Note 1 - Material Accounting Policies under IND AS
B) Basis of preparation of financial statements
The principle accounting policies applied in the preparation
of these financial statements are set out in Para C below.
These policies have been consistently applied to all the
years presented.
i. Statement of compliance
These separate financial statements (also known as
Standalone Financial Statements) have been prepared
in accordance with IND AS as prescribed under Section
133 of the Companies Act, 2013 read with Rule 3 of the
Companies (Indian Accounting Standards) Rules, 2015,
and subsequent amendments thereto.
ii. Basis of preparation and presentation
The financial statements have been prepared on
a historical cost basis considering the applicable
provisions of the Companies Act 2013, except for the
following material item that has been measured at fair
value as required by relevant Ind AS. Historical cost is
generally based on the fair value of the consideration
given in exchange for goods and services. Fair value is
the price that would be received on the sale of an asset
or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
a) Certain financial assets/liabilities measured at fair
value (refer Note 29A) and
b) Any other item as specifically stated in the
accounting policy.
The Financial Statement is presented in INR (“'”) and
all values are rounded off to Rupees Lakhs unless
otherwise stated.
The Company reclassifies comparative amounts, unless
impracticable and whenever the Company changes the
presentation or classification of items in its financial
statements materially. No such material reclassification
has been made during the year.
The financial statements of the Company for the
year ended March 31, 2025 were approved for issue
in accordance with a resolution of the directors
on May 19, 2025.
iii. Major Sources of Estimation Uncertainty
In the application of accounting policy which is
described in note (C) below, the management is required
to make judgments, estimates and assumptions about
the carrying amount of assets and liabilities, income and
expenses, contingent liabilities and the accompanying
disclosures 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 and are prudent
and reasonable. Actual results may differ from those
estimates. The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in
which the estimates are revised if the revision affects
only that period or in the period of revision and
future periods if the revision affects both the current
and future period.
The few critical estimations and judgments made in
applying accounting policies are:
Property, Plant and Equipment:
The useful life of Property, Plant and Equipment are
as specified in Schedule II to the Companies Act, 2013
and on certain assets based on technical advice which
considered the nature of the asset, the usage of the
asset, expected physical wear and tear, the operating
conditions of the asset, anticipated technological
changes, manufacturers warranties and maintenance
support. The Company reviews the useful life of
Property, Plant and Equipment at the end of each
reporting period. This reassessment may result in a
change in depreciation charge in future periods.
Impairment of Non-financial Assets:
For calculating the recoverable amount of non-financial
assets, the Company is required to estimate the value-
in-use of the asset or the Cash Generating Unit and the
fair value less costs to disposal. For calculating value in
use the Company is required to estimate the cash flows
to be generated from using the asset. The fair value
of an asset is estimated using a valuation technique
where observable prices are not available. Further, the
discount rate used in value in use calculations includes
an estimate of risk assessment specific to the asset.
Impairment of Financial Assets:
The Company impairs financial assets other than
those measured at fair value through profit or loss or
designated at fair value through other comprehensive
income on expected credit losses. The estimation of
expected credit loss includes the estimation of the
probability of default (PD), loss given default (LGD) and
the exposure at default (EAD). Estimation of probability
of default apart from involving trend analysis of past
delinquency rates includes estimation on forward¬
looking information relating to not only the counterparty
but also relating to the industry and the economy as a
whole. The probability of default is estimated for the
entire life of the contract by estimating the cash flows
that are likely to be received in default scenario. Further,
the loss given default is calculated based on an estimate
of the value of the security recoverable as on the
reporting date. The exposure at default is the amount
outstanding at the balance sheet date.
Defined Benefit Plans:
The cost of the defined benefit plan and the present
value of such obligations are determined using
actuarial valuations. An actuarial valuation involves
making various assumptions that may differ from
actual developments in the future. These include
the determination of the discount rate, future salary
increases, mortality rates and attrition rate. Due to the
complexities involved in the valuation and its long-term
nature, a defined benefit obligation is highly sensitive
to changes in these assumptions. All assumptions are
reviewed at each reporting date. (Refer Note 30F)
FairValue Measurementof Financial Instruments:
When the fair values of financial assets and financial
liabilities recorded in the balance sheet cannot
be measured based on quoted prices in active
markets, their fair value is measured using valuation
techniques including the Discounted Cash Flow (DCF)
model. The inputs to these models are taken from
observable markets where possible, but where this
is not feasible, a degree of judgement is required in
establishing fair values.
Income taxes:
Significant judgments are involved in determining the
provision for income taxes, including amount expected
to be paid/recovered for uncertain tax positions.
In assessing the realizability of deferred income tax
assets, management considers whether some portion
or all the deferred income tax assets will not be realized.
The ultimate realization of deferred income tax assets
is dependent upon the generation of future taxable
income during the periods in which the temporary
differences become deductible. Management considers
the scheduled reversals of deferred income tax
liabilities, projected future taxable income and tax
planning strategies in making this assessment. Based
on the level of historical taxable income and projections
for future taxable income over the periods in which the
deferred income tax assets are deductible, management
believes that the Company will realize the benefits of
those deductible differences.
The amount of the deferred income tax assets
considered realizable, however, could be reduced in the
near term if estimates of future taxable income during
the carry forward period are reduced.
Leases:
Ind AS 116 requires lessees to determine the lease
term as the non-cancellable period of a lease adjusted
with any option to extend or terminate the lease, if the
use of such option is reasonably certain. The Company
makes an assessment on the expected lease term on
a lease-by-lease basis and thereby assesses whether
it is reasonably certain that any options to extend or
terminate the contract will be exercised. In evaluating
the lease term, the Company considers factors such as
any significant leasehold improvements undertaken
over the lease term, costs relating to the termination
of the lease and the importance of the underlying
asset to Company’s operations taking into account the
location of the underlying asset and the availability of
suitable alternatives. The lease term in future periods
is reassessed to ensure that the lease term reflects the
current economic circumstances. After considering
current and future economic conditions, the Company
has concluded that no changes are required to lease
period relating to the existing lease contracts.
Allowance forcredit losseson receivables:
The Company determines the allowance for credit losses
based on historical loss experience adjusted to reflect
current and estimated future economic conditions. The
Company considered current and anticipated future
economic conditions relating to industries the Company
deals with and the countries where it operates. In
calculating expected credit loss, the Company has also
considered credit reports and other related credit
information for its customers to estimate the probability
of default in future.
C) Summary of Material Accounting Policies:
Ind AS 1 was amended vide notification no G.S.R.242(E)
dated March 31, 2023 to require disclosure of Material
Accounting Policy information from accounting periods
beginning on or after April 1, 2023 instead of significant
accounting policy disclosure by amending paragraph 117,
inserting paragraphs 117A to 117E and deleting paragraphs
118 to 121. Paragraph 117 of Ind AS 1 states when an
information on accounting policy is considered as ‘Material
Accounting Policy information’ as follows:
Accounting policy information is material if, when
considered together with other information included in an
entity’s financial statements, it can reasonably be expected
to influence decisions that the primary users of general-
purpose financial statements make on the basis of those
financial statements.
Each of the policies disclosed herein below has been tested
to determine whether the information disclosed is Material
Accounting Policy information.
1) Property, Plant and Equipment (PPE)
The Company has elected to continue with the carrying value
of Property, Plant and Equipment (‘PPE’) recognized as of the
transition date, measured as per the Previous GAAP and use
that carrying value as its deemed cost.
Property, Plant and Equipment are stated at cost less
accumulated depreciation and accumulated impairment
losses except for freehold land which is not amortised.
Any gain or loss arising on derecognition of an item of
property, plant and equipment is determined as the
difference between the net disposal proceeds and the
carrying amount of the asset and is recognized in Profit or
Loss aggregated with other income or other expense line
item on net basis, respectively.
The depreciable amount of an asset is determined after
deducting its residual value. Depreciation on the property,
plant and equipment, is calculated using the straight-line
method over the useful life of assets based on management
estimates which is in line with the useful life indicated
in Schedule II to the Companies Act, 2013. Given below
are the estimated useful lives for each class of property,
plant and equipment:
2) Intangible Assets:
Intangible assets acquired separately are measured on initial
recognition at cost. After initial recognition, intangible assets
are carried at cost less any accumulated amortization and
accumulated impairment losses.
Software (not being an integral part of the related hardware)
and Technical Know How acquired for internal use are
treated as intangible assets.
Any gain or loss arising from derecognition of an intangible
asset is determined as the difference between the net
disposal proceeds and the carrying amount of the asset and
is recognized in profit or loss with other income or other
expense line item on net basis, respectively
Intangible Assets are amortized over 3 to 10 years on
straight-line method over the estimated useful economic
life of the assets.
3) Investment Property:
Investment properties are land and buildings that are
held for long term lease rental yields and/ or for capital
appreciation. Investment properties are initially recognized
at cost including transaction costs. Subsequently investment
properties comprising building are carried at cost less
accumulated depreciation and accumulated impairment
losses, if any.
Depreciation on Factory Building is provided over the
estimated useful lives as specified in note 1 above.
The difference between the net disposal proceeds and the
carrying amount of the asset is recognized in profit or loss in
the period of de-recognition.
4) Inventories:
Inventories consisting of stores and spares, raw materials,
work in progress, and finished goods are measured at lower
of cost and net realizable value However, materials held
for use in production of inventories are not written down
below cost, if the finished products are expected to be sold
at or above cost.
Cost of raw material, components and stores and spares
is determined on a first in first out basis for Glass Lined
Equipment division and a weighted average method for
Filtration, drying and other equipment.
5) Leases:
The Company as a lessee
The Company’s lease asset classes primarily consist of leases
for land and building. The Company assesses whether a
contract contains a lease, at inception of a contract.
At the date of commencement of the lease, the Company
recognizes 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 low value leases. For these short-term
and low value leases, the Company recognizes the lease
payments as an operating expense on a straight-line basis
over the term of the lease.
The lease term includes extension or termination options
when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost
and subsequently measured at cost less accumulated
depreciation and impairment losses.
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. Lease liabilities are remeasured with a corresponding
adjustment to the related right of use asset if the Company
changes its assessment of whether it will exercise an
extension or a termination option.
The Company as a lessor
Leases for which the Company is a lessor are classified as a
finance or operating lease. Whenever the terms of the lease
transfer substantially all the risks and rewards of ownership
to the lessee, the contract is classified as a finance lease. All
other leases are classified as operating leases.
For operating leases, rental income is recognized on a
straight-line basis over the term of the relevant lease.
6) Government Grants:
Grants and subsidies from the government are recognized
when there is reasonable assurance that (i) the Company
will comply with the conditions attached to them, and (ii) the
grant/subsidy will be received.
Where the grant relates to an asset under the EPCG Scheme,
it is presented as a deferred income aggregated under other
liabilities in the Balance Sheet and presented under other
income in profit and loss on a systematic and rational basis
associated with fulfillment of export obligation.
|