defined benefit obligation; and
• share-based payments
(iii) Functional and presentation currency
These standalone financial statements are presented in Indian rupees, which is the Company's functional currency. All amounts have
been rounded off to the nearest crore, unless otherwise indicated. The amount reflected as "0.00" in Financials are value with less
than one lakh.
3. Key estimates and assumptions
While preparing standalone financial statements in conformity with Ind AS, the management has made certain estimates and assumptions
that require subjective and complex judgments. These judgments affect the application of accounting policies and the reported amount of
assets, liabilities, income and expenses, disclosure of contingent liabilities at the balance sheet date and the reported amount of income and
expenses for the reporting period. Future events rarely develop exactly as forecasted and the best estimates require adjustments, as actual
results may differ from these estimates under different assumptions or conditions.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.
Judgment, estimates and assumptions are required in particular for:
• Determination of the estimated useful lives
Useful lives of property, plant and equipment are based on the life prescribed in Schedule II of the Companies Act, 2013. In cases
where the useful lives are different from that prescribed in Schedule II and in case of intangible assets, they are estimated by
management based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating
conditions of the asset, past history of replacement, anticipated technological changes, manufacturers' warranties and maintenance
support - (Refer point 6F below).
• Recognition and measurement of defined benefit obligations
The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include
discount rates, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market yields
at the end of the reporting period on government bonds. The period to maturity of the underlying bonds corresponds to the probable
maturity of the post-employment benefit obligations. Due to complexities involved in the valuation and its long-term nature, defined
benefit obligation is sensitive to changes in these assumptions. All assumptions are reviewed at each reporting period - (Refer note 39).
• Recognition and measurement of long-term employee incentives
Accrual for long term employee incentive scheme liability requires estimates and judgements in respect of achievement of
parameters of business performance. These estimates are based on past performance, approved budgets and plans and other
relevant information considered on a best estimate basis as at the reporting date - (Refer note 39).
• Recognition of deferred tax assets and liabilities
Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying
values of assets and liabilities and their respective tax bases, and unutilized business losses and unabsorbed depreciation carry¬
forwards and tax credits. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be
available against which the deductible temporary differences, unused tax losses, unabsorbed depreciation carry-forwards and
unused tax credits could be utilized - (Refer note 43).
• Recognition and measurement of other provisions
a. Provision for sales returns
The Company makes a provision for estimated sales returns, based on its historical experience and is dependent on other
relevant factors - (Refer note 17 & 28).
b. Provision for doubtful trade receivables
The Company has large number of individual small customers. Management assesses the level of allowance for doubtful
debts after taking into account of ageing analysis and any other factor specific to individual counterparty and a collective
estimate based on historical experience adjusted for certain current factors - (Refer note 12).
c. The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of
resources, and on past experience and circumstances known at the balance sheet date. The actual outflow of resources at a
future date may therefore, vary from the amount included in other provisions - (Refer notes 22 and 28).
• Discounting of long-term financial assets / liabilities
All financial assets / liabilities are required to be measured at fair value on initial recognition. In case of financial liabilities /assets
which are required to subsequently be measured at amortized cost, interest is accrued using the effective interest method - (Refer
note 41.1).
• Fair valuation of employee stock grants
The fair valuation of the employee stock grants is based on the Black-Scholes model used for valuation of options. Key assumptions
made with respect to expected volatility includes share price, expected dividends and discount rate, under this option pricing model
- (Refer note 40).
• Determining whether an arrangement contains a lease
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease
requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated renewals)
and the applicable discount rate - (Refer note 4).
The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to
extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease
if the Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise
an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that
create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate
the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease.
The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of
leases with similar characteristics.
• Rebates
Rebates are generally provided to distributors or customers as an incentive to sell the Company's products. Accruals for discounts/
incentives are estimated (using the most likely method) based on accumulated experience and underlying schemes and agreement
with customers.
• Recognition and measurement of provision for inventories
The Company makes specific provisions for slow moving / non-moving items. Due to the significant number of stock keeping units
(SKU's) in the various categories of inventories, significant judgement is required by the Company in determining the inventory
provisioning.
• Fair value of financial instruments
Derivatives are carried at fair value. Derivatives includes foreign currency forward contracts and commodity futures. Fair value of
foreign currency forward contracts are determined using the fair value reports provided by respective bankers - (Refer note 41.4).
• Biological Assets
Management uses inputs relating to production and market prices in determining the fair value of biological assets - (Refer note 6).
• Impairment of investments in subsidiaries
The Company reviews its carrying value of investments carried at cost (net of impairment, if any) annually, or more frequently when
there is an indication of impairment. Management inter alia considers various inputs such as macro-economic environment, industry
specific matters, financial projections and other relevant information for purposes of such assessment - (Refer note 7).
4. Measurement of fair values
The Company's accounting policies and disclosures require the measurement of fair values for, both financial and non-financial assets and
liabilities.
The Company has an established control framework with respect to the measurement of fair values. The management regularly reviews
significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used
to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such
valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of a financial asset or a financial liability, the Company uses observable market data as far as possible. Fair
values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in 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).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value
measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire
measurement.
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has
occurred.
5. Recent pronouncements:
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under the Companies (Indian
Accounting Standards) Rules from time to time.
During the year ended March 31, 2026, MCA has notified the following amendments to Indian Accounting Standards, applicable to the
Company from April 1, 2025:
• Ind AS 1, Presentation of Financial Statements, applicable w.e.f April 1, 2026 - The amendment relates to classification of liabilities
as current or non -current and current liabilities with covenants. In the context of classifying a liability as current, it removes the
requirement of existence of a right to defer settlement for at least 12 months after the reporting date and instead requires that
the said right should exist on the reporting date and have substance. The amendment also introduces guidance on classification of
liabilities with covenants. The Company has no impact of these amendments in its classification criteria of current and non-current
liabilities.
• Ind AS 7, Statement of Cash Flows and Ind AS 107, Financial Instruments Disclosures, applicable w.e.f April 1, 2025 - The amendment
in Ind AS 7 requires to inform users of financial statements of the existence of supplier finance arrangements and explain the nature
of the arrangements, the carrying amount of liabilities and the range of payment due dates. Ind AS 107 has been amended to add
supplier finance arrangements as a factor that may cause concentration of liquidity risk. The Company has reviewed the amendment
and based on its evaluation has determined that it does not have any significant impact in its financial statements.
• Ind AS 12 - Income Taxes relating to International Tax Reform - Pillar Two Model Rules
A. Revenue & Other income
i. Sale of Products
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 transaction price of goods sold and services rendered is net of
variable consideration on account of various discounts and schemes offered by the Company as part of the contract. Discounts
given by the Company includes trade discounts, volume rebates and other incentive given to the customers. Accumulated
experience is used to estimate the provision for discounts. Revenue is only recognized to the extent that it is highly probable
a significant reversal will not occur.
Revenue from the sale of goods are recognized when control of the goods has transferred to our customer and when there
are no longer any unfulfilled obligations to the customer. Depending on the contractual terms with the customers, this
can be either at the time of dispatch or delivery of goods. This is considered the appropriate point where the performance
obligations in our contracts are satisfied as the Company no longer have control over the inventory.
As at 31 March 2026, an estimate has been made of goods that will be returned and a liability has been recognized for this
amount. An asset has also been recorded for the corresponding inventory that is estimated to return to the Company using a
best estimate based on historical experience.
ii. Dividend income
Dividend income is recognized only when the right to receive the same is established, it is probable that the economic
benefits associated with the dividend will flow to the Company, and the amount of dividend can be measured reliably.
iii. Interest income
For all financial instruments measured at amortized cost, interest income is recorded using the effective interest rate (EIR),
which is the rate that discounts the estimated future cash payments or receipts through the expected life of the financial
instruments or a shorter period, where appropriate, to the net carrying amount of the financial assets. Interest income is
included in other income in the Statement of profit or loss.
iv. Subsequent remeasurement of the contingent consideration which represents a financial liability or asset, is recognized
through statement of profit and loss.
B. Foreign currency
i. Transactions and balances
Transactions in foreign currencies are translated into the respective functional currencies of the Company at the exchange
rates at the dates of the transactions or an average rate if the average rate approximates the actual rate at the date of the
transaction.
Foreign currency transactions are recorded on initial recognition in the functional currency, using the exchange rate at the
date of the transaction. At each balance sheet date, foreign currency monetary items are reported using the closing exchange
rate. Exchange differences that arise on settlement of monetary items or on reporting at each balance sheet date of the
Company's monetary items at the closing rate are recognized as income and expenses in the period in which they arise.
C. Employee benefits
i. Short term employee benefits
All employee benefits payable wholly within twelve months of rendering services are classified as short-term employee
benefits. Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the
amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of
past service provided by the employee and the obligation can be estimated reliably.
Short-term benefits such as salaries, wages, short-term compensation absences, etc., are determined on an undiscounted
basis and recognized in the period in which the employee renders the related service.
ii. Defined contribution plans
Obligations for contributions to defined contribution plans such as Provident Fund and Family pension maintained with
Regional Provident Fund Office are expensed as the related service is provided.
iii. Defined benefit plans
The following post - employment benefit plans are covered under the defined benefit plans:
• Provident Fund Contributions other than those made to the Regional Provident Fund Office of the Government
which are made to the Trust administered by the Company.
The Company's contribution to the Provident Fund Trust as established by the Company, is also considered as a
Defined Benefit Plan. The provident fund is administered by the Trustees of the Godrej Agrovet Limited Provident
Fund. The rules of the Company's Provident Fund administered by the Trust, require that if the return on investment
for any reason is less than the guaranteed Rate of Interest, then the deficiency shall be made good by the Company.
The Company's net obligations in respect of such plans is calculated by estimating the amount of future benefit that
the employees have earned in return for their services and the current and prior periods that benefit is discounted to
determine its present value and the fair value of the plan asset is deducted.
• Gratuity Fund
The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. The Gratuity Plan
provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment,
of an amount based on the respective employee's salary and the tenure of employment with the Company. The
calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit
method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the
present value of economic benefits available in the form of any future refunds from the plan or reductions in future
contributions to the plan.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are
recognized in the period in which they occur, directly in other comprehensive income (OCI). They are included in
retained earnings in the statement of changes in equity and in the balance sheet.
iv. Other long-term employee benefits
Liability toward Long-term Compensated Absences is provided for on the basis of an actuarial valuation, using the Projected
Unit Credit Method, as at the date of the Balance Sheet. Actuarial gains / losses comprising of experience adjustments and
the effects of changes in actuarial assumptions are immediately recognized in the Statement of Profit and Loss.
Other long term employee benefits include payable in respect of long term incentive scheme recorded by estimating the
possible cash outflows based on assessment of parameters of the scheme and discounted at present value.
v. Terminal Benefits:
All terminal benefits are recognized as an expense in the period in which they are incurred.
D. Income Tax
Income tax expense comprises current and deferred tax. It is recognized in net profit in the statement of profit or loss or in the OCI.
i. Current tax
Current tax is the amount of tax payable (recoverable) in respect of the taxable profit (tax loss) for the year determined in
accordance with the provisions of the Income-Tax Act, 1961. Current income tax for current and prior periods is recognized at
the amount expected to be paid to or recovered from the tax authorities, using tax rates and tax laws that have been enacted
or substantively enacted at the reporting date.
Current tax assets and liabilities are offset only if the Company:
a) has a legally enforceable right to set off the recognized amounts; and
b) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
ii. Deferred tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for:
• temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination
and that affects neither accounting nor taxable profit or loss;
• temporary differences related to investments in subsidiaries and associates to the extent that the Company is able
to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the
foreseeable future; and
• taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the
extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will
be realized; such reductions are reversed when the probability of future taxable profits improves. Unrecognized deferred tax
assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable
profits will be available against which they can be used. Deferred tax assets and liabilities are measured at the tax rates that
are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the reporting date. Taxes relating to items recognized directly in equity or OCI is
recognized in equity or OCI.
The Company has recognized a separate deferred tax asset in relation to its lease liabilities and a deferred tax liability in
relation to its right of use assets.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company
expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if:
The entity has a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets
and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.
E. Inventories
Inventories are carried in the balance sheet as follows:
(a) Raw materials, Packing materials, Stock in Trade and Stores & Spares: At lower of cost, on weighted average basis and net
realizable value.
(b) Work-in-progress / project in progress-: At lower of cost of materials, plus appropriate production overheads and net
realizable value.
(c) Finished Goods: At lower of cost of materials, plus appropriate production overheads and net realizable value,
(d) Land development project in progress includes cost of land, development management fees, construction cost, allocated
interest and expenses attributable to the construction of the project undertaken by the Company.
Net realizable value is the estimated selling price in the ordinary course of business less estimated cost of completion and selling
expenses necessary to make the sale.
The cost of inventories have been computed to include all cost of purchases, cost of conversion and other related costs incurred in
bringing the inventories to the present location and condition. Slow and non-moving material, obsolescence, defective inventories
are duly provided for and valued at net realizable value. Goods and materials in transit are valued at actual cost incurred upto the date
of balance sheet. Materials and supplies held for use in the production of inventories are not written down if the finished products in
which they will be used are expected to be sold at or above cost.
F. Property, plant and equipment
i. Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment
losses, if any.
The cost of an item of property, plant and equipment comprises:
a) its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and
rebates.
b) any direct costs directly attributable to bringing the asset to the location and condition necessary for it to be capable
of operating in the manner intended by management.
c) the initial estimate in present value terms of the costs of dismantling and removing the item and restoring the site on
which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of
having used the item during a particular period for purposes other than to produce inventories during that period.
Income and expenses related to the incidental operations, not necessary to bring the item to the location and condition
necessary for it to be capable of operating in the manner intended by management, are recognized in the statement of profit
or loss.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted and
depreciated for as separate items (major components) of property, plant and equipment.
An item of property, plant and equipment is derecognized upon disposal or when there is no future economic benefits
expected from its use or disposal.
Any gain or loss on disposal of an item of property, plant and equipment is recognized in the statement of profit or loss.
On transition to Ind AS, the Company elected to continue with the carrying value of all of its Property, Plant and Equipment
recognised as at 1st April, 2015 ("transition date") measured as per the previous GAAP and use that carrying value as its
deemed cost as of the transition date.
ii. Subsequent expenditure
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure
will flow to the Company and the cost can be measured reliably.
iii. Depreciation/ Amortizations
Depreciation on tangible fixed assets is provided in accordance with the provisions of Schedule II of the Companies Act 2013,
on Straight Line Method. Depreciation on additions / deductions is calculated on pro rata basis from/up to the month of
additions/deductions. The estimated useful lives, residual values and depreciation method are reviewed at the end of each
reporting period, with the effect of any changes in estimate accounted for on a prospective basis. In case of the following
category of assets , the depreciation has been provided based on the technical specifications, external & internal assessment,
requirement of refurbishments and past experience of the remaining useful life which is different from the useful life as
specified in Schedule II to the Act:
(a) Plant and Machinery: - 20 Years (Useful life as per schedule II - 8 to 20 years)
(b) Computer Hardware
Depreciated over its estimated useful life of 4 years (Useful life as per schedule II - 3 years)
(c) Leasehold Land:
Amortized over the lease term.
(d) Leasehold improvements and equipment:
Amortized over the Primary lease period.
Assets costing less than ' 5,000 are fully depreciated in the year of purchase/acquisition.
Property, plant and equipment with finite life are evaluated for recoverability whenever there is any indication that their
carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e higher of the fair value
less cost to sell and value in use) is determined on an individual asset basis unless the asset does not generate cash flows
that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash
generating unit (CGU) to which the asset belongs. If the recoverable amount of an asset (or CGU) is estimated to be less than
its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is
recognized in the statement of profit and loss.
G. Investment Property
i. Recognition and measurement
Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale
in the ordinary course of business. Upon initial recognition, an investment property is measured at cost, including related
transaction costs. Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation
and accumulated impairment losses, if any.
ii. Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure
will flow to the Company and the cost of the item can be measured reliably.
iii. Fair value disclosure
The fair values of investment property is disclosed in the notes. Fair values is determined by an independent valuer who holds
a recognised and relevant professional qualification and has recent experience in the location and category of the investment
property being valued.
H. Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset that necessarily takes a
substantial period of time to get ready for its intended use are capitalised as part of the cost of that asset till the date it is ready for
its intended use or sale. Other borrowing costs are recognized as an expense in the period in which they are incurred.
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. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
As per Ind AS-108 'Operating Segments', if a financial report contains both the consolidated financial statements of a parent that
is within the scope of Ind AS-108 as well as the parent's separate financial statements, segment information is required only in the
consolidated financial statements. Accordingly, information required to be presented under Ind AS-108 Operating Segments has
been given in the consolidated financial statements.
J. Intangible assets
Recognition and measurement
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to
the Company and the cost of the asset can be measured reliably.
Intangible assets viz. Grant of Licenses and Computer software, which are acquired by the Company and have finite useful lives are
measured at cost less accumulated amortization and any accumulated impairment losses, if any.
On transition to Ind AS, the Company elected to continue with the carrying value of all of its intangible assets recognised as at 1st
April, 2015 ("transition date") measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition
date.
Amortization
Amortization is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method
over their estimated useful lives, and is generally recognized in the statement of profit or loss, except in the case of certain intangibles,
as per the provisions of various schemes of amalgamation.
The intangible assets are amortized over the estimated useful lives as given below:
- Computer Software : 6 years
- Non-Compete : Over the period of the agreement i.e. 10 years.
Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Research and Development Expenditure
Research Expenditure:
Revenue expenditure on research & development is charged to the Statement of Profit and Loss of the year in which it is incurred.
Capital expenditure incurred during the period on research & development is accounted for as an addition to property, plant &
equipment or intangible assets.
K. Share-based payments:
a. Employees of the Company receive remuneration in the form of share-based payments, whereby employees render services
as consideration for equity instruments (equity-settled transactions).
b. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate
valuation model.
c. That cost is recognized, together with a corresponding increase in share-based payment reserves in equity, over the period
in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled
transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the
Company's best estimate of the number of equity instruments that will ultimately vest.
d. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per
share.
L. 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. Financial instruments also include derivative contracts such as foreign currency foreign exchange forward contracts
and commodity futures contracts.
Financial instruments also cover contracts to buy or sell a non-financial item that can be settled net in cash or another financial
instrument, or by exchanging financial instruments, as if the contracts were financial instruments, with the exception of contracts
that were entered into and continue to be held for the purpose of the receipt or delivery of a non-financial item in accordance with
the entity's expected purchase, sale or usage requirements.
Derivatives are currently recognized at fair value on the date on which the derivative contract is entered into and are subsequently
re-measured to their fair value at the end of each reporting period.
Any gain or losses arising from changes in the fair value of derivatives are recognized in the statement of profit and loss.
i. Financial assets
Classification
The Company classifies its financial assets in the following measurement categories:
• Where assets are measured at fair value, gains and losses are either recognized entirely in the Statement of Profit and
Loss (i.e. fair value through profit or loss), or recognized in Other Comprehensive Income (i.e. fair value through other
comprehensive income), where permissible.
• A financial asset that meets the following two conditions is measured at amortized cost (net of any write down for
impairment) unless the asset is designated at fair value through profit or loss under the fair value option.
Business model test: The objective of the Company's business model is to hold the financial asset to collect the contractual
cash flows (rather than to sell the instrument prior to its contractual maturity to realize its fair value changes).
Cash flow characteristics test: 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.
Initial recognition & measurement
At initial recognition, the Company measures a financial asset at fair value plus, in the case of a financial asset not recorded
at fair value through the Statement of Profit or Loss, transaction costs that are attributable to the acquisition of the financial
asset. However, trade receivables that do not contain a significant financing component are measured at transaction price.
Equity investments (other than investments in subsidiaries, associates and joint venture)
• All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for
trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either
as at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is
made on initial recognition and is irrevocable.
• If the Company decides to classify an equity instrument as FVOCI, then all fair value changes on the instrument,
excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to profit and loss, even
on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
• Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the
Statement of Profit and Loss.
Investments in Subsidiaries, Associates & Joint Ventures:
Investments in subsidiaries, associates & joint ventures are carried at cost less accumulated impairment losses, if any. Where
an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its
recoverable amount. On disposal of investments in subsidiaries, associates and joint ventures the difference between net
disposal proceeds and the carrying amounts are recognized in the Statement of Profit and Loss.
Subsequent remeasurement of the contingent consideration which represents a financial liability or asset, is recognized
through Statement of profit and loss account.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily
derecognized (i.e. removed from the Company's Statement of Assets and Liabilities) when:
• The rights to receive cash flows from the asset have expired, or
• The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either
(a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither
transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither
transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the
Company continues to recognize the transferred asset to the extent of the Company's continuing involvement. In that case,
the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis
that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original
carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of
impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortized cost e.g., loans, deposits and bank balance.
b) Trade receivables - The application of simplified approach does not require the Company to track changes in credit
risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its
initial recognition. Trade receivables are tested for impairment on a specific basis after considering the sanctioned
credit limits, security like letters of credit, security deposit collected etc. and expectations about future cash flows.
ii. Financial liabilities
Classification
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial liability and an equity instrument.
The Company classifies all financial liabilities as subsequently measured at amortized cost, except for financial liabilities at fair
value through the Statement of Profit and Loss. Such liabilities, including derivatives that are liabilities, shall be subsequently
measured at fair value.
Initial recognition and measurement
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and
borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly
attributable and incremental transaction cost.
Amortized 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 amortization is included as finance costs in the statement of profit and loss.
The Company's financial liabilities include trade and other payables, acceptances, loans and borrowings including bank
overdrafts, financial guarantee contracts and derivative financial instruments.
Derecognition
A financial liability is derecognized 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 recognized in the statement
of profit and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Statement of Assets and Liabilities if
there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis,
to realize the assets and settle the liabilities simultaneously.
Derivative financial instruments
The Company uses derivative financial instruments, such as forward currency to hedge its foreign currency risks and interest
rate risks respectively. Such derivative financial instruments are initially recognized at fair value on the date on which a
derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets
when the fair value is positive and as financial liabilities when the fair value is negative.
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