Note 1: Summary of Material Accounting Policies
This note provides a list of the material accounting policies
adopted in the preparation of these Standalone Financial
Statements for the year ended 31 March 2025. These
policies have been consistently applied to all the years
presented, unless otherwise stated.
a) Basis of Preparation
(i) Compliance with Ind AS
The Standalone Financial Statements comply in
all material aspects with Indian Accounting
Standards (Ind AS) notified under Section 133 of
the Companies Act, 2013 (the Act) [Companies
(Indian Accounting Standards) Rules, 2015] and
other relevant provisions of the Act. The
Standalone Financial Statements are prepared
on accrual and going concern basis. The
Standalone Financial Statements for the year
ended 31 March 2025 were authorized and
approved for issue by the Board of Directors on 8
May 2025.
(ii) Historical Cost Convention The Standalone
Financial Statements have been prepared on a
historical cost basis, except for certain financial
assets and financial liabilities that are measured
at fair value or amortized cost, defined benefit
obligations.
b) Segment Reporting
Operating segments are reported in a manner
consistent with the internal reporting provided to the
chief operating decision maker.
The Board of Directors assesses the financial
performance and position of the Company and makes
strategic decisions and has been identified as chief
operating decision maker (CODM). Refer note 40 for
reportable segments determined by the Company.
c) Foreign Currency Translation
(i) Functional and Presentation Currency
Items included in the Standalone Financial
Statements are measured using the currency of
the primary economic environment in which the
Company operates ('the functional currency').
The Standalone Financial Statements are
presented in Indian rupee (Rs.), which is
Company's functional and presentation currency.
(ii) Transactions and Balances
Monetary and non-monetary transactions in
foreign currencies are initially recorded in the
functional currency of the Company at the
exchange rates at the date of the transactions.
Monetary foreign currency assets and liabilities
remaining unsettled on reporting date are
translated at the rates of exchange prevailing on
reporting date. Gains/ (losses) arising on account
of realization / settlement of foreign exchange
transactions and on translation of monetary
foreign currency assets and liabilities are
recognised in the Statement of Profit and Loss.
Non-monetary items that are measured at fair
value in a foreign currency are translated using
the exchange rates at the date when the fair value
was determined. Translation differences on
assets and liabilities carried at fair value are
reported as part of the fair value gain or loss in
the Statement of Profit and Loss
d) Revenue Recognition
To determine whether to recognise revenue, the
Company follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance
obligations
5. Recognising revenue when/as performance
obligation(s) are satisfied.
Under Ind AS 115 - Revenue from contracts with
customers, revenue is recognised upon transfer of
control of promised goods or services to customers.
Revenue is measured at the transaction price agreed
with the customers received or receivable, excluding
discounts, incentives, performance bonuses, price
concessions, amounts collected on behalf of third
parties, or other similar items, if any, as specified in
the contract with the customer. Revenue is recorded
provided the recovery of consideration is probable
and determinable.
Sales are recognised when control of the products
has transferred, the customer has full discretion over
sale price, and there is no unfulfilled obligation that
could affect the customer's acceptance of the
products.
The Company manufactures and sells a range of
artificial leather domestically as well as outside India.
Revenue from the sale of products is recognised at a
point in time, upon transfer of control of products to
the customers and is measured at transaction price
received/receivable, net of discounts, and applicable
taxes.
The Company does not have any contract where the
period between the transfer of promised goods to the
customer and payment by the customer exceeds one
year. As a consequence, the Company does not adjust
any of the transaction prices for the time value of money
using the practical expedient in Ind AS 115.
Trade receivables are recognised initially at the
transaction price as they do not contain significant
financing components. The Company holds the trade
receivables with the objective of collecting the
contractual cash flows and therefore measures them
subsequently at amortised cost using the effective
interest method, less loss allowance.
Contract asset is recognized as a right to
consideration in exchange for goods or services
transferred to the customer. Contract liabilities arises
on account of the advance payments received from
customer for which performance obligation has not
yet been completed.
e) Government Grants
Grant from the government are recognized at their fair
value where there is a reasonable assurance that the
grant will be received and the Company will comply
with all attached conditions.
Grants are recognized where there is reasonable
assurance that the grant will be received and all the
conditions attached with them will be complied with.
When the grant relates to an expense item, it is
recognized as income on a systematic basis over the
periods that the related costs, for which it is intended
to compensate, are expensed. When the grant relates
to an asset, it is recognized as
(a) Deferred income which is recognised in profit
and loss on a systematic basis over the useful
life of the asset or
(b) income in proportion to the fulfillment of its
obligations, wherever applicable.
f) 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 adjusted by
changes in deferred tax assets and liabilities
attributable to temporary differences.
Tax expense comprises current and deferred tax.
Current and deferred tax is recognised in profit or
loss except to the extent that it relates to items
recognised in other comprehensive income or directly
in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity
respectively.
The current income tax charge is calculated on the
basis of the tax laws enacted or substantively enacted
at the end of the reporting period. Management
periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax
regulation is subject to interpretation and considers
whether it is probable that a taxation authority will
accept an uncertain tax treatment. The Company
measures its tax balances either based on the most
likely amount or the expected value, depending on
which method provides a better prediction of the
resolution of the uncertainty.
Deferred income tax is provided in full, using the
liability method, on temporary differences arising
between the tax bases of assets and liabilities and
their carrying amounts in the Standalone Financial
Statements. Deferred income tax is also not
accounted for if it arises from initial recognition of an
asset or liability in a transaction that at the time of the
transaction affects neither accounting profit nor taxable
profit (tax loss). Deferred income tax is determined
using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting period
and are expected to apply when the related deferred
income tax asset is realised or the deferred income
tax liability is settled.
Deferred tax assets are recognised for all deductible
temporary differences and unused tax losses only if it
is probable that future taxable amounts will be
available to utilise those temporary differences and
losses.
Current/deferred tax assets and tax liabilities are offset
where the entity has a legally enforceable right to offset
and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
g) Leases
As a Lessee
Leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased
asset is available for use by the Company. Contracts
may contain both lease and non-lease components.
The Company allocates the consideration in the
contract to the lease and non-lease components
based on their relative stand-alone prices. However,
for leases of real estate for which the Company is a
lessee, it has elected not to separate lease and non¬
lease components and instead accounts for these
as a single lease component.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities
include net present value of the following lease
payments:
• Fixed payments (including in substance fixed
payments), less any lease incentives receivable
• Variable lease payments that are based on an
index or a rate, initially measured using the index
or rate as at the commencement date
• Amounts expected to be payable by the Company
under residual value guarantees
• The exercise price of a purchase option if the
Company is reasonably certain to exercise that
option, and
• Payments of penalties for terminating the lease,
if the lease term reflects the Company exercising
that option.
Lease payments to be made under reasonably certain
extension options are also included in the
measurement of the liability. The lease payments are
discounted using the interest rate implicit in the lease.
If that rate cannot be readily determined, which is
generally the case for lease in the Company, the
lessee's incremental borrowing rate is used, being
the rate that the individual lessee would have to pay to
borrow the funds necessary to obtain an asset of
similar value to the right-of-use asset in similar
economic environment with similar terms, security
and conditions.
Lease payments are allocated between principal and
finance cost. The finance cost is charged to profit or
loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of
the liability for each period.
Right-of-use assets are measured at cost comprising
the following:
• The amount of the initial measurement of lease
liability
• Any lease payments made at or before the
commencement date less any lease incentives
received
• Any initial direct costs, and
• Restoration costs.
Right-of-use assets are generally depreciated over
the shorter of the asset's useful life and the lease
term on a straight-line basis. If the Company is
reasonably certain to exercise a purchase option, the
right-of-use asset is depreciated over the underlying
asset's useful life.
Payments associated with short-term leases of
equipment and all leases of low value assets are
recognised on a straight-line basis as an expense in
profit or loss. Short term leases are leases with a
lease term of twelve months or less.
h) 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 recoverable amount of a CGU (or an individual
asset) is the higher of its value in use and its fair
value less costs to sell. Value in use is based on the
estimated future cash flows, discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of
money and the risks specific to the CGU (or the asset).
An impairment loss is recognised if the carrying
amount of an asset or CGU exceeds its estimated
recoverable amount. Impairment losses are
recognised in the Statement of Profit and Loss.
Impairment loss recognised in respect of a CGU is
allocated to reduce the carrying amounts of the assets
of the CGU (or group of CGUs) on a pro rata basis.
In respect of assets for which impairment loss has
been recognised in prior periods, the Company
reviews at each reporting date whether there is any
indication that the loss has decreased or no longer
exists. An impairment loss is reversed if there has
been a change in the estimates used to determine
the recoverable amount. Such a reversal is made 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.
i) Cash and Cash Equivalents
For the purpose of presentation in the cash flow
statement, cash and cash equivalents includes cash
on hand, deposits held at call with banks/ financial
institutions, other short-term, other highly liquid
investments with original maturities of three months
or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk
of changes in value.
Other Bank Balances
Other bank balances consist of term deposits with
banks, which have original maturities of more than
three months but less than 12 months. Such assets
are recognised and measured at amortised cost
(including directly attributable transaction cost) using
the effective interest method, less impairment losses,
if any.
j) Inventories
Inventories are measured at the lower of cost and net
realisable value.
Raw materials, stock-in-trade and stores and
spares:
The cost of inventories is calculated on weighted
average basis, and includes expenditure incurred in
acquiring the inventories and other costs incurred in
bringing them to their present location and condition.
Raw materials, components and other supplies held
for use in the production of finished products are not
written down below cost except in cases where
material prices have declined and it is estimated that
the cost of the finished products will exceed their net
realizable value.
Work-in-progress and finished goods:
Cost includes raw material costs and an appropriate
share of fixed production overheads based on normal
operating capacity. Net realisable value is the
estimated selling price in the ordinary course of
business, less the estimated costs of completion and
selling expenses. The net realisable value of work-
in-progress is determined with reference to the selling
prices of related finished products.
The comparison of cost and net realisable value is
made on an item-by-item basis.
k) Investments and Other Financial Assets
(i) Classification
The Company classifies its financial assets in
the following measurement categories:
- Those to be measured subsequently at fair
value (either through other comprehensive
income, or through profit or loss), and
- Those measured at amortised cost.
The classification depends on the entity's
business model for managing the financial
assets and the contractual terms of the cash
flows.
For assets measured at fair value, gains and
losses will either be recorded in the Statement of
Profit and Loss or other comprehensive income.
For investments in equity instruments, this will
depend on whether the Company has made an
irrevocable election at the time of initial
recognition to account for the equity investment
at fair value through other comprehensive income
(FVOCI).
The Company reclassifies debt investments
when and only when its business model for
managing those assets changes.
(ii) Recognition
Regular way purchases and sales of financial
assets are recognised on trade date, on which
the Company commits to purchase or sale the
financial asset.
(iii) Measurement
At initial recognition, the Company measures a
financial asset at its fair value plus, in the case of
a financial asset not at fair value through profit or
loss, transaction costs that are directly attributable
to the acquisition of the financial asset.
Transaction costs of financial assets carried at
fair value through profit or loss are expensed in
profit or loss.
Debt Instruments
Subsequent measurement of debt instruments
depends on the Company's business model for
managing the asset and the cash flow characteristics
of the asset. There are three measurement categories
into which the Company classifies its debt
instruments:
- Amortised Cost: Assets that are held for
collection of contractual cash flows where those
cash flows represent solely payments of principal
and interest are measured at amortised cost.
Interest income from these financial assets is
included in other income using the effective
interest rate method. Any gain or loss arising on
derecognition is recognised directly in profit or
loss and presented in other income or other
expenses. Impairment losses are presented as
separate line item in the Statement of Profit and
Loss.
- Fair Value Through Other Comprehensive
Income (FVOCI) : Assets that are held for collection
of contractual cash flows and for selling the
financial assets, where the assets' cash flows
represent solely payments of principal and
interest, are measured at fair value through other
comprehensive income (FVOCI). Movements in
the carrying amount are taken through OCI,
except for the recognition of impairment gains or
losses, interest revenue and foreign exchange
gains and losses which are recognised in the
Statement of Profit and Loss. When the financial
asset is derecognised, the cumulative gain or
loss previously recognised in OCI is reclassified
from equity to the Statement of Profit and Loss
and recognised in other income. Interest income
from these financial assets is included in other
income using the effective interest rate method.
Foreign exchange gain and losses are presented
in other income and impairment expenses are
presented as separate line item in Statement of
Profit and Loss.
- Fair Value Through Profit or Loss: Assets that do
not meet the criteria for amortised cost or FVOCI
are measured at fair value through profit or loss.
A gain or loss on a debt investment that is
subsequently measured at fair value through
profit or loss and is not part of a hedging
relationship is recognised and presented net in
the Statement of Profit and Loss within other
income or other expenses in the period in which
it arises. Interest income from these financial
assets is included in other income.
Investments in Mutual Funds, Alternate Investment
Funds and Equity Instruments
Investment in mutual funds and equity instruments
are classified as fair value through profit or loss as
they are not held within a business model whose
objective is to hold assets in order to collect
contractual cash flows and the contractual terms of
such assets do not give rise on specified dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding. Where
the Company's management has elected to present
fair value gains and losses on equity investments in
other comprehensive income, there is no subsequent
reclassification of fair value gains and losses to the
Statement of Profit and Loss. The Company makes
such election on an instrument-by-instrument basis.
The classification is made on initial recognition and
is irrevocable. Dividends from such investments are
recognised in profit or loss as other income when the
Company's right to receive payments is established.
Investment in Bonds
Investment in bonds are financial assets with fixed or
determinable payments that are quoted in an active
market. These are classified as financial assets
measured at amortised cost as they fulfill the following
conditions:
- Such assets are held within a business model
whose objective is to hold assets in order to
collect contractual cash flows.
- The contractual terms of such assets give rise
on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.
- The Company recognises these assets on the
date when they are originated and are initially
measured at fair value plus any directly
attributable transaction costs.
Changes in the fair value of financial assets at fair
value through profit or loss are recognised in other
income in the Statement of Profit and Loss.
Impairment losses (and reversal of impairment
losses) on equity investments measured at FVOCI
are not reported separately from other changes in fair
value.
(iv) Impairment of Financial Assets
The Company assesses on a forward looking
basis the expected credit losses associated with
its assets carried at amortised cost and FVOCI
debt instruments. The impairment methodology
applied depends on whether there has been a
significant increase in credit risk. Note 43 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.
(v) Derecognition of Financial Assets
A financial asset is derecognised only when :
- The Company has transferred the rights to
receive cash flows from the financial asset
or
- Retains the contractual rights to receive the
cash flows of the financial asset, but
assumes a contractual obligation to pay the
cash flows to one or more recipients.
Where the Company has transferred an asset,
the Company evaluates whether it has
significantly transferred all risks and rewards of
ownership of the financial asset. In such cases,
the financial asset is derecognised. Where the
Company has not significantly transferred all
risks and rewards of ownership of the financial
asset, the financial asset is not derecognised.
Where the Company has neither transferred a
financial asset nor retains significantly all risks
and rewards of ownership of the financial asset,
the financial asset is derecognised if the
Company has not retained control of the financial
asset. Where the Company retains control of the
financial asset, the asset is continued to be
recognised to the extent of continuing involvement
in the financial asset.
(vi) Income Recognition
Interest Income
Interest income from financial assets at fair value
through the profit or loss is disclosed as interest
income within other income. Interest income on
financial assets at amortised cost and financial
assets at FVOCI is calculated using effective
interest method is recognised in the Statement
of Profit and Loss as part of other income. Interest
income is calculated by applying the effective
interest rate to the gross carrying amount of a
financial asset except for financial assets that
subsequently become credit impaired.
Dividends
Dividends are recognised in profit or loss only
when the right to receive payment is established,
it is probable that the economic benefits
associated with the dividend will flow to the
Company, and the amount of the dividend can be
measured reliably.
l) Investment in Subsidiaries
A subsidiary is an entity controlled by the Company.
Control exists when the Company has power over the
entity, is exposed, or has rights to variable returns
from its involvement with the entity and has the ability
to affect those returns by using its power over the
entity. Power is demonstrated through existing rights
that give the ability to direct relevant activities, those
which significantly affect the entity's returns.
Investments in subsidiaries are carried at cost. The
cost comprises price paid to acquire investment and
directly attributable cost.
m) Offsetting Financial Instruments
Financial assets and liabilities are offset and the net
amount is reported in the balance sheet where there
is a legally enforceable right to offset the recognised
amounts and there is an intention to settle on a net
basis or realise the asset and settle the liability
simultaneously. The legally enforceable right must
not be contingent on future events and must be
enforceable in the normal course of business and in
the event of default, insolvency or bankruptcy of the
Company or the counterparty.
n) Property, Plant and Equipment
Freehold land is carried at historical cost. All other
items of property, plant and equipment are stated at
historical cost less depreciation. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items. Cost comprises the purchase
price, borrowing costs if capitalisation criteria are met
and 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.
Subsequent costs are included in the asset's carrying
amount or recognised as a separate asset, as
appropriate, only when it is probable that future
economic benefits associated with the item will flow
to the Company and the cost of the item can be
measured reliably. The carrying amount of any
component accounted for as a separate asset is
derecognised when replaced. All other repairs and
maintenance are charged to Statement of Profit and
Loss during the reporting period in which they are
incurred.
Depreciation Methods, Estimated Useful Lives and
Residual Value
Depreciation is calculated using the straight-line
method to allocate the cost of the assets, net of their
residual values, over their estimated useful lives as
follows:
The useful lives have been determined based on
technical evaluation done by the management's
expert and management estimate, in order to reflect
the actual usage of the assets. The residual values
are not more than 5% of the original cost of the asset.
The management believes that these estimated
useful lives are realistic and reflect fair approximation
of the period over which the assets are likely to be
used.
The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These are
included in Statement of Profit and Loss within other
income or other expenses.
Advances paid towards the acquisition of property,
plant and equipment outstanding at each Balance
Sheet date are classified as capital advances under
non-current assets.
Capital work-in-progress excluding capital advances
includes property, plant and equipment under
construction and not ready for intended use as on
Balance Sheet date.
o) Intangible Assets
Intangible assets that are acquired by the Company
are measured initially at cost. All intangible assets
are with finite useful lives and are measured at cost
less accumulated amortisation and impairment, if any.
Amortisation and Useful Lives
Intangible assets are amortised over the useful life
and assessed for impairment whenever there is an
indication that the intangible asset may be impaired.
The amortisation period and the amortisation method
are reviewed at the end of each reporting period.
Intangible assets comprise software having an
estimated useful life of 4 years.
p) 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
profit or loss over the period of the borrowings using
the effective interest method. Fees paid on the
establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn
down. Borrowings are classified as current liabilities
unless the Company has an unconditional right to
defer settlement of the liability for at least twelve
months after the reporting period.
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