3. MATERIAL ACCOUNTING POLICIES AND
OTHER EXPLANATORY INFORMATION
3.1 Statement of compliance with Indian
Accounting Standards (Ind AS)
The standalone financial statements of the Company
have been prepared in accordance with Ind AS notified
by the Companies (Indian Accounting Standards)
Rules, 2015 and Companies (Indian Accounting
Standards) Amendment Rules, 2016. Accordingly, the
standalone financial statements for the year ended
31 March 2025 are prepared complying applicable
Ind AS.
3.2 Historical cost convention
These standalone financial statements have been
prepared on a historical cost convention except
where certain financial assets and liabilities have
been measured at fair value.
3.3 Business combinations
Business combinations involving entities under
common control are accounted for using the pooling
of interest method. The net assets of the transferor
entity or business are accounted at their carrying
amounts on the date of the acquisition subject
to necessary adjustments required to harmonise
accounting policies. Any excess or shortfall of the
consideration paid over the share capital of transferor
entity or business is recognised as capital reserve
under equity.
3.4 Revenue recognition
Revenue from contracts with customers is recognised
on transfer of control of promised goods or services
to a customer at an amount that reflects the
consideration to which the Company is expected to
be entitled to in exchange for those goods or services.
Revenue towards satisfaction of a performance
obligation is measured at the amount of transaction
price (net of variable consideration) allocated to
that performance obligation. Revenue is recognised
net of sales reductions such as discounts and sales
incentives granted. This variable consideration is
estimated based on the expected value of outflow.
Sale of products:
Revenue from the sale of products is recognised when
the Company has transferred control of the goods to
the buyer and the buyer obtains the benefits from
the goods, the potential cash flows and the amount
of revenue (the transaction price) can be measured
reliably, and it is probable that the Company will
collect the consideration to which it is entitled to in
exchange for the goods.
Sales-related warranties associated with the goods
are integral to sales price and cannot be purchased
separately, hence they serve as an assurance
that the products sold comply with agreed-upon
specifications. Accordingly, the Company accounts
for warranties in accordance with Ind AS 37 Provisions,
Contingent Liabilities and Contingent Assets.
Rendering of services:
Revenue from services is recognised over time
by measuring progress towards satisfaction of
performance obligation for the services rendered.
Interest and dividends
Interest income and expenses are reported on an
accrual basis using the effective interest method.
Dividends are recognised at the time the right to
receive payment is established.
3.5 Leases
The Company's lease asset classes primarily consist
of leases for Land and Buildings. The Company
assesses whether a contract is or contains a lease,
at inception of a contract. 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. To assess whether a
contract conveys the right to control the use of an
identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the
economic benefits from use of the asset through
the period of the lease and
(iii) the Company has the right to direct the use of
the asset.
At the date of commencement of the lease, the
Company recognises a right-of-use asset ("ROU")
and a corresponding lease liability for all lease
arrangements in which it is a lessee, except for
leases with a term of twelve months or less (short¬
term leases) and leases of low value assets. For
these short-term and leases of low value assets,
the Company recognises the lease payments as an
operating expense on a straight-line basis over the
term of the lease.
The right-of-use assets are initially recognised at
cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or
prior to the commencement date of the lease plus
any initial direct costs less any lease incentives. They
are subsequently measured at cost less accumulated
depreciation and impairment losses, if any. Right-of-
use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the
lease term and useful life of the underlying asset.
The lease liability is initially measured at the present
value of the future lease payments. The lease
payments are discounted using the interest rate
implicit in the lease or, if not readily determinable,
using the incremental borrowing rates. The lease
liability is subsequently remeasured by increasing
the carrying amount to reflect interest on the lease
liability, reducing the carrying amount to reflect the
lease payments made.
A lease liability is remeasured upon the occurrence of
certain events such as a change in the lease term or
a change in an index or rate used to determine lease
payments. The remeasurement normally also adjusts
the leased assets.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments
have been classified as financing cash flows.
3.6 Foreign currency transactions and translations
Initial recognition
The Company's standalone financial statements
are presented in INR, which is also the Company's
functional currency. Transactions in foreign currencies
are recorded on initial recognition in the functional
currency at the exchange rates prevailing on the date
of the transaction.
Measurement at the balance sheet date
Foreign currency monetary items of the Company,
outstanding at the balance sheet date are restated
at the year-end rates. Non-monetary items which
are carried at historical cost denominated in a foreign
currency are reported using the exchange rate at
the date of the transaction. Non-monetary items
measured at fair value in a foreign currency are
translated using the exchange rates at the date when
the fair value is determined.
Treatment of exchange difference
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 recognised as income or expenses in
the period in which they arise.
3.7 Borrowing costs
Borrowing costs directly attributable to the
acquisition, construction or production of qualifying
assets, which are assets that necessarily take a
substantial period of time to get ready for their
intended use or sale, are capitalised during the period
of time that is necessary to complete and prepare the
asset for its intended use or sale.
All other borrowing costs are expensed in the period in
which they are incurred and reported in finance cost.
3.8 Employee benefits
Employee benefits include provident fund, pension
fund, gratuity and compensated absences.
Defined contribution plans
The Company's contribution to provident fund and
pension fund is considered as defined contribution
plan and is charged as an expense as they fall due
based on the amount of contribution required to
be made and when services are rendered by the
employees. The Company has no legal or constructive
obligation to pay contribution in addition to its
fixed contribution.
Defined benefit plans
For defined benefit plans in the form of gratuity,
the cost of providing benefits is determined using
'the Projected Unit Credit method', with actuarial
valuations being carried out at each Balance Sheet
date. Re-measurements, comprising of actuarial gains
and losses are recognised immediately in the balance
sheet with a corresponding debit or credit to retained
earnings through other comprehensive income in
the period in which they occur. Re-measurements
are not reclassified to the statement of profit and
loss in subsequent periods. The retirement benefit
obligation recognised in the Balance Sheet represents
the present value of the defined benefit obligation as
adjusted for unrecognised past service cost.
Short-term employee benefits
The undiscounted amount of short-term employee
benefits expected to be paid in exchange for the
services rendered by employees are recognised during
the year when the employees render the service.
These benefits include performance incentive and
compensated absences which are expected to occur
within twelve months after the end of the period in
which the employee renders the related service. The
cost of such compensated absences is accounted
as under:
(a) in case of accumulated compensated absences,
when employees render the services that
increase their entitlement of future compensated
absences; and
(b) in case of non-accumulating compensated
absences, when the absences occur.
Long-term employee benefits
Compensated absences which are allowed to carried
forward over a period in excess of 12 months after
the end of the period in which the employee renders
the related service are recognised as a liability at the
present value of the defined benefit obligation as at
the Balance Sheet date out of which the obligations
are expected to be settled.
3.9 Taxation
Tax expense recognised in the statement of profit or
loss comprises the sum of deferred tax and current
tax not recognised in other comprehensive income or
directly in equity.
Current tax
Current income tax assets and/or liabilities comprise
those obligations to, or claims from, fiscal authorities
relating to the current or prior reporting periods, that
are unpaid at the reporting date. Current tax is payable
on taxable profit, which differs from profit or loss in
the standalone financial statements. Calculation of
current tax is based on tax rates and tax laws that
have been enacted or substantively enacted by the
end of the reporting period. Deferred income taxes
are calculated using the liability method on temporary
differences between the carrying amounts of assets
and liabilities and their tax bases.
Minimum Alternate Tax (MAT) paid in a year is charged
to the Statement of Profit and Loss as current tax.
The Company recognises MAT credit available as an
asset only to the extent there is convincing evidence
that the Company will pay normal income tax during
the specified period, i.e., the period for which MAT
Credit is allowed to be carried forward. In the year
in which the Company recognises MAT Credit as an
asset, the said asset is created by way of credit to
the statement of Profit and Loss and shown as "MAT
Credit Entitlement".
The Company reviews the "MAT Credit Entitlement"
asset at each reporting date and writes down the
asset to the extent the Company does not have
convincing evidence that it will pay normal tax during
the specified period. The MAT Credit Entitlement is
disclosed under the head 'Deferred tax assets (net)'.
Deferred tax
Deferred tax assets are recognised to the extent
that it is probable that the underlying tax loss or
deductible temporary difference will be utilised
against future taxable income. This is assessed based
on the Company's forecast of future results, adjusted
for significant non-taxable income and expenses
and specific limits on the use of any unused tax loss
or credit.
Deferred tax liabilities are generally recognised in
full, although Ind AS 12, Income Taxes, specifies
limited exemptions.
Changes in deferred tax assets or liabilities are
recognised as a component of tax income or expense
in the statement of profit or loss, except where
they relate to items that are recognised in other
comprehensive income (such as the revaluation of
land) or directly in equity, in which case the related
deferred tax is also recognised in other comprehensive
income or equity, respectively.
3.10 Operating cycle
Based on the nature of products/activities of the
Company and the normal time between purchase
of raw materials and their realisation in cash or
cash equivalents, the Company has determined its
operation cycle as 12 months for the purpose of
classification of its assets and liabilities as current and
non-current.
3.11 Operating expenses
Operating expenses are recognised in statement
of profit or loss upon utilisation of the service or as
incurred. Expenditure for warranties is recognised
when the Company incurs an obligation, which is
usually when the related goods are sold.
3.12 (a) Property, plant and equipment
Property, plant and equipment are stated at cost
less accumulated depreciation and impairment
losses, if any. Property, plant and equipment
are stated at their original cost including freight,
duties, taxes and other incidental expenses
relating to acquisition and installation.
The carrying amount of assets, including those
assets that are not yet available for use, are
reviewed at each balance sheet date to determine
whether there is any indication of impairment. If
any such indication exists, recoverable amount
of asset is determined. An impairment loss is
recognised in the statement of profit and loss
whenever the carrying amount of an asset
exceeds its recoverable amount. An impairment
loss is reversed only to the extent that the
carrying amount of asset does not exceed the
net book value that would have been determined
if no impairment loss had been recognised.
The residual values, useful lives and methods of
depreciation of property, plant and equipment
are reviewed at each financial year end and
adjusted prospectively, if appropriate.
(b) Intangible assets
I ntangible Assets are recognised, if the future
economic benefits attributable to the assets
are expected to flow to the Company and cost
of the asset can be measured reliably. All other
expenditure is expensed as incurred. The same
are amortised over the expected duration of
benefits. Such intangible assets are measured
at cost less any accumulated amortisation and
impairment losses, if any and are amortised over
their respective individual estimated useful life
on straight-line method. The amortisation period
and the amortisation method for an intangible
asset with a finite useful life are reviewed at least
at the end of each reporting period and adjusted
prospectively, if appropriate.
(c) Capital work-in-progress
Expenditure incurred during the period of
construction, including all direct and indirect
expenses, incidental and related to construction,
is carried forward and on completion, the costs
are allocated to the respective property, plant
and equipment. Capital work-in-progress
includes capital inventory.
3.13 Depreciation and amortisation
Depreciation is charged on a pro-rata basis on the
straight-line method at rates prescribed in Schedule
II to the Companies Act, 2013 and is charged to
the statement of profit and loss. Freehold land is
not depreciated.
The estimated useful life of the items of property,
plant and equipment are as follows:
* Moulds are parts of consumer appliances business of the
Company, included in plant and machinery, are depreciated
over a life of 10 years, which is different from life prescribed
in schedule II of the Act, based on independent chartered
engineer certificate
** Vehicles are being depreciated using written down value
method as per life of 8 years mentioned in Schedule II of the
Act
A Wooden pallets are parts of consumer appliances business
of the Company, included in furniture and fixtures, are
depreciated over a life of up to 5 years which is lesser than life
prescribed in schedule II of the Act, depending on the actual
use of the asset.
3.14Impairment of property, plant and equipment
and Intangible assets
Assets are tested for impairment whenever events or
changes in circumstances indicate that the carrying
amount may not be recoverable and impairment loss
is recognised for the amount by which the asset's
carrying amount exceeds its recoverable amount.
The recoverable amount is higher of an asset's
fair value less costs of disposal and value in use.
For the purpose of assessing impairment, assets
are grouped at the lowest levels for which there
are separately identifiable cash inflows which are
largely independent of the cash inflows from other
assets or group of assets (cash generating units). If
at the balance sheet date, there is an indication that
a previously assessed impairment loss no longer
exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount subject
to a maximum of depreciated historical cost and the
same is accordingly reversed in the statement of
profit and loss.
3.15 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and
demand deposits, together with other short-term,
highly liquid investments maturing within 90 days
from the date of acquisition. Cash and cash equivalent
are readily convertible into known amounts of cash
and are subject to an insignificant risk of changes
in value.
3.16 Cash flow statement
Cash flows are reported using the indirect method,
whereby profit/loss before tax is adjusted for the
effects of transactions of non-cash nature and any
deferrals or accruals of past or future cash receipts
or payments. The cash flows from operating,
investing and financing activities of the Company are
segregated based on the available information.
3.17 Inventories
I nventories are stated at the lower of cost and net
realisable value. The cost of inventories comprises of
all costs of purchase, costs of conversion and other
costs incurred in bringing the inventories to their
present location and condition.
Costs of inventories are determined on weighted
average basis. Net realisable value is the estimated
selling price in the ordinary course of business less
any applicable selling expenses.
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