Material accounting policies
This note provides a list of material accounting policies adopted in the preparation of these Standalone
financial statements.
1.2 Basis of preparation and presentation of Financial Statements
The Standalone financial statements of Kapston Services Limited have been prepared and presented in
accordance with and in compliance in all material aspects, with the Indian Accounting Standards ("Ind AS")
notified under Section 133 of the Companies Act, 2013 (the "Act") read along with the Companies (Indian
Accounting Standards) Rules 2015, and presentation requirements of Division II of Schedule III to the
Companies Act, 2013, and as amended from time to time together with the comparative period data as at
andfortheyearended31 March 2024.
These Standalone financial statements have been prepared by the Company as a going concern on the
basis of relevant Ind AS that are effective at the Company's annual reporting date, 31 March 2025. These
financial statements for the year ended 31 March 2025 were approved by the Company's Board of Directors
on 19 May 2025.
1.3 Basis of Measurement
These Standalone financial statements have been prepared on the historical cost convention and on an
accrual basis, except for the following material items in the balance sheet:
a. Certain financial assets are measured either at fair value or at amortized cost depending on the
classification;
b. Employee defined benefit assets/(liability) are recognized as the net total of the fair value of plan assets,
plus actuarial losses, less actuarial gains and the present value of the defined benefit obligation
c. Long-term borrowings are measured at amortized cost using the effective interest rate method.
d. Right of use assets are recognized at the present value of lease payments that are not paid at that date. This
amount is adjusted for any lease payments made at or before the commencement date, lease incentives
received and initial direct costs, incurred if any.
1.4 Functional and presentation currency
These Standalone financial statements are presented in Indian Rupees (INR), which is also the Company's
functional currency. All financial information presented in Indian rupees have been rounded-off to two
decimal places to the nearest lakhs except share data or as otherwise stated.
1.5 Use of estimates and judgments.
In preparing these Standalone financial statements, management has made judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from those estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised prospectively.
Judgements
Information about judgements made in applying accounting policies that have the most significant effects
on the amounts recognised in the financial statements is included in the following notes:
- Note 1.19- lease classification.
- Note 1.19- leases: whether an arrangement contains a lease and lease classification
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material
adjustment within the next financial year are included in the following notes:
- Note 38-measurement of defined benefit obligations: key actuarial assumptions;
- Note 1.10- determining an asset's expected useful life and the expected residual value at the end of its life
1.6 Measurement of fair values
Accounting polices and disclosures require measurement of fair value for both financial and non-financial assets.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or
a liability is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is
available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs
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 forthe 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.
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period
during which the change has occurred.
Further information about the assumptions made in the measuring fair values is included in the following notes:
- Note41 - Financial instruments
1.7 Current and non-current classification
'The Schedule III to the Act requires assets and liabilities to be classified as either current or non-current. The
Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
Assets: An asset is classified as current when it satisfies any of the following criteria:
a. It is expected to be realized in, or is intended for sale or consumption in, the Company's normal operating
cycle;
b. It is held primarilyforthepurposeofbeingtraded;
c. It is expected to be realized within twelve months afterthe reporting date; or
d. It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting date.
Liabilities: A liability is classified as current when it satisfies any of the following criteria:
a. It is expected to be settled in the Company's normal operating cycle;
b. It is held primarily forthe purpose of being traded;
c. It is due to be settled within twelve months afterthe reporting date; or
d. the Company does not have an unconditional right to defer settlement of liability for atleast twelve months
from the reporting date.
All other liabilities are classified as non-current. 'Deferred tax assets/liabilities are classified as non-current.
1.8 Operating Cycle
Operating cycle is the time between the acquisition of assets for processing and realisation in cash or cash
equivalents. The Company has ascertained its operating cycle as 12 months for the purpose of current or non¬
current classification of assets and liabilities
1.9 Foreign Currency Transaction
Transactions in foreign currencies are translated to the respective functional currencies of entities within the
Company at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in
foreign currencies at the reporting date are translated into the functional currency at the exchange rate at that
date. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates
different from those at which they were translated on initial recognition during the period or in previous financial
statements are recognized in the statement of profit and loss in the period in which they arise.
Non-monetary assets and liabilities denominated in a foreign currency and measured at historical cost are
translated at the exchange rate prevalent at the date of transaction, if any.
1.10 Property Plant & Equipment
Recognition and measurement
Freehold land is carried at historical cost. All other items of property, plant and equipment are measured at cost
less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price, asset retirement
obligation and costs directly attributable towards bringing the asset to its working condition for its intended use.
Any trade discounts and rebates are deducted in arriving at the purchase price. General and specific borrowing
costs directly attributable to the construction of a qualifying asset are capitalized as part of the cost.
Subsequent expenditure related to an item of property, plant and equipment is added to its carrying value only
when it increases the future benefits from the existing asset beyond its previously assessed standard or period of
performance. All other expenses on existing property, plant and equipment, including day-to-day repairs,
maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss in the year
during which such expenses are incurred.
Depreciation:
The Company depreciates property, plant and equipment over the estimated useful lives using the written down
valiip mpthnrl from thp Hatp thp a<:<;pt<: arp availahlp fnr iisp
1.11 Intangible assets
Intangible assets that are acquired by the Company and that have finite useful lives are measured at cost less
accumulated amortization and accumulated impairment losses.
Amortization
Amortization is recognized in the statement of profit and loss on a written down value basis over the estimated
useful lives of intangible assets Intangible assets that are not available for use are amortized from the date they
are available for use.
1.12 Financial Instruments
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
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value
through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or
sales of financial assets that require delivery of assets within a time frame established by regulation or convention
in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits
to purchase or sell the asset.
Subsequent measurement
For the Purpose of Subsequent measurement, financial assets are classified in four categories.
• Debt Instrument at amortized cost
• Debt Instrument at FVTOCI
• Debt instruments, Derivatives and Equity instruments at FVTPL and
• Equity Instruments measured at FVTOCI.
Debt instruments at amortised cost
A "debt instrument" is measured at the amortised cost if both the following conditions are met:
a) the asset is held within a business model whose objective is to hold assets for collecting contractual cash
flows; and
b) contractual terms of the asset give rise on specifi ed 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 method and are subject to impairment. 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 eff ective interest rate.
Interest income from these financial assets is included in finance income using the effective interest rate method.
Any gain or loss arising on derecognition is recognised directly in statement of profit and loss and presented in
other income. The losses arising from impairment are recognised in the statement of profit and loss. This
category generally applies to trade and other receivables
Debt instrument at FVTOCI
A "debt instrument" is classified as at the FVTOCI if both of the following criteria are met:
a) the objective of the business model is achieved both by collecting contractual cash flows and selling the
financial assets; and
b) the asset's contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at
fair value. Fair value movements are recognised in the OCI. However, the Company recognises interest income,
impairment losses and reversals and foreign exchange gain or loss in the statement of profit and loss. On
derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified to the statement of
profit and loss. Interest earned while holding a FVTOCI debt instrument is reported as interest income using the
effective interest rate method.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for
categorisation as at amortised cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to
designate a debt instrument, which otherwise meets amortised cost or FVTOCI criteria, as at FVTPL. However,
such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency
(referred to as an "accounting mismatch").
Debt instruments included within the FVTPL category are measured at fair value with all changes recognised in
the statement of profit and loss.
Equity investments
All equity investments within the scope of Ind AS 109 are measured at fair value. Equity instruments which are
held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind
AS 103 applies are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable
election to present in OCI subsequent changes in the fair value. The Company makes such election on an
instrument-by-instrument basis. The classification is made upon initial recognition and is irrevocable. If the
Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument,
excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to the statement of
profi t and loss, even on sale of investment. However, on sale the Company may transfer the cumulative gain or
loss within equity. Equity investments designated as FVTOCI are not subject to impairment assessment. Equity
instruments included within the FVTPL category are measured at fair value with all changes recognised in the
statement of profit and loss.
Investments in subsidiaries and joint venture:
Investments in subsidiaries and joint venture are carried at cost less accumulated impairment losses, if any.
Where an indication of impairment exists, the carrying amount of the investment is assessed and written down
immediately to its recoverable amount. On disposal of investments in subsidiaries and joint venture, the
difference between net disposal proceeds and the carrying amounts are recognised in the statement of profit
and loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
primarily derecognised (i.e., removed from the Company's balance sheet) when:
(i) The rights to receive cash flows from the asset have expired, or
(ii) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a third party under a 'pass-through'
arrangementD and either (a) the Company has transferred substantially all the risks and rewards of the
asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass¬
through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When
it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control
of the asset, the Company continues to recognise the transferred asset to the extent of the Company's continuing
involvement. In that case, the Company also recognises an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects the rights and obligations that the Company has
retained.
b. Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss,
loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as
appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs.
The Company's financial liabilities include trade and other payables, loans and borrowings including bank
overdrafts, financial guarantee contracts.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below
Financial Liabilities at Fair value through Profit and Loss
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon
initial recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the
purpose of repurchasing in the near term. This category also includes derivative financial instruments entered
into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS
109. Separated embedded derivatives are also classified as held for trading unless they are designated as
effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
Financial liabilities designated upon initial recognition at FVTPL are designated as such at the initial date of
recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains
or losses attributable to changes in own credit risk are recognised in OCI. These gains or losses are not
subsequently transferred to the statement of profit and loss. However, the Company may transfer the cumulative
gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit
and loss. The Company has not designated any fi nancial liability as FVTPL.
Loans and 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 the statement of profit and loss over the period of the borrowings using the effective
interest method.
Subsequent measurement
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost
using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as
well as through the EIRamortisation process.
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. The EIR amortisation is included as finance costs in the statement of profit and loss.
Derecognition
A financial liability is derecognised 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
derecognition 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 and loss.
Offsetting:
Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if there is a
currently and legally enforceable right to set off the amounts and it intends either to settle them on a net basis or
to realise the asset and settle the liability simultaneously.
1.13 Inventories
Inventories (raw materials, consumables and stores and spares) are valued at lower of cost and net realisable
value. Cost of inventories comprises purchase price and other costs incurred in bringing the inventories to their
present location and condition. Cost is determined using the weighted average method.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs to
sell
1.14 Impairment of non-financial assets
'The Company's non-financial assets, other than inventories and deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated.
'For impairment testing, assets that do not generate independent cash inflows are grouped together into cash¬
generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are
largely independent of the cash inflows of other assets or CGUs.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared
separately for each of the Company's CGUs to which the individual assets are allocated. These budgets and
forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is
calculated and applied to project future cash flows after the fifth year. To estimate cash flow projections beyond
periods covered by the most recent budgets/forecasts, the Company extrapolates cash flow projections in the
budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In
any case, this growth rate does not exceed the long-term average growth rate for the products, industries, o
country or countries in which the Company operates, or for the market in which the asset is used.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less cost
to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-ta:
discount rate that reflects current market assessments of the time value of money and the risks specific to th<
CGU (or the asset).
An impairment loss is recognized in the statement of profit and loss if the estimated recoverable amount of ai
asset or its cash-generating unit is lower than its carrying amount. Impairment losses recognized in respect o
cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units ant
then to reduce the carrying amount of the other assets in the unit on a pro-rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losse
recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased o
no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine th<
recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does no
exceed the carrying amount that would have been determined, net of depreciation or amortization, if n<
impairment loss has been recognized.
1.15 Cash & Cash Equivalents
Cash and bank balances comprise of cash balance in hand, in current accounts with banks, demand deposil
short-term deposits, Margin Money deposits and unclaimed dividend accounts. For this purpose, "short-term
means investments having maturity of three months or less from the date of investment. Bank overdrafts that an
repayable on demand and form an integral part of our cash management are included as a component of cast
and cash equivalents for the purpose of the statement of cash flows. The Margin money deposits and unclaimec
dividend balances shall be disclosed as restricted cash balances.
1.16 Employee Benefits
a. Short term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised fo
the amount expected to be paid if the Company has a present legal or constructive obligation to pay thi
amount as a result of past service provided by the employee and the obligation can be estimated reliably.
b. Defined Contribution Plan
The Company's contributions to defined contribution plans are charged to the statement of profit and los
as and when the services are received from the employees.
c. Defined Benefit Plans
The liability in respect of defined benefit plans and other post-employment benefits is calculated using th<
projected unit credit method consistent with the advice of qualified actuaries. The present value of th<
defined benefit obligation is determined by discounting the estimated future cash outflows using interes
rates based on prevailing market yields of Indian Government Bonds and that have terms to maturit
approximating to the terms of the related defined benefit obligation. The current service cost of the definec
benefit plan, recognised in the statement of profit and loss in employee benefit expense, reflects th<
increase in the defined benefit obligation resulting from employee service in the current year, benefi
changes, curtailments and settlements. Past service costs are recognised immediately in income. The ne
interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligatioi
and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profi
and loss. Actuarial gains and losses arising from experience adjustments and changes in actuaria
assumptions are charged or credited to equity in other comprehensive income in the period in which the;
arise.
d. Termination benefits
Termination benefits are recognized as an expense when the Company is demonstrably committed, without
realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the
normal retirement date, or to provide termination benefits as a result of an offer made to encourage
voluntary redundancy. Termination benefits for voluntary redundancies are recognized as an expense if the
Company has made an offer encouraging voluntary redundancy, it is probable that the offer will be
accepted, and the number of acceptances can be estimated reliably.
e. Other long-term employee benefits
The Company's net obligation in respect of other long term employee benefits is the amount of future
benefit that employees have earned in return for their service in the curr ent and previous periods. That
benefit is discounted to determine its present value. Re-measurements are recognized in the statement of
profit and loss in the period in which they arise.
|