1. SIGNIFICANT ACCOUNTING POLICIES
1.1 Basis of Preparation of Financial Statements
The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS)
notified under Section 133 of the Companies Act, 2013 (“Act") read with Rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015and relevant amendment rules issued thereafter.
The financial statements have been prepared and presented under the historical cost convention,
on the accrual basis of accounting except for certain financial assets and financial liabilities that
are measured at fair values at the end of each reporting period, as stated in the accounting policies
set out below. The accounting policies have been consistently applied except where a newly issued
accounting standard is initially adopted or a revision to an existing accounting standard requires a
change in the accounting policy hitherto in use.
1.2 Current / non-current classification
An asset or liability is classified as current if it satisfies any of the following conditions:
i. the asset/liability is expected to be realized/settled in the Company's normal operating cycle;
ii. the asset is intended for sale or consumption;
iii. the asset/liability is held primarily for the purpose of trading;
iv. the asset/liability is expected to be realized/settled within twelve months after the reporting period;
v. the asset is cash or cash equivalent unless it is restricted from being exchanged or used to settle a
liability for atleast twelve months after the reporting date;
vi. in the case of a liability, where the Company does not have an unconditional right to defer settlement
of the liability for at least twelve months after the reporting date.
All other assets and liabilities are classified as non-current.
For the purpose of current/non-current classification of assets and liabilities, the Company has
ascertained its normal operating cycle as twelve months. This is based on the nature of services and
the time between the acquisition of assetsor inventories for processing and their realization in cash
and cash equivalents.
1.3 Use of estimates
The preparation of the financial statements in conformity with Ind AS requires management to make
estimates, judgments and assumptions. These estimates, judgments and assumptions affect the
application of accounting policies and the reported amounts of assets and liabilities, the disclosures
of contingent assets and liabilities at the date of the financial statements and reported amounts
of revenues and expenses during the period. Application of accounting policies thatrequire critical
accounting estimates involving complex and subjective judgments and the use of assumptions in
the financial statements have been disclosed in note 1.4. Accounting estimates may change from
period to period. Actual results may differ from those estimates. Appropriate changes in estimates
are made as management becomes aware ofchanges in circumstances surrounding the estimates.
Changes in estimates are reflected in the financial statements in the period in which changes are
made and, if material, their effects are disclosed in the notes to the financial statements.
1.4 Critical accounting estimates and judgements
The key assumptions concerning the future and other key sources of estimating uncertainty at the
reporting date, thathave a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the nextfinancial year, are described below:
a. Property, plant and equipment
Property, plant and equipment represent a significant proportion of the asset base of the Company.
The charge in respect of periodic depreciation is derived after determining an estimate of the
asset's expected useful life and the expected residual value at the end of its life. The useful lives
and residual values of company's assets are determined by management at the time the asset
is acquired and reviewed periodically, including at each financial year end. The lives are based
on historical experience with similar assets as well as anticipation of future events, which may
impact their life, such as changes in technology.
b. Employee Benefits
The present value of the defined benefit obligations depends on a number of factors that
are determined on an actuarial basis using a number of assumptions. Any changes in these
assumptions will impact the carrying amountof obligations.
c. Provision for Bad Debts
Provision for bad debts is based on management's estimate of risks involved in recovery of
stagnant balances which are reviewed periodically. Similarly, write back of customers' dues are
based on management's estimate after reviewof stagnant balances periodically.
d. Inventory obsolescence
Inventory is valued by the management after making necessary provisions for obsolescence based
on management's estimate after review of slow and non-moving items periodically.
e. Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet
cannot be measured based on quoted prices in active markets, their fair value is measured using
valuation techniques which involve various judgements and assumptions. Where, in spite of best
efforts, a reliable basis for fair value cannot be obtained,the carrying amount is substituted as fair
value.
f. Taxes
Income tax, GST and other applicable taxes are computed and paid as per the law for the time
being in force. Impact of decisions of Supreme Court and jurisdictional appellate bodies to the
extent possible are considered therein. Advance rulings sought by third parties are by and large
not binding on the company as facts may differ.
1.5 Revenue from Contracts with Customers
Revenue from contracts with customers is recognised on transfer of control of goods or services
to a customer at an amount that reflects the consideration to which the Company is expected to be
entitled to in exchange for those goodsor services. 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 and services rendered is net of
variable consideration on account of various discounts and schemes offered by the Company as
partof the contract. This variable consideration is estimated based on the expected value of outflow.
Revenue (net of variableconsideration, if any) is recognised only to the extent that it is highly probable
that the amount will not be subject to significant reversal when uncertainty relating to its recognition
is resolved.
Sale of products: Revenue from sale of products is recognized when the control on the goods have
been transferred tothe customer. The performance obligation in case of sale of product is satisfied at
a point in time i.e., when the materialis delivered to the customer.
1.6 Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if
any. Costs directlyattributable to acquisition are capitalized until the property, plant and equipment
are ready for use, as intended by management. When parts of an item of property, plant and equipment
have different useful lives, they are accounted for as separate items (major components). The cost
of replacement spares/ major inspection relating to property, plantand equipment is capitalized only
when it is probable that future economic benefits associated with these will flow tothe company and
the cost of the item can be measured reliably.
Depreciation on Tangible Assets has been provided on written down value method. The useful lives
adopted are as prescribed in Schedule II of the Companies Act, 2013, except for leasehold land
which is amortised over the period of lease. Capital Spares, if any, are depreciated based on useful
life of each replaced part.
Depreciation methods, useful lives and residual values are reviewed periodically, including at each
financial year end.
Advances paid towards the acquisition of property, plant and equipment outstanding at each
balance sheet date is classified as capital advances under other non-current assets and the cost of
assets not put to use before such date are disclosed under 'Capital work-in-progress'. Subsequent
expenditures relating to property, plant and equipment is capitalized only when it is probable that
future economic benefits associated with these will flow to the company andthe cost of the item can
be measured reliably.
Repairs and maintenance costs are recognized in the Statement of Profit and Loss. The cost
and related accumulated depreciation are eliminated from the financial statements upon sale or
retirement of the asset and the resultant gains or losses are recognised in the Statement of Profit
and Loss. Assets to be disposed off are reported at the lower of the carrying value or the fair value
less cost to sell.
The Company has elected to continue with the carrying value of all of its property, plant and equipment
and intangibleassets recognised as of April 1, 2016 (transition date) measured as per the previous
GAAP and use that carrying valueas its deemed cost as of the transition date.
1.7 Intangible Assets
Intangible assets are stated at cost less accumulated amortization and impairment. Intangible assets
are amortized over their respective individual estimated useful lives on a straight-line basis, from
the date that they are available foruse. The estimated useful life of an identifiable intangible asset is
based on a number of factors including the effectsof obsolescence, demand, competition, and other
economic factors (such as the stability of the industry, and known technological advances), and the
level of maintenance expenditures required to obtain the expected future cash flows from the asset.
Amortization methods and useful lives are reviewed periodically including at each financial year end.
1.8 Financial instruments
1.8.1 Initial recognition
The Company recognises financial assets and financial liabilities when it becomes a party
to the contractual provisions of the instrument. All financial assets and liabilities are recognized
at fair value on initial recognition, except for trade receivables which are initially measured at
transaction price. Transaction costs that are directly attributable to the acquisition or issue
of financial assets and financial liabilities, that are not at fair value through profit or loss, are
added to the fair value on initial recognition. Regular purchase and sale of financial assets are
accounted for at trade date.
1.8.2 Subsequent measurement
a. Non-derivative financial instruments
(i) Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a
business model whoseobjective is to hold the asset 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.
This category applies to cash and bank balances, trade receivables, loans and other
financial assets of the Company. Such financial assets are subsequently measured at
amortized cost using the effective interestmethod.
Since most of the financial assets are current, the effect of discounting the future cash
receipts to the initial recognition value is not expected to be material and hence not done.
Interest income is earned on financial assets maturing within 12 months and hence
interest income is recognised over the relevant period of the financial asset under other
income in the Statement of Profit and Loss.
(ii) Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive
income if it is held within a business model whose objective is achieved by both
collecting contractual cash flows and selling financial assets 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. The Company
has made an irrevocable election for its investments which are classified as equity
instruments to present the subsequent changes in fair value in other comprehensive
income based on its business model. Further, incases where the Company has made an
irrevocable election based on its business model, for its investmentswhich are classified
as equity instruments, the subsequent changes in fair value are recognized in other
comprehensive income.
(iii) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently
fair valued through profit or loss.
(iv) Financial liabilities
Financial liabilities are subsequently carried at amortised cost using the effective interest
method, except for contingent consideration recognized in a business combination which
is subsequently measuredat fair value through profit and loss. For trade and other
payables maturing within one year fromthe Balance Sheet date, the carrying amounts
are more or less equal to the fair value due to the short maturity of these instruments.
b. Derivative financial instruments
The Company holds derivative financial instruments such as foreign exchange forward and
option contractsto mitigate the risk of changes in exchange rates on foreign currency
exposures. The counterparty forthese contracts is generally a bank. However, there were
no derivative financial instruments in the years 2024-25 and 2025-26.
(i) Financial assets or financial liabilities, at fair value through profit or loss
This category has derivative financial assets or liabilities which are not designated as
hedges.
Although the company believes that these derivatives constitute hedges from an
economic perspective, they may not qualify for hedge accounting under Ind AS 109,
Financial Instruments. Any derivative that is either not designated as hedge, or is so
designated but is ineffective as per Ind AS 109, is categorized as a financial asset or
financial liability, at fair value through profit or loss.
Derivatives not designated as hedges are recognized initially at fair value and attributable
transaction costs are recognized in the Statement of Profit and Loss when incurred.
Subsequent to initial recognition, these derivatives are measured at fair value through
profit or loss and the resulting exchange gains or losses are included in other income.
Assets/ liabilities in this category are presented as current assets/ current liabilities if
they are either held for trading or are expected to be realized within 12 months afterthe
balance sheet date.
(ii) Cash flow hedges
The company designates certain foreign exchange forward and options contracts as
cash flow hedges tomitigate the risk of foreign exchange exposure on highly probable
forecast cash transactions.
When a derivative is designated as a cash flow hedging instrument, the effective portion
of changes in the fair value of the derivative is recognized in other comprehensive income
and accumulated in the cash flow hedging reserve. Any ineffective portion of changes
in the fair value of the derivative is recognized immediately in the net profit in the
statement of profit and loss. If the hedging instrument no longer meets the criteria for
hedge accounting, then hedge accounting is discontinued prospectively. If the hedging
instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the
hedging instrument recognized in cash flow hedging reserve till the period the hedge
was effective remains in cash flow hedging reserve until the forecasted transaction
occurs.
The cumulative gain or loss previously recognized in the cash flow hedging reserve
is transferred to the Statement of Profit and Loss upon the occurrence of the related
forecasted transaction. If the forecasted transaction is no longer expected to occur, then
the amount accumulated in cash flow hedging reserve isreclassified to the Statement of
Profit and Loss.
c. Share capital - Ordinary Shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance
of new ordinary shares and share options are recognized as a deduction from equity, net of
any tax effects.
1.8.3 Derecognition of financial instruments
The company derecognizes a financial asset when the contractual rights to the cash flows
from the financialasset expire or it transfers the financial asset and the transfer qualifies
for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is
derecognized from the Company's Balance Sheet when the obligation specified in the contract
is discharged or cancelled or expires.
.9 Fair value of financial instruments
The Company measures financial instruments at fair value in accordance with the accounting policies
mentioned above.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. 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 realized.
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 are more or less equal to the fair value due to the
short maturity of these instruments.
.10 Impairment
a. Financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the
financial assets which arenot fair valued through profit or loss. Loss allowance for trade receivables
with no significant financing component is measured at an amount equal to lifetime ECL. For all
other financial assets, expected credit losses are measured at an amount equal to the 12-month
ECL, unless there has been a significant increase in credit risk from initial recognition in which
case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that
is requiredto adjust the loss allowance at the reporting date to the amount that is required to be
recognised is recognized as animpairment gain or loss in profit or loss.
b. Non-financial assets
Intangible assets and property, plant and equipment
Intangible assets and property, plant and equipment are evaluated for recoverability whenever
events or changes incircumstances indicate that their carrying amounts may not be recoverable.
For the purpose of impairment testing, the recoverable amount (i.e. the 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 generation units to which the asset
belongs.
If such assets are considered to be impaired, the impairment to be recognized in the Statement
of Profit and Loss ismeasured by the amount by which the carrying value of the assets exceeds
the estimated recoverable amount of theasset. An impairment loss is reversed in the statement
of profit and loss if there has been a change in the estimatesused to determine the recoverable
amount. In such cases, the carrying amount of the asset is increased to its revised recoverable
amount. However, such revised amount will not be exceeded beyond the carrying amount
that would have been determined (net of any accumulated amortization or depreciation) had no
impairment loss been recognizedfor the asset in prior years.
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