2. Basis of preparation and material
accounting policy information
a. Statement of compliance
These financial statements have been prepared in
accordance with the Indian Accounting Standards (Ind
AS) as prescribed under section 133 of the Companies Act,
2013 read with Companies (Indian Accounting Standards)
Rules as amended from time to time and notified under
Companies Act 2013, and other relevant provisions of the
Act and the guidelines issued by Securities and Exchange
Board of India, to the extent applicable.
The financial statements have been prepared on an
accrual basis using the historical cost convention, except
for the following assets and liabilities:
i) Financial assets and liabilities are measured at fair
value
ii) Defined benefit plans-plan assets measured at fair
value
iii) Derivative financial instruments are measured at
fair value
The financial statements were authorised for issue by the
Company's Board of Directors on 19 May 2025.
b. Basis of preparation
The financial statements have been prepared on accrual
and going concern basis under historical cost convention
except for certain financial instruments and plan assets,
which are measured at fair values. The accounting
policies have been applied consistently to all the periods
presented in the financial statements.
Current versus non-current classification
All assets and liabilities have been classified as current
or non-current as per the Company’s normal operating
cycle and as per terms of agreements wherever applicable
which is period of twelve months. Deferred tax assets
and liabilities are classified as non-current assets and
non-current liabilities.
c. Functional and presentation currency
The Management has determined the currency of the
primary economic environment in which the Company
operates i.e., functional currency, to be Indian Rupees (').
The financial statements are presented in ' lakhs, which
is Company's functional and presentational currency.
d. Revenue recognition
Sale of goods
Revenue arises mainly from the sale of goods. Revenue is
recognised at a point in time, when the Company satisfies
performance obligations by transferring the promised
goods to its customers. To determine whether to
recognise revenue, the Company follows a 5-step process:
(i) Identifying the contract with a customer
(ii) Identifying the performance obligations
(iii) Determining the transaction price
(iv) Allocating the transaction price to the performance
obligations
(v) Recognising revenue when/as performance
obligation(s) are satisfied.
The Company considers the terms of the contract
and its customary business practices to determine
the transaction price. The performance obligation is
satisfied upon delivery of goods to the customer. The
transaction price is the amount of consideration to
which the Company expects to be entitled in exchange
for transferring promised goods to a customer, excluding
amounts collected on behalf of third parties (for example,
indirect taxes). The consideration promised in a contract
with a customer may include fixed consideration, variable
consideration (if reversal is less likely in future) both.
Revenue towards satisfaction of a performance obligation
is measured at the amount of transaction price (net of
variable consideration) allocated to that performance
obligation. The transaction price of goods sold is net of
variable consideration on account of price changes of raw
materials used in final product.
e. Inventories
Inventories are valued at the lower of cost and net
realisable value. However, materials and other items
held for use in production of inventories are not written
down below cost if the finished goods in which they will
be incorporated are expected to be sold at or above cost.
Costs incurred in bringing each product to its present
location and condition are accounted for as follows:
Ý Raw materials: cost includes cost of purchase and
other costs incurred in bringing the inventories
to their present location and condition. Cost is
determined on weighted average basis.
Ý Finished goods and work-in-progress: cost includes
cost of direct materials and labour and a proportion
of manufacturing overheads based on the normal
operating capacity. Cost of finished goods is
determined on manufacturing cost basis.
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. Due allowance is estimated and made for
defective and obsolete items, wherever necessary.
f. Income taxes
Tax expense recognised in the statement of profit and
loss comprises the sum of deferred tax and current tax
not recognised in Other Comprehensive Income (OCI)/
directly in equity.
Current tax is measured at the amount expected to be
paid to the tax authorities in accordance with the Income-
tax Act, 1961. Current tax relating to items recognised
outside statement of profit and loss is recognised outside
statement of profit and loss (i.e. in OCI or any other equity
depending upon the treatment of underlying item).
Current tax assets and current tax liabilities are offset
only if there is a legally enforceable right to set off the
recognized amounts, and it is intended to realize the asset
and settle the liability on a net basis or simultaneously.
Deferred tax liabilities are generally recognised in full
for all taxable temporary differences. Deferred tax
assets are recognised to the extent that it is probable
that the underlying tax loss, unused tax credits or
deductible temporary difference will be utilised against
future taxable income. This is assessed based on the
Company's forecast of future operating results, adjusted
for significant non-taxable income and expenses and
specific limits on the use of any unused tax loss or credit.
Unrecognised deferred tax assets are re-assessed at each
1 1 ti t i! istt tt t t its
become probable that future taxable profits will allow the
deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the year when the asset
is realised or the liability is settled, based on tax rates
(and tax laws) that have been enacted or substantively
enacted at the reporting date. Deferred tax relating to
items recognised outside the statement of profit and loss
is recognised outside statement of profit and loss (in OCI
or equity depending upon the treatment of underlying
item).
g. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise
cash at banks and on hand and short-term deposits with
original maturities of three months or less that are
readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value.
h. Foreign currency transactions
Monetary and non-monetary transactions in foreign
currencies are initially recorded in the functional
currency of the Company at the exchange rates at the
dates of the transactions or at an average rate if the
average rate approximates the actual rate at the date
of the transaction. Monetary foreign currency assets
and liabilities remaining unsettled on reporting date
are translated at the rates of exchange prevailing on
reporting date. Gains/ (losses) arising on account of
realisation/ settlement of foreign exchange transactions
and on translation of monetary foreign currency assets
and liabilities are recognised in the statement of profit
and loss. Non-monetary items are measured in terms of
historical cost in a foreign currency are translated using
the exchange rate at the date of the transaction. The
Company uses derivative financial instruments such as
forward exchange contracts to hedge its risk associated
foreign currency fluctuations. Such derivatives are stated
at fair value. Any gains or losses arising from changes in
fair value are taken directly to statement of profit or loss.
i. Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised
when the Company becomes a party to the contractual
provisions of the financial instrument and are measured
initially at fair value adjusted for transaction costs,
except for those carried at fair value through profit or loss
which are measured initially at fair value. Subsequent
measurement of financial assets and financial liabilities
is described below:
Non-derivative financial assets
Subsequen t measurement
i. Financial assets carried at amortised cost - a
financial asset is measured at the amortised cost, if
both the following conditions are met:
• The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and
• Contractual terms of the asset give rise on
specified dates to cash flows that are solely
payments of principal and interest (SPPI) on
the principal amount outstanding.
After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method.
Impairmen t of financial assets
In accordance with Ind AS 109, the Company applies
expected credit loss (ECL) model for measurement
and recognition of impairment loss for financial
assets. ECL is the weighted-average of difference
between all contractual cash flows that are due to
the Company in accordance with the contract and all
the cash flows that the Company expects to receive,
discounted at the original effective interest rate,
with the respective risks of default occurring as
the weights. When estimating the cash flows, the
Company is required to consider:
• All contractual terms of the financial assets
(including prepayment and extension) over the
expected life of the assets.
• Cash flows from the sale of collateral held or
other credit enhancements that are integral to
the contractual terms.
ii. Investments in equity instruments - The
Company subsequently measures all equity
investments (other than subsidiaries, joint ventures
and associates) at fair value (either through profit
or loss or through other comprehensive income).
Dividends from such investments are recognised in
profit or loss as other income when the Company's
right to receive payments is established.
Trade receivables: Trade receivable is recognized
initially at transaction price, plus transaction
costs that are attributable to the acquisition of the
financial asset. However, trade receivables that do
not contain a significant financing component are
measured at transaction price.
In respect of trade receivables, the Company applies
the simplified approach of Ind AS 109, which requires
measurement of loss allowance at an amount equal
to lifetime expected credit losses. Lifetime expected
credit losses are the expected credit losses that
result from all possible default events over the
expected life of a financial instrument, including
the use of historical trends and macroeconomic
information.
Other financial assets: In respect of its other
financial assets, the Company assesses if the
credit risk on those financial assets has increased
significantly since initial recognition. If the credit
risk has not increased significantly since initial
recognition, the Company measures the loss
allowance at an amount equal to 12-month expected
credit losses, else at an amount equal to the lifetime
expected credit losses.
When making this assessment, the Company uses
the change in the risk of a default occurring over
the expected life of the financial asset. To make
that assessment, the Company compares the risk
of a default occurring on the financial asset as at
the balance sheet date with the risk of a default
occurring on the financial asset as at the date of
initial recognition and considers reasonable and
supportable information, that is available without
undue cost or effort, that is indicative of significant
increases in credit risk since initial recognition. The
Company assumes that the credit risk on a financial
asset has not increased significantly since initial
recognition if the financial asset is determined to
have low credit risk at the balance sheet date.
De-recognition of financial assets
A financial asset is primarily de-recognised when
the contractual rights to receive cash flows from the
asset have expired or the Company has transferred
its rights to receive cash flows from the asset.
Non-derivative financial liabilities
Subsequen t measuremen t a t amortise d cost
Subsequent to initial recognition, all non-derivative
financial liabilities are measured at amortised cost
using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognised 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 de-recognition 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 or to realise the assets and settle
the liabilities simultaneously.
j. Fair value of financial instruments
In determining the fair value of its financial instruments,
the Company uses a variety of methods and assumptions
that are based on market conditions and risks existing
at each reporting date. The methods used to determine
fair value include discounted cash flow analysis, available
quoted market prices and dealer quotes. All methods of
assessing fair value result in general approximation of
value, and such value may never actually be realised. For
financial assets and liabilities maturing within one year
from the Balance Sheet date and which are not carried at
fair value, the carrying amounts approximate fair value
due to the short maturity of these instruments.
The Company has an established control framework
with respect to the measurement of fair values. This
includes the management that has overall responsibility
for overseeing all significant fair value measurements,
including Level 3 fair values, and reports directly to the
board of directors.
The management regularly reviews significant
unobservable inputs and valuation adjustments. If
third party information, such as broker quotes or
pricing services, is used to measure fair values, then
the Management assesses the evidence obtained from
the third parties to support the conclusion that these
valuations meet the requirements of Ind AS, including the
level in the fair value hierarchy in which the valuations
should be classified.
Fair values are categorised into different levels in a fair
value hierarchy based on the inputs used in the valuation
techniques as follows.
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level
1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices).
Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability,
the Company uses observable market data as far as
possible. If the inputs used to measure the fair value of an
asset or a liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorised
in its entirety in the same level of the fair value hierarchy
as the lowest level input that is significant to the entire
measurement.
k. Property, plant and equipment ('PPE')
Recognition and initial measurement
Property, plant and equipment are stated at their
cost of acquisition less accumulated depreciation less
accumulated impairment, if any. The cost comprises
purchase price, borrowing cost if capitalisation criteria
are met and directly attributable cost of bringing the
asset to its working condition for the intended use. Any
trade discount and rebates are deducted in arriving at
the purchase price. 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 definition of asset is met. All
other repair and maintenance costs are recognised in the
statement of profit or loss as incurred.
In case an item of property, plant and equipment is
acquired on deferred payment basis, interest expenses
included in deferred payment is recognised as interest
expense and not included in cost of asset.
Depreciation methods, estimated useful lives and residual
value
Depreciation is calculated using the straight-line method
to allocate their cost, net of their residual values, over
their estimated useful lives;
(i) The depreciation charged on all property, plant and
equipment is on the basis of useful life specified in
Part "C" of Schedule II to the Companies Act, 2013
which represents useful lives of the assets.
(ii) On assets sold, discarded, etc., during the year,
depreciation is provided up to the date of sale/
discard.
(iii) Depreciation has been calculated on a pro-rata basis
from the date of additions in respect of acquisition/
installation during the year.
(iv) Leasehold land is amortised over the primary lease
period or the useful life, whichever is shorter.
Depreciation methods, useful lives and residual values
are reviewed at each financial year, and changes, if any,
are accounted for prospectively.
De-recognition
An item of property, plant and equipment and any
significant part initially recognised is de-recognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss
arising on de-recognition of the asset (calculated as the
difference between the net disposal proceeds and the
carrying amount ofthe asset) is included in the statement
of profit and loss when the asset is de-recognised.
l. Capital work-in progress
Cost of material consumed and erection charges thereon
along with other direct cost incurred by the Company for
the projects are shown as capital work-in-progress until
capitalisation.
m. Impairment of non-financial assets
The carrying amounts of the Company's non-financial
assets, other than inventories, are reviewed at each
reporting date to determine whether there is any
indication of impairment considering the provisions of Ind
AS 36 'Impairment of Assets'. If any such indication exists,
then the asset's recoverable amount is estimated. The
recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs
to sell. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments
of the time value of money and the risks specific to the
asset. For the purpose of impairment testing, assets that
cannot be tested individually are group together into
the smallest group of assets that generates cash inflows
from continuing use that are largely independent of
the cash inflows of other assets or group of assets (the
"cash-generating unit", or "CGU"). An impairment loss is
recognised if the carrying amount of an asset or its CGU
exceeds its estimated recoverable amount. Impairment
losses are recognised in the statement of profit and loss.
Impairment losses recognised in respect of CGUs are
reduced from the carrying amounts of the assets of the
CGU.
n. Right of use assets and lease liabilities
The Company considers whether a contract is, or
contains a lease. A lease is defined as ‘a contract, or part
of a contract, that conveys the right to use an asset (the
underlying asset) for a period of time in exchange for
consideration’.
The Company as a lessee
Classification of leases
The Company enters into leasing arrangements for
various assets. The assessment of the lease is based on
several factors, including, but not limited to, transfer of
ownership of leased asset at end of lease term, lessee’s
option to extend/purchase etc.
Recognition and initial measurement
At lease commencement date, the Company recognises
a right-of-use asset and a lease liability on the balance
sheet. The right-of-use asset is measured at cost, which is
made up of the initial measurement of the lease liability,
any initial direct costs incurred by the Company, an
estimate of any costs to dismantle and remove the asset
at the end of the lease (if any), and any lease payments
made in advance of the lease commencement date (net of
any incentives received).
Subsequen t measurement
The Company depreciates the right-of-use assets on a
straight-line basis from the lease commencement date
to the earlier of the end of the useful life of the right-of-
use asset or the end of the lease term. The Company also
assesses the right-of-use asset for impairment when such
indicators exist.
At lease commencement date, the Company measures the
lease liability at the present value of the lease payments
unpaid at that date, discounted using the interest rate
implicit in the lease if that rate is readily available or the
Company’s incremental borrowing rate. Lease payments
included in the measurement of the lease liability are
made up of fixed payments (including in substance fixed
payments) and variable payments based on an index or
rate. Subsequent to initial measurement, the liability
will be reduced for payments made and increased for
interest. It is re-measured to reflect any reassessment
or modification, or if there are changes in in-substance
fixed payments. When the lease liability is re-measured,
the corresponding adjustment is reflected in the right-
of-use asset.
The Company has elected to account for short-term
leases and leases of low-value assets using the practical
expedients. Instead of recognising a right-of-use asset
and lease liability, the payments in relation to these are
recognised as an expense in statement of profit and loss
on a straight-line basis over the lease term.
o. Borrowing costs
Borrowing costs directly attributable to the acquisitions,
construction or production of a qualifying asset are
capitalised during the period of time that is necessary
to complete and prepare the asset for its intended use or
sale. Other borrowing costs are expensed in the period
in which they are incurred and reported in finance costs.
A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended
use. Capitalisation of borrowing costs is suspended in the
period during which the active development is delayed
due to, other than temporary, interruption.
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