Note - 2 : Significant Accounting Policies
2.1 Statement of compliance
The financial statements of the company comply in all material aspects with Indian Accounting Standards (Ind AS)
notified under Section 133 of Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and
other relevant provisions of the Act.
The financial statements were authorised for issue by the Board of Directors at it's meeting held on 13th May 2025.
2.2 Basis of preparation
The financial statements have been prepared on a historical cost basis, except certain financial instruments and defined
benefit plans, which are measured at fair value.
2.3 Functional and presentation currency
These financial statements are presented in Indian Rupees (h), which is the company's functional currency. All amounts
have been rounded-off to the nearest Lakhs, unless otherwise stated.
2.4 Significant accounting judgments, estimates and assumptions
The preparation of the financial statements in conformity with Ind AS requires the management to make judgments,
estimates and assumptions which affect the reported amounts of revenue, expenses, current assets, non-current assets,
current liabilities, non-current liabilities and disclosure of the contingent liabilities at the end of each reporting period.
Actual estimates may differ from these estimates.
Detailed information about each of these estimates and judgements is included in relevant notes.
The areas involving critical estimates and judgements are:
Estimation of current tax expense and payable - Note 14
Estimation of defined benefit obligation - Note 19 & Note 25
Recognition of revenue - Note 26
Recognition of deferred tax assets for carried forward tax losses - Note 6
Useful lives of property, plant and equipment - Note 3 & Point 2.8 under Accounting policy.
Estimation and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and future periods affected.
2.5 Current versus non-current classification
The company presents assets and liabilities in the balance sheet based on current / non-current classification.
An asset is current when:
It is expected to be realised or intended to be sold or consumed in normal operating cycle;
It is held primarily for the purpose of trading;
It is expected to be realised within twelve months after the reporting period; or
It is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve
months after the reporting period.
AH other assets are classified as non-current.
A liability is current when:
It is expected to be settled in normal operating cycle;
It is held primarily for the purpose of trading;
It is due to be settled within twelve months after the reporting period; or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
2.6 Revenue recognition
Effective April 1, 2018, the Company has applied Ind AS 115 which establishes a comprehensive framework for
determining whether, how much and when revenue is to be recognised. Ind AS 115 replaces Ind AS 18 Revenue and Ind
AS 11 Construction Contracts. The standard is applied by the company prospectively and the comparative information
in the statement of profit and loss is not restated - i.e. the comparative information continues to be reported under
Ind AS 18 and Ind AS 11. The impact of the adoption of the standard on the financial statements of the Company
is insignificant.
Revenue is recognised upon transfer of control of promised products or services to customers in an amount that
reflects the consideration which the Company expects to receive in exchange for those products or services.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, service
level credits, performance bonuses, price concessions and incentives, if any, as specified in the contract with the
customer. Revenue also excludes taxes collected from customers.
Dividend income is recorded when the right to receive payment is established. Interest income is recognised using the
effective interest method.
Export benefits in the form of Duty Draw Back/ Merchandise Exports Incentive Scheme(MEIS) claims are recognised in
the statement of profit and loss on receipt basis.
2.7 Inventories
Inventories are stated at the lower of cost and net realisable value. However, materials and other items held for use in
the production of inventories are not written down below cost, if the finished products in which they will be incorporated
are expected to be sold at or above cost. Cost is ascertained on a weighted average basis.
Cost of raw materials, components, stores and spares comprises cost of purchases. Cost of work-in-progress and
finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead
expenditure, the latter being allocated based on normal operating capacity. Cost of inventories also includes all other
costs incurred in bringing the inventories to their present location and condition.
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.
2.8 Property, plant and equipment (PPE)
Recognition and measurement
Property, plant and equipment are stated at cost comprising of purchase price and any initial directly attributable cost
of bringing the asset to its working condition for its intended use, less accumulated depreciation (other than freehold
land) and impairment loss, if any. Borrowing costs directly attributable to the construction of a qualifying asset are
capitalised as part of the cost.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items (major components) of property, plant and equipment.
Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item
if it is probable that the future economic benefits embodied within the part will flow to the company and its cost can
be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing
of property, plant and equipment are recognised in the statement of profit and loss as incurred.
Disposal
The gain or loss arising on disposal of an item of property, plant and equipment is determined as the difference
between sale proceeds and carrying value of such item, and is recognised in the statement of profit and loss.
Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for
cost, less its residual value.
On PPE acquired on or before 31March 2000: Depreciation is recognised in the statement of profit and loss on a
written down value basis over the estimated useful lives of each part of an item of property, plant and equipment
as prescribed in Schedule II of the Companies Act, 2013, as assessed by the management of the company based on
technical evaluation.
On PPE acquired after 31March 2000: Depreciation is recognised in the statement of profit and loss on a straight line
basis over the estimated useful lives of each part of an item of property, plant and equipment as prescribed in Schedule
II of the Companies Act, 2013, as assessed by the management of the company based on technical evaluation.
Freehold land is not depreciated.
The property, plant and equipment acquired under finance leases is depreciated over the shorter of the lease term and
their useful lives unless it is reasonably certain that the company will obtain ownership by the end of the lease term.
2.9 Intangible assets
Recognition and measurement
Intangible assets are recognised when the asset is identifiable, is within the control of the company, it is probable that
the future economic benefits that are attributable to the asset will flow to the company and cost of the asset can be
reliably measured.
Expenditure on research activities is recognised in the statement of profit and loss as incurred. Development expenditure
is capitalised only if the expenditure can be measured reliably, the product or process is technically and commercially
feasible, future economic benefits are probable and the company intends to and has sufficient resources to complete
development and to use or sell the asset.
Subsequent measurement
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific
asset to which it relates.
Amortisation
Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value.
Amortisation is recognised in statement of profit and loss on a straight-line basis over the estimated useful lives of
intangible assets from the date that they are available for use, since this most closely reflects the expected pattern of
consumption of the future economic benefits embodied in the asset.
2.10 Investment property
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the
company, is classified as investment property.
Investment property is measured at cost less accumulated depreciation.
2.11 Impairment of tangible and intangible assets
Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is
any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount
(i.e. higher of the fair value less cost to sell and the value in-use) is determined on an individual asset basis unless
the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount
of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit
and loss.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the
extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.
2.12 Foreign currency transactions and balances
Transactions in foreign currency are recorded at exchange rates prevailing at the date of transactions. Exchange
differences arising on foreign exchange transactions settled during the year are recognised in the statement of profit
and loss of the year.
Monetary assets and liabilities denominated in foreign currencies which are outstanding, as at the reporting period
are translated at the closing exchange rates and the resultant exchange differences are recognised in the statement of
profit and loss.
Non-monetary assets and liabilities denominated in foreign currencies that are measured in terms of historical cost are
translated using the exchange rate at the date of the transaction.
2.13 Employee benefits
Short-term employee benefits
Employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee
benefits and are recognised in the period in which the employee renders the related service. A liability is recognised for
the amount expected to be paid when there is a present legal or constructive obligation to pay this amount as a result
of past service provided by the employee and the obligation can be estimated reliably.
Defined contribution plans
Contributions to defined contribution plans are recognised as expense when employees have rendered services entitling
them to such benefits.
Defined benefit plans
The employees' gratuity scheme is a defined benefit plan. The present value of the obligation under such defined
benefit plans is determined based on actuarial valuation using the projected unit credit method, which recognises each
period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to
build up the final obligation.
The obligation is measured at the present value of the estimated future cash flows. The discount rates used for
determining the present value of the obligation under defined benefit plans, is based on the market yields on government
securities as at the reporting date, having maturity periods approximating to the terms of related obligations.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included
in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net
interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding
debit or credit to retained earnings through other comprehensive income (OCI) in the period in which they occur.
Remeasurements are not reclassified to the statement of profit and loss in subsequent periods.
In case of funded plans, the fair value of the plan's assets is reduced from the gross obligation under the defined
benefit plans, to recognise the obligation on net basis.
When the benefits of the plan are changed or when a plan is curtailed, the resulting change in benefits that relates to
past service or the gain or loss on curtailment is recognised immediately in the statement of profit and loss. Net interest
is calculated by applying the discount rate to the net defined benefit liability or asset. The company recognises gains/
losses on settlement of a defined plan when the settlement occurs.
Compensated absences
The liabilities for earned leave are not expected to be settled wholly within twelve months after the end of the reporting
period in which the employees render the related service. They are therefore measured as the present value of expected
future payments to be made in respect of services provided by employees up to the end of the reporting period
using the projected unit credit method as determined by actuarial valuation. The benefits are discounted using the
market yields at the end of the reporting period that have terms approximating the terms of the related obligation.
Remeasurements as a result of experience adjustments and change in actuarial assumptions are recognised in the
statement of profit and loss. The obligations are presented as current liabilities in the balance sheet if the entity does
not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of
when the actual settlement is expected to occur.
Termination benefits
Termination benefits are expensed at the earlier of when the company can no longer withdraw the offer of those
benefits and when the company recognises costs for a restructuring. If benefits are not expected to be settled wholly
within 12 months of the reporting date, then they are discounted.
2.14 Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at
the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not
explicitly specified in an arrangement.
Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially
all the risks and rewards incidental to ownership to the company is classified as a finance lease.
Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased asset
or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance
charges and reduction of the lease liability to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are recognised in finance costs in the statement of profit and loss.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the
company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated
useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over
the lease term unless the payments to the lessor are structured to increase in line with expected general inflation to
compensate for the lessor's expected inflationary cost increases or another systematic basis is available.
Company as lessor
Leases in which the company does not transfer substantially all the risks and rewards of ownership of an asset are
classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term
of the relevant lease unless the payments to the lessor are structured to increase in line with expected general inflation
to compensate for the lessor's expected inflationary cost increases or another systematic basis is available. Initial direct
costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset
and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in
the period in which they are earned.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the
company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the company's
net investment in the leases. Finance lease income is allocated to accounting periods to reflect a constant periodic rate
of return on the net investment outstanding in respect of the lease.
2.15 Borrowing costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset that necessarily
takes a substantial period of time to get ready for its intended use or sale are capitalised during the period of time that
is required to complete and prepare the asset for its intended use or sale. All other borrowing costs are expensed in the
period in which they are incurred.
2.16 Income tax
Income tax expense comprises current and deferred tax. It is recognised in the statement of profit and loss except to
the extent that it relates to a business combination, or items recognised directly in equity or in OCI.
Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted, at the reporting date
in the country where the company operates and generates taxable income. Current tax assets and liabilities are offset
only if there is a legally enforceable right to set it off the recognised amounts and it is intended to realise the asset and
settle the liability on a net basis or simultaneously.
Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The company
recognises MAT credit available as an asset only to the extent that there is convincing evidence that the company will
pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward.
The company reviews the 'MAT credit entitlement' asset at each reporting date and writes down the asset to the extent
the company does not have convincing evidence that it will pay normal tax during the specified period.
Deferred tax
Deferred tax is provided using the balance sheet method on temporary differences between the tax base of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that
is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit
or loss;
Taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and
any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry forward of unused tax credits and unused
tax losses can be utilised, except:
When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has
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 assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items
are recognised in correlation to the underlying transaction either in OCI or directly in equity.
2.17 Financial instruments
Financial assets and liabilities are recognised when the company becomes a party to the contractual provisions of
the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial
recognition of financial asset or financial liability.
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire,
or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
entity. The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged,
cancelled or have expired.
Cash and cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of
cash that are subject to an insignificant risk of change in value and having original maturities of three months or less
from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are
unrestricted for withdrawal and usage.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business
whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the
financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets at fair value through other comprehensive income
Financial assets are measured at fair value through other comprehensive income if these financial assets are held
within a business whose objective is achieved by both collecting contractual cash flows on specified dates that are
solely payments of principal and interest on the principal amount outstanding and selling financial assets.
Financial assets at fair value through profit or loss
Financial assets are measured at fair value through profit or loss unless they are measured at amortised cost or at
fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the
acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognised in statement
of profit and loss.
Financial liabilities
Financial liabilities are measured at amortised cost using the effective interest method.
Equity instruments
An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its
liabilities. Equity instruments issued by the Company are recognised at the proceeds received net of direct issue cost.
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, to
realise the assets and settle the liabilities simultaneously.
Impairment of financial assets
The company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the
assets carried at amortised cost and FVTOCI debt instruments. The impairment methodology applied depends on
whether there has been a significant increase in credit risk. Note 35 details how the company determines whether there
has been a significant increase in credit risk.
For trade receivables only, the company applies the simplified approach permitted by 'Ind AS 109 - Financial instruments',
which requires expected lifetime losses to be recognised from initial recognition of the receivables.
2.18 Fair value measurement
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities based on the
nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as;
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable.
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable.
The company uses valuation techniques that are appropriate in the circumstances and for which sufficient data
is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of
unobservable inputs.
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