27. Significant accounting policies
27.1 Basis of preparation
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind-AS)
notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended till date).
The financial statements were authorized for issue by the Board of Directors on 23rd May 2025.
27.2 Basis of measurement
The financial statements have been prepared on a historical cost basis, except for the following items, which are measured
on an alternative basis on each reporting date.
27.3 Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is the Company’s functional currency. All financial
information is presented in INR rounded to the nearest Rupee in Lakhs, except share and per share data, unless otherwise
stated.
Exchange differences are recognized in the Statement of Profit and Loss except to the extent, exchange differences which
are regarded as an adjustment to interest cost on foreign currency borrowing, are capitalized as part of Borrowing Cost.
27.4 Significant accounting judgements, estimates and assumptions
The preparation of financial statements in conformity with Ind AS requires the management to make judgements, estimates
and assumptions that affect the reported amounts of revenue, expenses, current assets, non-current assets, current liabilities,
non-current liabilities and disclosures of the contingent liabilities at the end of each reporting period. Although, these
estimates are based on management’s best knowledge of current events and actions, uncertainty about these assumptions
and estimates could result in the outcomes requiring a material adjustment to the carrying value of assets or liabilities in future
periods.
This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which
are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally
assessed.
Critical estimates and judgements
The areas involving critical estimates or judgements are:
1. Estimation of defined benefit obligation -
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using
actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual
developments in the future. These include the determination of the discount rate; future salary increases and mortality
rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly
sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans
operated in India, the management considers the market yields on government securities in currencies consistent with
the currencies of the post-employment benefit obligation.
The mortality rate is based on publicly available mortality tables which tend to change only at interval in response to
demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.
Further details about gratuity obligations are given in Note 32.
2. Estimation of provision for warranty claims - Refer note 27.16 Provisions
3. Estimated useful life of intangible assets - Refer note 27.9 Intangible asset and amortization.
4. Deferred tax assets are recognized for all deductible temporary differences including the carry forward of unused tax credits
and any unused tax losses. Deferred tax assets are recognized 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 utilized.
5. Lease term - The company had applied provisions of Ind AS 116 effective 01st April, 2019. The said standard provides
for certain recognition exemptions for short term leases as well as provides for certain criteria when the lease contracts
are non-enforceable. The determination of lease term for the purpose of availing such exemptions and evaluation of
such criteria for non-enforceability of a contract involves significant judgment.
6. Revenue Recognition - The company recognises revenue for each performance obligation either at a point in time
or over a time. In case performance obligation is satisfied over a time, the output method is used to determine the
revenue since it is faithfully depicting the company’s performance towards complete satisfaction of performance
obligation. Practical expedient of “right to consideration” is also considered while recognizing revenue in the amount
to which the entity has right to invoice. In case performance obligation is satisfied at a point in time, the company
generally recognises revenue when the control is transferred i.e. in case of goods either on shipment or upon
delivery in domestic & on date of shipping in case of export. In case of services, the revenue is recognized based on
completion of distinct performance obligation. Refer significant accounting policy note 27.10 on revenue recognition
for information about methods, input and assumptions w.r.t transaction price & variable consideration.
Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset as current when it is:
• Expected to be realized or intended to be sold or consumed in normal operating cycle.
• Held primarily for the purpose of trading.
• Expected to be realized within twelve months after the reporting period, or
• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months
after the reporting period.
All 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.
The Company classifies all other liabilities as non-current.
Deferred tax assets/liabilities are classified as non-current assets/liabilities.
27.5 Inventories
Inventories are valued at the lower of cost and net realizable value. Costs incurred in bringing each product to its present
location and conditions are accounted for as follows:
• Raw materials and Stores Spares: Cost includes cost of purchase and other costs incurred in bringing the inventories
to their present location and condition. The cost is calculated on weighted average method.
• Finished goods and work in progress: Cost includes cost of direct materials and labor and a proportion of manufacturing
overheads based on the normal operating capacity, but excluding borrowing costs.
• Traded goods: 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.
• Unserviceable, damaged and obsolete inventory is valued at cost or net realizable value whichever is lower.
Net realizable 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.
27.6 Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at banks and on hand and highly liquid short-term deposits
with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. Bank overdrafts
are shown within borrowings in current liabilities in balance sheet.
27.7 Property, plant and equipment
• Recognition and measurement
Freehold land is carried at historical cost. All other items of property, plant and equipment are measured at cost of
acquisition or construction less accumulated depreciation and/or accumulated impairment loss, if any. The cost of an
item of property, plant and equipment comprises its purchase price, including import duties and other non-refundable
taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any
trade discounts and rebates are deducted in arriving at the purchase price. Borrowing costs directly attributable to the
construction of a qualifying asset are capitalized 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.
Property, plant and equipment under construction are disclosed as capital work-in-progress.
Advances paid towards the acquisition of property, plant and equipment outstanding at each reporting date are
disclosed under “Other non-current assets”.
• Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is recognized 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 derecognized. The costs of the day-to-day
servicing of property, plant and equipment are recognized in the statement of profit and loss as incurred.
• Disposal
An item of property, plant and equipment is derecognized upon disposal or when no future benefits are expected
from its use or disposal. Gains and losses on disposal of an item of property, plant and equipment are determined by
comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized
net within other income/expenses 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.
27.8 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 initially at cost, including related transaction costs and
where applicable borrowing costs. Subsequent expenditure is capitalized to asset’s carrying amount only when it is probable
that future economic benefits associated with the expenditure will flow to the Company and cost of the item can be measured
reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is
replaced, the carrying amount of the replaced part is derecognized.
Investment properties are depreciated using straight-line method over their estimated useful lives.
27.9 Intangible assets and amortization
Recognition and measurement
Intangible assets are recognized when the asset is identifiable, it 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.
Intangible assets acquired by the Company that have finite useful lives are measured at cost less accumulated amortization
and any accumulated impairment losses. Intangible assets with indefinite useful lives that are acquired separately are carried
at cost less accumulated impairment losses.
Subsequent measurement
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to
which it relates.
Amortization
Amortization is calculated over the cost of the asset, or other amount substituted for cost, less its residual value. Amortization
is recognized 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.
De recognition of Intangible assets
An Intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains
or losses arising from de recognition of an intangible asset are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and they are recognized in statement of profit and loss when the asset is derecognized.
27.10Revenue recognition
Sale of goods
Company recognizes revenue when it transfers control over a good or service to a customer i.e. when it has fulfilled all 5 steps
as given by Ind AS 115. Revenue is measured at transaction price i.e. Consideration to which company expects to be entitled
in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties
and after considering effect of variable consideration, significant financing component. For contracts with multiple performance
obligations, transaction price is allocated to different obligations based on their standalone selling price. In such case, revenue
recognition criteria are applied for each performance obligation separately, in order to reflect the substance of the transaction and
revenue is recognized separately for each obligation as and when the recognition criteria for the component is fulfilled.
For contracts that permit the customer to return an item, revenue is recognized to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognized will not occur. Amounts included in revenue are net of returns,
trade allowances, rebates, goods and service tax, value added taxes.
Rendering of services
Revenue is recognised over time as the services are provided. The stage of completion for determining the amount of revenue to
recognised is assessed based on surveys of work performed.
If the services under a single arrangement are rendered in different reporting periods, then the consideration is allocated based on
their relative stand-alone selling prices. The stand-alone selling price is determined based on the list prices at which the Company
sells the services in separate transactions.
Other income
Other income comprises of rental income, interest income, and dividend income, foreign currency gain on financial assets and
liabilities and export benefits.
Interest income is recognized as it accrues in the statement of profit and loss, using the effective interest method. Dividend
income and export benefits in the form of Duty Draw Back claims and Merchant Exchange Incentive Scheme licenses are
recognized in the statement of profit and loss on the date that the Company’s right to receive payment is established.
27.11 Finance costs
Finance costs comprises of interest expense on borrowings, and foreign currency loss (to the extent those are regarded as
an adjustment to the finance costs) on financial assets and liabilities. Interest expenditure is recognized as it accrues in the
statement of profit and loss, using the effective interest method.
27.12Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, are added to the cost
of those assets, until such time as the assets are substantially ready for their intended use or sale. Qualifying assets are the
assets that necessarily take a substantial period of time to get ready for their intended use or sale.
27.13Foreign currency transactions
The financial statements are presented in INR, which is also the company’s functional currency. All amounts have been
rounded to the nearest rupee, unless otherwise indicated.
Transactions and balances
Transactions in foreign currencies are initially recorded at functional currency spot rates at the date the transaction first
qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of
exchange at the reporting date. Such differences arising on settlement or translation of monetary items are recognized in
statement of profit and loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary
items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item
(i.e., translation differences on items whose fair value gain or loss is recognized in OCI or profit or loss are also recognized
in OCI or profit or loss, respectively).
27.14Employee Benefits
Short Term Employee Benefits
All employee benefits payable wholly within twelve months of rendering the services are classified as short-term employee benefits.
Benefits such as salaries, wages, expected cost of bonus and short-term compensated absences, leave travel allowance etc. are
recognized in the period in which the employee renders the related service.
Post-Employment Benefits
Defined Contribution Plan
The Company’s state governed provident fund scheme and employee state insurance scheme are defined contribution plans. The
contribution paid/payable under the scheme is recognized during the period in which the employee renders the related service.
Defined Benefit Plan
The employees’ gratuity fund scheme is the Company’s defined benefit plan. The present value of the obligation under such defined
benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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
balance sheet 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 recognized immediately in the balance sheet with a corresponding debit or credit to retained
earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent
periods.
Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement
occurs. Past service cost is recognized as expenses on straight-line basis over the average period until the benefits become
vested. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.
Long Term Employee Benefit
The obligation for long term employee benefits such as long-term compensated absences is recognized in the same manner as in
the case of defined benefit plans as mentioned above.
Accumulated leaves that are expected to be utilized within the next 12 months are treated as short term employee benefits.
27.15lncome Taxes
Current income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of tax laws enacted or substantially enacted at the end of reporting
period. Management periodically evaluates positions taken in tax returns with respect to situation in which applicable tax
regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid
to the tax authorities.
Deferred tax
Deferred tax is provided using the balance sheet method on temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized 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.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any
unused tax losses. Deferred tax assets are recognized 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
utilized, 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 utilized. Unrecognized
deferred tax assets are re-assessed at each reporting date and are recognized 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
realized 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 recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are
recognized in correlation to the underlying transaction either in OCI or directly in equity.
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.
|