2. Material Accounting Policies
2.1 Basis of preparation
(i) The standalone financial statements comply in all material aspects with the Indian Accounting Standards (Ind AS) notified
under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015], other
relevant provisions of the Act and presentation requirements of Division II of Schedule III to the Companies Act, 2013 (Ind AS
compliant Schedule III).
The Company has consistently applied the accounting policies used in the preparation for all periods presented.
(ii) New and amended standards adopted by the Company
The Ministry of Corporate Affairs vide notification dated May 7, 2025 and August 13, 2025 notified the Companies (Indian
Accounting Standards) Amendment Rules, 2025 and Companies (Indian Accounting Standards) Second Amendment Rules,
2025, respectively, which amended certain accounting standards (see below), and are effective for annual reporting periods
beginning on or after April 1, 2025:
(a) Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants - Amendments to
Ind AS 1
As a result of the adoption of the amendments to Ind AS 1, the Company changed its accounting policy for the
classification of borrowings:
"Borrowings are classified as current liabilities unless, at the end of the reporting period, the Company has a right
to defer settlement of the liability for at least 12 months after the reporting period. Covenants that the Company is
required to comply with, on or before the end of the reporting period, are considered in classifying loan arrangements
with covenants as current or non-current. Covenants that the Company is required to comply with after the reporting
period do not affect the classification.”
This new policy did not result in a change in the classification of the Company's borrowings. The Company did not make
retrospective adjustments as a result of adopting the amendments to Ind AS 1.
(b) Supplier Finance Arrangements - Amendments to Ind AS 7 and Ind AS 107
As a result of the adoption of the amendments to Ind AS 7 and Ind AS 107, the Company provided new disclosures for
liabilities under supplier finance arrangements in note 28.
(c) International Tax Reform - Pillar Two Model Rules - Amendments to Ind AS 12
The Company is not within the scope of the OECD Pillar Two Model Rules, as Pillar Two legislation has not yet been
enacted in any of the jurisdictions in which the Company operates.
(d) Lack of Exchangeability - Amendments to Ind AS 21
The amended Ind AS 21 have added requirements to help entities to determine whether a currency is exchangeable
into another currency, and the spot exchange rate to use where it is not.
These amendments did not have any material impact on the amounts recognised in prior periods and are not expected
to significantly affect the current or future periods.
(iii) New standards or amendments not yet adopted
Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants - Amendments to Ind
AS 1 - This amendment also includes specific provisions that will take effect for reporting periods beginning on or after April
1, 2026, as outlined below.
Under the existing Ind AS 1, where there is a breach of a material provision of a long-term loan arrangement on or before
the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the
entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the
financial statements for issue, not to demand payment as a consequence of the breach.
However, the amended requirements stipulate that entities will no longer be permitted to consider lender waivers
that are granted after the reporting date but before the financial statements are approved for the purpose of
classification of loans. This amendment is required to be applied retrospectively in accordance with Ind AS 8.
The Company does not expect this amendment to have an impact on its operations or financial statements.
2.2 Basis of measurement
The standalone financial statements have been prepared on accrual basis and under the historical cost convention, except for
the following which have been measured at fair value:
• certain financial assets and liabilities,
• defined benefit plans - plan assets measured at fair value,
• derivative financial instruments,
• share based payments
The standalone financial statements are presented in Indian Rupees ('), which is the Company's functional and presentation
currency and all amounts are rounded to the nearest lakhs (' 00,000) and two decimals thereof, except as stated otherwise.
2.3 Use of estimates
The preparation of the financial statements requires management to make estimates and assumptions. Actual results could vary
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 effects only that period or in the period of
the revision and future periods if the revision affects both current and future years (refer note 3 on critical accounting estimates,
assumptions and judgements).
2.4 Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses, if any.
Cost includes expenditure that is directly attributable to the acquisition of the items.
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 are charged to profit or loss during the reporting period in which they are incurred.
Assets are depreciated to the residual values on a straight-line basis over the estimated useful lives based on technical estimates,
except moulds which are depreciated based on units of production. Assets residual values and useful lives are reviewed at each
financial year end considering the physical condition of the assets and benchmarking analysis or whenever there are indicators
for review of residual value and useful life. The residual value of the asset is not more than 5% of the original cost of the asset,
except assets (Mobile, Car, Laptop) which are under option to acquire by the employee under relevant HR policy, moulds and
toolings for which salvage value is based on estimated saleable value. Freehold Land is not depreciated. Estimated useful lives of
the assets are as follows:
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss in the
year of disposal or retirement.
2.5 Inventories
Inventories are valued at the lower of cost and net realisable value, except scrap which is valued at net realisable value. Net
realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale. The cost of inventories comprises of cost of purchase, cost of conversion and other
costs incurred in bringing the inventories to their respective present location and condition. Cost is computed on the weighted
average basis.
2.6 Employee benefits
a) Short-term employee benefits are recognised as an expense in the Statement of Profit and Loss of the year in which the
related services are rendered. Liabilities for wages and salaries, including non-monetary benefits that are expected to be
settled wholly within 12 months after the end of the period in which the employees render the related service are recognised
in respect of employees' services up to the end of the reporting period and are measured at the amounts expected to
be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations under other
current financial liabilities in the Balance Sheet.
b) Compensated absences is accounted for using the projected unit credit method, on the basis of actuarial valuations carried
out by third party actuaries at each Balance Sheet date. Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are charged or credited to profit and loss in the period in which they arise.
c) Contribution to Provident Fund, a defined contribution plan, is made in accordance with the statute, and is recognised as
an expense in the year in which employees have rendered services. No further liability of the Company once contribution is
made.
d) The liability or asset recognised in the Balance Sheet in respect of 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 denominated in Indian Rupees (?) 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 benefits expense in the Statement of Profit and Loss.
Re-measurement 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.
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.
The Company operates defined benefit plans for gratuity, which requires contributions to be made to a separately
administered fund. Funds are managed by a trust. The trust has policies from an insurance company. These benefits are
partially funded.
2.7 Financial instruments - initial recognition, subsequent measurement and impairment
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
Financial assets are classified at amortised cost or FVOCI or FVPL, depending on its business model for managing those
financial assets and the asset's contractual cash flow characteristics.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income.
For investments in debt instruments, this will depend on the business model in which the investment is held. For investments
in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial
recognition to account for subsequent changes in the FVOCI.
The Company reclassifies debt investments when and only when its business model for managing these assets changes.
For impairment purposes, material financial assets are tested on an individual basis and other financial assets are assessed
collectively in groups that share similar credit risk characteristics.
Measurement
At initial recognition, the Company measures a financial asset (excluding trade receivables which do not contain a significant
financing component) at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction
costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at
FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are
solely payment of principal and interest.
Investment in debt instruments
Subsequent measurement of debt instruments depends on the Company's business model for managing the asset and the
cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt
instruments:
• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost. Financial assets classified at amortised cost are
subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised 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. Interest
income from these financial assets is included in other income using the effective interest rate method. Any gain or loss
arising on derecognition is recognised directly in profit or loss and presented in other income/(expenses). Impairment
losses are presented as separate line item in the Statement of Profit and Loss.
• Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows
and for selling the financial assets, where the assets' cash flows represent solely payments of principal and interest, are
measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment
gains or losses, interest income and foreign exchange gains and losses which are recognised in profit and loss. When
the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity
to profit or loss and recognised in other income/(expenses). Interest income from these financial assets is included in
other income using the effective interest rate method. Foreign exchange gains and losses are presented in other income/
(expenses) and impairement expenses are presented as separate line item in the Statement of Profit and Loss.
• Fair value through profit or loss (FVPL): Any financial asset that do not meet the criteria for classification as at amortised
cost or as financial assets at FVOCI, is classified as financial assets at FVPL. Financial assets at FVPL are at each reporting
date fair valued with all the changes recognised in the Statement of Profit and Loss.
Trade receivables
A receivable is classified as a 'trade receivable' if it is in respect to the amount due from customers on account of goods sold
or services rendered in the ordinary course of business. Trade receivables are recognised initially at the transaction value
except trade receivable that contains significant financing component that are subsequently measured at amortised cost
using the effective interest rate method, less provision for impairment. For some trade receivables, the Company may obtain
security in the form of guarantee, security deposit or letter of credit which can be called upon if the counterparty is in default
under the terms of the agreement.
Impairment
Impairment is made on the expected credit losses, which are the present value of the cash shortfalls over the expected life
of financial assets. The impairment methodology applied depends on whether there has been a material increase in credit
risk. The estimated impairment losses are recognised in a separate provision for impairment and the impairment losses are
recognised in the Statement of Profit and Loss within other expenses.
Subsequent changes in assessment of impairment are recognised in provision for impairment and the change in impairment
losses are recognised in the Statement of Profit and Loss within other expenses.
For foreign currency trade receivables, impairment is assessed after reinstatement at closing rates.
Individual receivables which are known to be uncollectible are written off by reducing the carrying amount of trade
receivables and the amount of the loss is recognised in the Statement of Profit and Loss within other expenses.
Subsequent recoveries of amounts previously written off are credited to other income.
Investment in equity instruments
Investment in equity securities are initially measured at fair value. Any subsequent fair value gain or loss is recognised through
profit or loss if such investments in equity securities are held for trading purposes. The fair value gains or losses of all other
equity securities are recognised in other comprehensive income. 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 profit or loss following the derecognition of the investment. Dividends from such investments
are recognised in profit or loss as other income when the Company's right to receive payments is established. Impairment
losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other
changes in fair value.
De-recognition of financial asset
A financial asset is derecognised only when
• The Company has transferred the rights to receive cash flows from the financial asset or
• Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay
the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and
rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not
transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the
financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where
the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing
involvement in the financial asset.
b) Financial liabilities
At initial recognition, all financial liabilities other than fair valued through profit or loss are recognised initially at fair value
less transaction costs that are attributable to the issue of financial liability. Transaction costs of financial liability carried at
fair value through profit or loss is expensed in profit or loss.
(i) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading. The Company has not
designated any financial liabilities upon initial measurement recognition at fair value through profit or loss. Financial
liabilities at fair value through profit or loss are at each reporting date at fair value with all the changes recognised in the
Statement of Profit and Loss.
(ii) Financial liabilities measured at amortised cost
Borrowings
Borrowings are initially recognised at fair value, 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 profit or loss over the period of the borrowings using the effective interest rate method. Fees paid on the establishment of
loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility
will be drawn-down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is
probable that some or all of the facility will be drawn-down, the fee is capitalised as a prepayment for liquidity services and
amortised over the period of the facility to which it relates.
Borrowings are derecognised from the Balance Sheet when the obligation specified in the contract is extinguished, cancelled
or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to
another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in
the Statement of Profit and Loss as other income or finance costs.
Borrowings are classified as current liabilities unless, at the end of the reporting period, the Company has unconditional
right to defer settlement of the liability for atleast 12 months after reporting period.
Trade and other payables
A payable is classified as 'trade payable' if it is in respect of the amount due on account of goods purchased or services
received in the normal course of business. These amounts represent liabilities for goods and services provided to the
Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities
unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and
subsequently measured at amortised cost using the effective interest rate method.
De-recognition of financial liability
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. The
difference between the carrying amount of a financial liability that has been extinguished or transferred to another party
and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the Statement
of Profit and Loss as other income or finance costs.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the Balance Sheet where the Company has a
legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis or realise the
asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must
be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the
counterparty.
2.8 Revenue recognition and other income
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation.
a) Sale of products
Revenue from sale of products is recognised when control of products, being sold has been transferred to the customer and
when there are no longer any unfulfilled obligations to the customer.
b) Sale of power
Revenue from the sale of power is recognised when the electricity is supplied and is measured as per the contractually
agreed tariff rates.
c) Sale of services
Revenue from job work charges and repair and maintenance contract are recognised based on stage of completion of the
contract. Stage of completion is determined using ''input methods'' as a proportion of cost incurred to date to the total
estimated contract cost. Estimated loss on job work to be undertaken in future years are provided for in the period in which
the estimate results in a loss on job work and repair and maintenance contract.
d) Other operating revenue
Interest recovered from customers is recognised on time proportion basis taking into the account the amount outstanding
and the rate applicable as per agreed terms.
Incentives on exports and other Government grants related to operations are recognised in books after due consideration of
certainty of utilisation/receipt of such incentives. For Government grants, refer note 4.15.
e) Other income
Interest
Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.
Dividend
Dividend income is recognised when the right to receive dividend is established.
2.9 Business Combinations
The acquisitions of businesses are accounted for using the acquisition method. The cost of the acquisition is measured at the
aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed and equity instruments issued
by the Company in exchange for control of the acquiree. The acquiree's identifiable assets, liabilities and contingent liabilities
that meet the condition for recognition are recognised at their fair values at the acquisition date. In the case of bargain purchase,
resultant gain is recognised on the acquisition date and accumulated to capital reserve in other equity. Acquisition related costs
are recognised in the Statement of Profit and Loss.
Business combinations arising from transfer of interests in entities that are under common control are accounted for using the
pooling of interest method. The difference between any consideration transferred and the aggregate historical carrying values
of assets and liabilities of the acquired entity are recognised in other equity.
Goodwill
Goodwill arising on an acquisition of business is carried at cost as established at the date of acquisition of the business less
accumulated impairment losses, if any. Goodwill is tested for impairment annually and for the purposes of impairment testing,
goodwill is allocated to the cash-generating units that is expected to benefit from the synergies of the combination.
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