[T] MATERIAL ACCOUNTING POLICIES
2.1 Basis of preparation
The financial statements of the Company have been prepared and presented in accordance with Indian Accounting Standards
(Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies(Indian
Accounting Standards)(Amendment) Rules, 2016 and the relevant provisions of the Companies Act, 2013 ("the Act").
The financial statements for the period ended March 31, 2025 were approved by the Board of Directors and authorized for
issue on May 20, 2025.
The accounting policies are applied consistently (except where a newly issued accounting standard is initially adopted or
a revision to an existing accounting standard requires a change in the accounting policy hitherto in use) to all the periods
presented in the financial statements . The Company has identified twelve months as its operating cycle.
All 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 to the Act.
Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the following:
- Certain financial assets and liabilities measured at fair value or at amortised cost depending on the classification(refer
accounting policy regarding financial instruments),
- Employee defined benefit assets/(obligations) are recognised as the net total of the fair value of plan assets, plus
actuarial losses, less actuarial gains and the present value of the defined benefit obligations and
Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest Lacs as per the requirement
of Schedule III, unless otherwise stated.
Use of estimates and judgments:
The estimates and judgements used in the preparation of the financial statements are continuously evaluated by the
Company and are based on historical experience and various other assumptions and factors (including expectations of
future events) that the Company believes to be reasonable under the existing circumstances. Differences between actual
results and estimates are recognised in the period in which the results are known/materialised.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date
but provide additional evidence about conditions existing as at the reporting date.
2.2 Summary of Material accounting policies
(a) Property, plant and equipment (PPE)
The Company had applied for the one time transition exemption of considering the carrying cost on the transition date
i.e. 1st April, 2016 as the deemed cost under IND AS. Hence regarded thereafter as historical cost.
Property, plant and equipment are stated at historical cost, less accumulated depreciation and impairment, if any.
The initial cost of property, plant and equipment comprises its purchase price, including import duties and non¬
refundable purchase taxes and any directly attributable costs of bringing an asset to working condition and location for
its intended use. It also includes the initial estimate of the costs of dismantling and removing the item and restoring
the site on which it is located. The initial cost also 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.
Depreciation is recognised using straight-line method over their estimated useful lives of the assets. Where cost of
a part of the asset ("asset component”) is significant to total cost of the asset and useful life of that part is different
from the useful life of the remaining asset, useful life of that significant part is determined separately and such asset
component is depreciated over its separate useful life. In the case of qualifying assets, cost also includes applicable
borrowing costs vide policy relating to borrowing costs.
An item of property, plant and equipment and any significant part initially recognized is de-recognized 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 is included in the statement of profit and loss when the property, plant and equipment is de-recognized.
An item of property, plant and equipment and any significant part initially recognized is de-recognized 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 Property, plant and equipment is de-recognized.
Costs of assets are not yet ready for their intended use at the balance sheet date are disclosed under capital work- in¬
progress. Such cost includes indirect expenses incurred during construction period if the recognition criteria are met.
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated on straight line basis and written down value method using the useful lives estimated by the
management, which are equal to those prescribed under Schedule II to the Companies Act, 2013. Management believes
that useful life of assets are same as those prescribed in Schedule II to the Act, except for plant and equipment's
wherein based on technical evaluation, useful life has been estimated to be different from that prescribed in Schedule II
of the Act.
If the management's estimate of the useful life of a item of property, plant and equipment at the time of acquisition or
the remaining useful life on a subsequent review is shorter than the envisaged in the aforesaid schedule, depreciation
is provided at a higher rate based on the management's estimate of the useful life/ remaining useful life.
Capital work-in-progress is not depreciated.
The residual values are not more than 5% of the original cost of the asset.
The assets' residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting
period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying
amount is greater than its estimated recoverable amount.
(b) Intangible assets
Intangible assets that are acquired by the Company and that have finite useful lives are measured at cost less
accumulated amortisation and accumulated impairment losses, if any. Subsequent expenditures are capitalized only
when they increase the future economic benefits embodied in the specific asset to which they relate.
The estimated useful life of other intangible assets is 3 years.
(c) Research and development
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of
products are also charged to the Statement of Profit and Loss in the year it is incurred, unless a product's technological
feasibility has been established, in which case such expenditure is capitalised. These costs are charged to the respective
heads in the Statement of Profit and Loss in the year it is incurred. The amount capitalised comprises of expenditure
that can be directly attributed or allocated on a reasonable and consistent basis for creating, producing and making the
asset ready for its intended use. Property, plant and equipment utilised for research and development are capitalised
and depreciated in accordance with the policies stated for Property, plant and equipment.
(d) Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement
at the inception of the lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration. A period of time may be described in terms of the
amount of use of an identified asset.
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.
A lease is classified at the inception date as a finance lease or an operating lease. Leases of property, plant and
equipment where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as
finance leases.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as
lessee are classified as operating leases.
A. 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 re-measurement 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 lease term.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the
exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
B. 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 (including in
substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index
or a rate and amounts expected to be paid under residual value guarantees. The lease payments also include the
exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties
for terminating the lease, if the lease term reflects the Company exercising the option to terminate.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease
commencement date because the interest rate implicit in the lease is not readily determinable.
The lease liability is subsequently remeasured if there is a modification, a change in the lease term or a change in
the lease payments.
C. Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of machinery and
equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do
not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of
office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-
value assets are recognised as expense on a straight-line basis over the lease term.
(e) Impairment of non financial assets
As at the end of each financial year, the carrying amounts of PPE are reviewed to determine whether there is any
indication that those assets have suffered an impairment loss. If such indication exists, PPE are tested for impairment
so as to determine the impairment loss, if any.
For the purpose of assessing impairment, an estimate of the recoverable amount of the individual asset/cash generating
unit is made. Impairment loss is recognised when the carrying amount of an asset/ cash generating unit exceeds its
recoverable amount.
Recoverable amount is determined:
(i) in the case of an individual asset, at the higher of the fair value less costs to sell and the value-in-use; and
(ii) in the case of a cash generating unit , at the higher of the cash generating unit's fair value less costs to sell and the
value-in-use.
The amount of value-in-use is determined as the present value of estimated future cash flows from the continuing use
of an asset, which may vary based on the future performance of the Company and from its disposal at the end of its
useful life. For this purpose, the discount rate (pre-tax) is determined based on the weighted average cost of capital of
the Company suitably adjusted for risks specified to the estimated cash flows of the asset. If recoverable amount of an
asset (or cash generating unit) is estimated to be less than its carrying amount, such deficit is recognised immediately
in the Statement of Profit and Loss as impairment loss and the carrying amount of the asset (or cash generating unit)
is reduced to its recoverable amount.
Impairment losses are recognized in the statement of profit and loss. After impairment, depreciation is provided on the
revised carrying amount of the asset over its remaining useful life.
(f) Financial Instruments
Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions
of the 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.
A. Financial assets
A.l Initial recognition
Financial assets not carried at fair value through profit or loss, other than trade receivables, are initially
recognized at fair value plus transaction costs. Financial assets carried at fair value through profit or loss
are initially recognized at fair value and transaction costs are expensed in the Statement of Profit and Loss.
Trade receivables that do not contain a significant financing component or for which the Group has applied
the practical expedient are measured at the transaction price determined under Ind AS 115. Refer policy on
Revenue from contracts with customers.
A.2. Subsequent measurement
Financial assets, other than equity instruments, are subsequently measured at amortized cost, fair value
through other comprehensive income ("FVOCI”) or fair value through profit or loss (FVTPL) on the basis of
following:
(i) Financial assets at amortized cost:
A financial asset is measured at amortized cost, if it is held under the hold to collect business model.
Amortized cost is calculated using the effective interest rate ("EIR") method 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 in interest income in the Statement of Profit and Loss.
(ii) Measured Financial assets at fair value through other comprehensive income (FVOCI):
A debt instrument is measured at FVOCI, if it is held under the hold to collect and sell business model. It is
subsequently measured at fair value with fair value movements recognized in the OCI, except for interest
income which is recognized using EIR method. On de-recognition, cumulative gain or loss previously
recognized in the OCI is reclassified from the equity to Statement of Profit and Loss.
For equity instruments, the Company may make an irrevocable election to present subsequent changes
in the fair value in OCI. The Company makes such election on an instrument-by-instrument basis. If
the Company decides to classify an equity instrument as at FVOCI, then all fair value changes on the
instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from
OCI to the statement of profit and loss, even on sale of investment. However, the Company may transfer
the cumulative gain or loss within equity.
(iii) Financial assets at fair value through profit or loss (FVTPL):
Investment in financial asset other than equity instrument, not measured at either amortized cost or
FVOCI is measured at FVTPL. Such financial assets are measured at fair value with all changes in fair
value, including interest income and dividend income if any, recognized in the Statement of Profit and
Loss.
Any equity instrument in the scope of Ind AS 109 are measured at fair value, unless elected to measure
at FVOCI.
A.3. Impairment
The Company follows 'simplified approach' for recognition of impairment loss allowance on trade receivables,
contract assets and lease receivables. The application of simplified approach does not require the Company
to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each
reporting date, right from its initial recognition.
At each reporting date, for recognition of impairment loss on other financial assets and risk exposure, the
Company determines whether there has been a significant increase in the credit risk since initial recognition.
If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However,
if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the
instrument improves such that there is no longer a significant increase in credit risk since initial recognition,
then the Company reverts to recognising impairment loss allowance based on 12-month ECL.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on
the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to
enable significant increases in credit risk to be identified on a timely basis.
A.4. Trade Receivables
Trade receivables that do not contain a significant financing component are measured at transaction price.
In respect of trade receivables, the Company applies the simplified approach of IND AS 109 "Financial
Instruments”, which requires measurement of loss allowance at an amount equal to lifetime expected credit
losses. Lifetime expected credit losses are the expected credit losses that result from all possible default
events over the expected life of a financial instrument.
For Trade Receivables, the Company applies 'simplified approach' which requires expected lifetime losses to
be recognised from initial recognition of the receivables.
A. 5. De-recognition
The Company de-recognizes a financial asset when the contractual rights to the cash flows from the financial
asset expire, or it transfers rights to receive cash flows from an asset, 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.
B. Financial Liabilities
B. 1. Initial Recognition and measurement
All financial liabilities are recognised initially at fair value and, in the case of financial liabilities at amortised
cost, net of directly attributable transaction costs.
After initial recognition, interest-bearing loans, borrowings and trade and other payables are subsequently
measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit
and loss when the liabilities are derecognised as well as through the EIR amortisation process.
B.2. De-recognition
A financial liability is de-recognized when the obligations 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. When
a new financial liability is recognised in place of an existing one, the difference in the respective carrying
amounts is recognised in the statement of profit and loss.
C. Equity Instruments:
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting
all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
The Company recognises a liability to pay dividend to equity holders of the Company when the distribution is
authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India,
a distribution with respect to interim dividend is authorised when it is approved by the Board of Directors of the
Company and final dividend is authorised when it is approved by the shareholders. A corresponding amount is
recognised directly in equity.
(g) Inventories
Inventories are valued at the lower of cost and net realisable value.
Raw materials: cost includes cost of purchase and other costs incurred in bringing the inventories to their present
location and condition. Cost is determined on First In First Out (FIFO) basis.
Finished goods and work in progress: cost includes cost of purchase, cost of conversion and other costs including
manufacturing overheads allocated based on the normal operating capacity incurred in bringing them to their respective
present location and condition. Cost is determined on FIFO basis.
Stores and Spares: cost includes cost of purchase and other costs incurred in bringing the inventories to their present
location and condition. Cost is determined on First In First Out (FIFO) basis.
Materials in transit: cost incurred to date.
Obsolete, slow moving and defective inventories are identified from time to time and, where necessary, a provision is
made for such inventories.
(h) Revenue from contracts with customers
The Company recognizes revenue, whenever control over distinct goods or services is transferred to the customer,
provided a contract with enforceable rights and obligations exists and amongst others collectability of consideration is
probable taking into account customer's credit worthiness.
Revenue is the transaction price the Company expects to be entitled to. In determining the transaction price, the
Company considers effects of variable consideration such as the amount of discounts, incentives, volume rebates,
outgoing taxes on sales etc. and the existence of significant financing contracts, non-cash consideration and
consideration payable to the customer, if any.
Variable Consideration
If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to
which it will be entitled to in exchange for transferring goods or services to the customer. The variable consideration
is estimated at contract inception and constrained until it is highly probable that a significant reversal of revenue will
not occur once associated uncertainties are resolved. Some contracts with the customers provide them with a right to
return and volume rebates. The right to return and volume rebates gives rise to variable consideration.
The amount of variable consideration is calculated by either using the expected value or the most likely amount
depending on which is expected to better predict the amount of variable consideration. If a contract contains more than
one distinct good or service, the transaction price is allocated to each performance obligation based on relative stand¬
alone selling prices. If stand-alone selling prices are not observable, the Company reasonably estimates those.
If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability
is recognised when the payment is received. The advance payments received plus a specified rate of return/ discount,
at the prevailing market rates, is settled by supplying respective goods over a period of up to twenty four months under
an agreed delivery schedule as per the terms of the respective agreements. As these are contracts that the Company
expects and has the ability, to fullfill through delivery of a non-financial item, these are presented as advance from
customers and are recognised as revenue as and when control of respective commodities is transferred to customers
under the agreements. The fixed rate of return/ discount is treated as finance cost. The portion of the advance where
either the Company does not have a unilateral right to defer settlement beyond 12 months or expects settlement within
12 months from the balance sheet date is classified as a current liability.
Recognising revenue from major business activities
Sale of goods
Revenues are recognized at a point in time when control of the goods passes to the buyer, usually upon either at the
time of dispatch or delivery. Revenue from the sale of goods is measured at the fair value of the consideration received
or receivable, net of taxes, net of returns and allowances, trade discounts, volume rebates and recovery of charges
collected from customers like transport, packing etc.
Interest income
Interest income is recorded using the Effective interest rate method.
(i) Taxes
Current income tax
Tax on income for the current period is determined on the basis of taxable income and tax credits computed in
accordance with the provisions of the Income Tax Act,1961 and using estimates and judgments based on the expected
outcome of assessments/appeals and the relevant rulings in the areas of allowances and disallowances.
Deferred tax
Deferred income tax is recognized using the balance sheet approach, deferred tax is recognized on temporary
differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes, except when the deferred income tax arises from the initial recognition of goodwill or an
asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or
loss at the time of the transaction.
Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits
and unused tax losses, 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 income tax assets is reviewed at each balance sheet 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 income tax
asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period 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 balance sheet date.
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.
(j) Employee benefits Plan:
(i) Short-Term Employee Benefits
Employee benefits such as salaries, wages, short-term compensated absences, bonus, ex-gratia and performance-
linked rewards that are expected to be settled wholly within twelve months of rendering the service are classified
as short-term employee benefits and are expensed in the period in which the employee renders the service.
(ii) Other long-term employee benefit obligations
The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the
end of the period in which the employees render the related service. They are therefore measured as the present
value of expected future payments to be made in respect of services provided by employees up to the end of the
reporting period using the projected unit credit method. The benefits are discounted using the market yields at the
end of the reporting period that have terms approximating to the terms of the related obligation.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional
right to defer settlement for at least twelve months after the reporting period, regardless of when the actual
settlement is expected to occur.
(iii) Post-employment obligations
The Company operates the following post-employment schemes:
(a) defined benefit plans viz gratuity,
(b) defined contribution plans viz provident fund.
Defined benefit plans
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value
of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined
benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows by reference to market yields at the end of the reporting period on government bonds that have terms
approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation
and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and
loss.
Remeasurement 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.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are
recognised immediately in profit or loss as past service cost.
Defined contribution plan
The Company pays provident fund contributions to publicly administered provident funds as per local regulations.
The Company has no further payment obligations once the contributions have been paid. The contributions are
accounted for as defined contribution plans and the contributions are recognised as employee benefit expense
when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction
in the future payments is available.
(iv) Termination benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement
date, or when an employee accepts voluntary redundancy in exchange for these benefits.
(k) Foreign currency translation
Functional and presentation currency
Items included in the financial statements of the entity are measured using the currency of the primary economic
environment in which the entity operates ('the functional currency'). The financial statements are presented in Indian
rupee (INR), which is entity's functional and presentation currency.
Transactions and balances
In the financial statements of the Company, transactions in currencies other than the functional currency are translated
into the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities
denominated in other currencies are translated into the functional currency at exchange rates prevailing on the reporting
date. Non-monetary assets and liabilities denominated in other currencies and measured at historical cost or fair value
are translated at the exchange rates prevailing on the dates on which such values were determined.
All exchange differences are recognized in the Statement of Profit and Loss of the year.
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