2. Material Accounting Policies
2.1 Basis of preparation
(i) The standalone financial statements comply in all material aspects with 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 notified by the Ministry of Corporate Affairs
The Ministry of Corporate Affairs vide notification dated 9 September 2024 and 28 September 2024 notified the Companies
(Indian Accounting Standards) Second Amendment Rules, 2024 and Companies (Indian Accounting Standards) Third
Amendment Rules, 2024, respectively, which amended/notified certain accounting standards (see below), and are effective
for annual reporting periods beginning on or after 1 April 2024:
• Insurance contracts - Ind AS 117; and
• Lease Liability in Sale and Leaseback - Amendments to Ind AS 116
These amendments did not have any impact on the amounts recognised in current or prior period.
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 and moulds 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 expense 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.
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 fair value through other comprehensive income or fair value through
profit or loss, depending on its business model for managing those financial assets and the assets 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 fair value in other comprehensive income.
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 receivable that does not contain 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 fair
value through profit or loss 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 finance income using the effective interest rate method.
• 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 fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through
OCI, except for the recognition of impairment gains or losses, interest revenue 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 gains/ (losses). Interest income from these financial
assets is included in other income using the effective interest rate method.
• Fair value through profit or loss (FVPL): Any financial asset that do not meet the criteria for classification as at amortized
cost or as financial assets at fair value through other comprehensive income, is classified as financial assets at fair value
through profit or loss. Financial assets at fair value through profit or loss 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 transaction value except
trade receivable that contains significant financing component that are subsequently measured at amortised cost using the
effective interest 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 receivable, 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 receivable
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 and loss. Dividends from such investments are recognised in profit and 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 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.
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 expires. 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 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 there is 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 Income
Interest from customers - Interest from customer 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
certainity 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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