A. MATERIAL ACCOUNTING POLICIES AND NOTES FORMING
PART OF THE FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31ST MARCH, 2025
a) Basis of Preparation of Financial Statements:
These standalone financial statements have been prepared in
accordance with the Indian Accounting Standards (hereinafter
referred to as the ‘Ind AS') as notified by Ministry of Corporate
Affairs pursuant to section 133 of the Companies Act, 2013
(‘the Act') read with rule 3 of the Companies (Indian Accounting
Standards) Rules, 2015 and amendment rules issued thereafter.
The financial statements of the Company are prepared on
the accrual basis of accounting and historical cost convention
except for the following material items that have been measured
at fair value as required by the relevant Ind AS:
i) Certain financial assets and liabilities are measured at
Fair value (refer note no. 43 financial instruments)
ii) Defined benefit employee plan (refer note no. 42)
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 Companies Act,
2013. Based on the nature of products and the time between
acquisition of assets for processing and their realisation in
cash and cash equivalents, the Company has ascertained its
operating cycle as 12 months for the purpose of current or non¬
current classification of assets and liabilities.
b) Use of estimates and judgements:
The preparation of the financial statements requires the
Management to make judgements, estimates and assumptions
that affect the reported amounts of assets and liabilities,
disclosure of contingent liabilities as at the date of the financial
statements and the reported amounts of revenue and expenses
during the reporting period. The recognition, measurement,
classification or disclosure of an item or information in the
financial statements is made relying on these estimates.
The estimates and judgments 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. Actual results may differ from those
estimates. Any revision to accounting estimates is recognised
prospectively in current and future periods.
Critical accounting judgements and key source of
estimation uncertainty
The Company is required to make judgments, estimates and
assumptions about the carrying amount of assets and liabilities
that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience
and other factors that are considered to be relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the
revision affects only that period, or in the period of the revision
and future period, if the revision affects current and future
periods.
(a) Depreciation / amortisation and useful lives of
property; plant and equipment and intangible assets
Property, plant and equipment and intangible assets are
depreciated / amortised over their estimated useful lives,
after taking into account its estimated residual value.
Management reviews the estimated useful lives and
residual values of the assets annually in order to determine
the amount of depreciation/amortisation to be recorded
during any reporting period. The useful lives and residual
values are based on the Company's historical experience
with similar assets and take into account anticipated
technological changes. The depreciation/amortisation for
future periods is revised if there are significant changes
from previous estimates. Depreciation on the fixed assets
added/disposed of/discarded during the year is provided
on pro-rata basis with reference to the month of addition/
disposal/discarding.
(b) Provisions and liabilities
Provisions and liabilities are recognized in the period
when it becomes probable that there will be a future
outflow of funds resulting from past operations or
events that can reasonably be estimated. The timing of
recognition requires application of judgement to existing
facts and circumstances which may be subject to
change. The amounts are determined by discounting the
expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money
and the risks specific to the liability.
(c) Contingencies
In the normal course of business, contingent liabilities
may arise from litigation and other claims against the
Company. Potential liabilities that are possible but not
probable of crystallising or are very difficult to quantify
reliably are treated as contingent liabilities. Such liabilities
are disclosed in the notes but are not recognized in the
financial statements.
(d) Measurement of defined benefit obligations
The present value of the defined benefit obligations
depends on a number of factors that are determined on
an actuarial basis. The assumptions used in determining
the net interest cost/(income) for defined benefit
plans include the discount rate. Any changes in these
assumptions will impact the carrying amount of defined
benefit obligations.
c) Property, plant and equipment and Intangible assets
Property, plant and equipment
Freehold land is carried at cost. All other items of property, plant
and equipment are measured at historical cost less accumulated
depreciation and impairment losses, if any. Costs include freight,
import duties, non-refundable GST and other expenses directly
attributable to the acquisition of the asset.
Subsequent costs are included in the asset's carrying amount
or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the company and the cost of the item can
be measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognised when
replaced. All other repairs and maintenance expenses are
charged to the Statement of Profit and Loss during the reporting
period in which they are incurred.
The cost of property, plant and equipment which are not ready
for their intended use before such date, are disclosed as capital
work-in-progress.
The Company assesses at each Balance Sheet date whether
there is any indication that any asset may be impaired. If any,
such indication exists, the carrying value of such asset is
reduced to its recoverable amount and the impairment loss is
charged to profit and loss account. If at the balance Sheet date
there is any deduction that a previously assessed impairment
loss no longer exists, then such loss is reversed and the asset is
restated to that effect.
Intangible assets
Technical Know-how and Computer software are stated at cost,
less accumulated amortisation and impairments, if any.
Depreciation/ amortisation methods, estimated useful lives
and residual value
Depreciation is provided on a Straight-Line Method, over the
estimated useful lives of assets. Leasehold land is amortised
over period of lease.
The company depreciates its property, plant and equipment
over the useful life in the manner prescribed in Schedule II of
the Companies Act, 2013 and management believes that useful
lives of assets are same as those prescribed in Schedule II of
the Companies Act, 2013.
The Company amortizes computer software with a useful life
using the straight-line method over the period of 6 years from
the date of acquisition.
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in the
Statement of Profit and Loss.
Assets held for sale
Non-current assets or disposal groups comprising of assets and
liabilities are classified as ‘held for sale' when all of the following
criteria are met:
(i) decision has been made to sell.
(ii) the assets are available for immediate sale in its present
condition.
(iii) the assets are being actively marketed and
(iv) sale has been agreed or is expected to be concluded
within 12 months of the Balance Sheet date.
Subsequently, such non-current assets and disposal groups
classified as ‘held for sale' are measured at the lower of its
carrying value and fair value less costs to sell. Non-current
assets held for sale are not depreciated or amortised.
d) As a lessee
Operating Lease
The Company, as a lessee, recognises a right-of-use asset
and a lease liability for its leasing arrangements, if the contract
conveys the right to control the use of an identified asset. The
contract conveys the right to control the use of an identified
asset, if it involves the use of an identified asset and the
Company has substantially all of the economic benefits from
use of the asset and has right to direct the use of the identified
asset. The cost of the right-of-use asset shall comprise of the
amount of the initial measurement of the lease liability adjusted
for any lease payments made on or before the commencement
date plus any initial direct costs incurred. The right-of-use
assets is subsequently measured at cost less any accumulated
depreciation, accumulated impairment losses, if any, and
adjusted for any remeasurement of the lease liability. The right-of-
use assets is depreciated using the straight-line method from the
commencement date over the shorter of lease term or useful life
of right-of-use asset. The Company measures the lease liability
at the present value of the lease payments that are not paid at
the commencement date of the lease. The lease payments are
discounted using the interest rate implicit in the lease, if that
rate can be readily determined. If that rate cannot be readily
determined, the Company uses incremental borrowing rate. For
short-term and low-value leases, the Company recognises the
lease payments as an operating expense on a straight-line basis
over the lease term.
e) Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand and deposits
which are readily convertible to known amounts of cash and
which are subject to insignificant risk of changes in value and
have an original maturity of three months or less, including
money market deposits, commercial paper and investments.
Bank overdrafts are shown within borrowings in current liabilities
in the balance sheet.
f) Inventories
Inventories of Raw Materials, Work-in-Progress, Stores and
Spares and Finished Goods are stated ‘at cost or net realisable
value, whichever is lower;
Cost comprise all cost of purchase, cost of conversion and
other costs incurred in bringing the inventories to their present
location and condition. Cost formula used is ‘Weighted Average
Cost'. Due allowance is estimated and made for defective
and obsolete items, wherever necessary, based on the past
experience of the Company.
g) Financial Instruments
Financial assets - Initial recognition
Financial assets are recognised when the Company becomes a
party to the contractual provisions of the instruments. Financial
assets other than trade receivables are initially recognised at fair
value plus transaction costs for all financial assets not carried at
fair value through profit or loss. Financial assets carried at fair
value through profit or loss are initially recognised at fair value,
and transaction costs are expensed in the statement of profit
and loss.
Subsequent measurement
Financial assets are subsequently measured at amortised cost,
fair value through other comprehensive income or fair value
through profit or loss on the basis of both
(a) the entity's business model for managing the financial
assets and
(b) the contractual cash flow characteristics of the financial
asset.
(i) Measured at amortised cost:
Financial assets are subsequently measured at
amortised cost, if these financial assets are held
within a business module whose objective is to
hold these assets in order to collect contractual
cash flows and the contractual terms of the
financial asset give rise on specified date to cash
flows that are solely payments of principal and
interest on the principal amount outstanding.
(ii) Measured at fair value through other
comprehensive income (FVTOCI):
Financial assets are measured at FVTOCI, if these
financial assets are held within a business model
whose objective is achieved by both collecting
contractual cash flows that give rise on specified
dates to solely payments of principal and interest
on the principal amount outstanding and by selling
financial assets.
(iii) Measured at fair value through profit or loss
(FVTPL):
Financial assets other than equity instrument
are measured at FVTPL unless it is measured at
amortised cost or at FVTOCI on initial recognition.
Such financial assets are measured at fair value
with all changes in fair value, including interest
income and dividend income if any, recognised in
the Statement of Profit and Loss.
Equity instruments
The company subsequently measures all equity investments
at fair value. Where the Company's management has elected
to present fair value gains and losses on equity investments
in other comprehensive income, there is no subsequent
reclassification of fair value gains and losses to the Statement
of Profit and Loss. Dividends from such investments are
recognised in the Statement of Profit and Loss as other income
when the Company's right to receive payments is established.
Impairment
The Company assesses on a forward looking basis the expected
credit losses associated with its financial assets carried at
amortised cost and FVTOCI debt instruments. The impairment
methodology applied depends on whether there has been a
significant increase in credit risk.
For trade receivables only, the Company applies the simplified
approach permitted by Ind AS 109 Financial Instruments, which
requires expected lifetime losses to be recognised from initial
recognition of the receivables. The impairment losses and
reversals are recognised in Statement of Profit and Loss.
De-recognition
The Company derecognises 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
recognise the transferred asset to the extent of the Company's
continuing involvement. In that case, the Company also
recognises 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.
On de-recognition of equity instruments measured at FVTOCI,
the cumulative gain or loss previously recognised in other
comprehensive income is reclassified from other equity to retain
earning as a reclassification adjustment.
Financial Liabilities
Financial liabilities are recognised when the Company becomes
a party to the contractual provisions of the instruments. Financial
liabilities are initially recognised at fair value net of transaction
costs for all financial liabilities not carried at fair value through
profit or loss.
Financial liabilities measured at amortised cost are subsequently
measured at using EIR method. Financial liabilities carried at fair
value through profit or loss are measured at fair value with all
changes in fair value recognised in the Statement of Profit and
Loss.
De-recognition
A financial liability is derecognised 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 recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net
amount is reported in the Balance Sheet if there is a currently
enforceable legal right to offset the recognised amounts and
there is an intention to settle on a net basis, to realise the assets
and settle the liabilities simultaneously.
Derivative financial instruments
Derivative financial instruments such as future contracts are
initially recognised at fair value on the date a derivative contract
is entered into and are subsequently re-measured at their fair
value with changes in fair value recognised in the Statement of
Profit and Loss in the period when they arise.
h) Fair Value Measurement
The Company measures financial instruments, such as,
derivatives at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
The fair value measurement is based on the presumption that
the transaction to sell the asset or transfer the liability takes
place either:
V In the principal market for the asset or liability, or
V 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 best economic 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 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:
V Level 1 - Quoted (unadjusted) market prices in active
markets for identical assets or liabilities
V Level 2 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
directly or indirectly observable
V Level 3 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Company determines
whether transfers have occurred between levels in the hierarchy
by re-assessing categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) at
the end of each reporting period.
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.
i) Borrowings
Borrowings are initially recognised at net of transaction costs
incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction
costs) and the redemption amount is recognised in the
Statement of Profit and Loss over the period of the borrowings
using the effective interest method.
j) Borrowing costs
General and specific borrowing costs that are directly attributable
to the acquisition, construction or production of a qualifying
asset are capitalised during the period of time that is required
to complete and prepare the asset for its intended use or sale.
Qualifying assets are assets that necessarily take a substantial
period of time to get ready for their intended use or sale.
Other borrowing costs are expensed in the period in which they
are incurred.
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