Material accounting policies
Statement of compliance
AS per para 16 of Ind AS 1, the financial statements comply in all material
aspects with Indian Accounting Standards ('Ind AS') notified under section
133 of the Companies Act, 2013 ('the Act') read with Rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015 and other relevant provisions of
the Act as amended.
2.1 Basis of Preparation of Financial Statements
Financial Statements have been prepared in accordance with the
accounting principles generally accepted in India including Indian
Accounting Standards (Ind AS) prescribed under the Section 133 of
the Companies Act, 2013 read with rule 3 of the Companies (Indian
Accounting Standards) Rules, 2015 as amended and relevant provisions
of the Companies Act, 2013 including presentation and disclosure
requirements of Division II of Schedule III of the Act as amended from
time to time.
Accordingly, the Company has prepared these Financial Statements
which comprise the Balance Sheet as at 31 March, 2026, the Statement
of Profit and Loss for the year ended 31 March 2026, the Statement of
Cash Flows for the year ended 31 March 2026 and the Statement of
Changes in Equity for the year ended as on that date, and accounting
policies and other explanatory information (together hereinafter
referred to as ' Financial Statements').
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.
The statement of cash flows have been prepared under indirect method.
The Financial Statements have been presented in Indian Rupees (INR),
which is the Company's functional currency. All financial information
presented in INR has been rounded off to the nearest Lakh (INR
00,000) upto two decimals rupee, unless otherwise stated.
The financial statements of the company are prepared in accordance
with Indian Accounting Standards (Ind AS), under the historical cost
convention on the accrual basis as per the provisions of the Companies
Act, 2013 (“the Act"), except for:
> Financial instruments - measured at fair value;
> Assets held for sale - measured at fair value less cost of sale;
> Plan assets under defined benefit plans - measured at fair value
> Employee share-based payments - measured at fair value
> Liability for cash settled - measured at fair value
> In addition, the carrying values of recognised assets and liabilities,
designated as hedged items in fair value hedges that would
otherwise be carried at cost, are adjusted to record changes in the
fair values attributable to the risks that are being hedged in effective
hedge relationship.
2.2 Current and non-current classification
The Company presents assets and liabilities in the balance sheet based
on current / non-current classification.
An asset is classified as current when it satisfies any of the following
criteria:
> It is expected to be realised in, or is intended for sale or consumption
in, the Company's normal operating cycle.
> It is held primarily for the purpose of being traded.
> It is expected to be realised within 12 months after the reporting
date; or
> It is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after the
reporting date.
> All other assets are classified as non-current.
A liability is classified as current when it satisfies any of the following
criteria:
> It is expected to be settled in the Company's normal operating cycle.
> It is held primarily for the purpose of being traded
> It is due to be settled within 12 months after the reporting date; or the
Company does not have an unconditional right to defer settlement
of the liability for at least 12 months after the reporting date. Terms
of a liability that could, at the option of the counterparty, result in
its settlement by the issue of equity instruments do not affect its
classification.
> All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current only.
2.3 Use of estimates and judgments
The preparation of the financial statements in conformity with Ind
AS requires the 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. Actual results could differ from those
estimates.
This note provides an overview of the areas where there is a higher
degree of judgment or complexity. Detailed information about each of
these estimates and judgments is included in relevant notes together
with information about the basis of calculation.
Estimates and judgments are regularly revisited. Estimates are based on
historical experience and other factors, including futuristic reasonable
information that may have a financial impact on the company.
The following are the areas involving critical estimates and judgements
• Measurement of defined benefit obligations - Note 34
• Recognition of Deferred tax assets/liabilities - Note 18
• Current Tax Expenses and Current Tax Payable - Note 18
• Useful life of Intangible Assets - Note 2.4 B
2.4 Material accounting policies
A summary of the Material accounting policies applied in the preparation
of the financial statements is as given below. These accounting policies
have been applied consistently to all the periods presented in the
financial statements.
(A) Property, Plant and Equipment
Property, plant and equipment except freehold land held for use in
the production, supply or administrative purposes, are stated in the
balance sheet at cost less accumulated depreciation and accumulated
impairment losses, if any. Freehold land held is stated in the balance
sheet at cost less accumulated impairment losses if any.
The Company has a regular program of verification of Property, Plant
and Equipment so to cover all the items over a period of 3 years.
The cost of acquired property, plant and equipment comprises its
purchase price net of any trade discounts and rebates, any import
duties and other taxes (other than those subsequently recoverable from
the tax authorities), any directly attributable expenditure on making
the asset ready for its intended use, including relevant borrowing
costs for qualifying assets including exchange differences arising from
foreign currency borrowings to the extent that they are regarded as an
adjustment to interest costs. Expenditure incurred after the property,
plant and equipment have been put into operation, such as repairs and
maintenance, are charged to the Statement of Profit and Loss in the
year in which the costs are incurred. Major shut-down and overhaul
expenditure is capitalised as the activities undertaken improves
the economic benefits expected to arise from the asset. It includes
professional fees and for qualifying assets, borrowing costs capitalized
in accordance with the Company's accounting policy based on Ind AS
23-Borrowing Costs. Such properties are classified to the appropriate
categories of PPE when completed and ready for intended use.
The cost of a self-constructed asset comprises the cost of materials and
direct labour, any other costs directly attributable to bringing the item
to working condition for its intended use, including relevant borrowing
costs for qualifying assets including exchange differences arising from
foreign currency borrowings to the extent that they are regarded as an
adjustment to interest costs and estimated costs of dismantling and
removing the item and restoring the site where it is located.
Property, plant and equipment which are not ready for intended use as
on the date of Balance Sheet are disclosed as “Capital work-in-progress"
Items of stores and spares that meet the definition of Property, plant and
equipment are capitalized at cost and depreciated over their useful life.
Otherwise, such items are classified as inventories.
The Company follows Cost Model for measurement of items of Property
Plant and Equipment and has not revalued any items of Property Plant
and Equipment.
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"
Subsequent expenditure and componentization
Parts of an item of PPE having different useful lives and significant value
and subsequent expenditure on Property, Plant and Equipment arising
on account of capital improvement or other factors are accounted for
as separate components 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 profit or loss
during the reporting period in which they are incurred.
Depreciation and useful life
Depreciation is provided on a pro-rata basis on the straight-line method
based on estimated useful life prescribed under Schedule II to the
Companies Act, 2013
Freehold land is not depreciated.
The Company reviews the residual value, useful lives and depreciation
method annually and, if expectations differ from previous estimates,
the change is accounted for as a change in accounting estimate on a
prospective basis.
Derecognition
An item of PPE is de-recognised upon disposal or when no future
economic benefits are expected to arise from the continued use of
the asset. Any gain or loss arising on the disposal or retirement of an
item of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of the asset and is
recognised in Statement of Profit and Loss.
(B) Intangible assets
Intangible assets acquired separately are measured on initial recognition
at cost. Following initial recognition, intangible assets are carried at cost
less any accumulated amortization and accumulated impairment losses,
if any. Cost include acquisition and other incidental cost related to
acquiring the intangible asset.
The useful lives of intangible assets are assessed as either finite
or indefinite. Intangible assets with finite lives are amortized over
the useful economic life and assessed for impairment whenever
there is an indication that the intangible asset may be impaired. The
amortization period and the amortization method for an intangible
asset with a finite useful life are reviewed at least at the end of each
reporting period. Changes in the expected useful life or the expected
pattern of consumption of future economic benefits embodied in the
asset are considered to modify the amortization period or method, as
appropriate, and are treated as changes in accounting estimates. The
amortization expense on intangible assets with finite lives is recognised
in the statement of profit and loss. 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 are recognised in the Statement of Profit and Loss when the asset is
derecognized.
Intangible Assets which are not put into operations or which are not
ready for its intended use as on the Balance Sheet Date are disclosed as
“Intangible Assets under Development."
Subsequent Costs
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
entity and the cost can be measured reliably.
Useful life and amortization
Intangible assets with finite useful lives that are acquired separately are
carried at cost less accumulated amortisation and impairment losses.
Amortisation of the asset begins when development is complete, and
the asset is available for use. Amortization is recognized on a straight¬
line basis over the useful lives of the asset from the date of capitalization
as below:
> Computer software 5-10 years
> Brands/Trade Mark/ Patent - 10 years
The estimated useful life and amortization method is reviewed at the
end of each reporting period and the effect of any changes in estimate is
accounted for prospectively.
Derecognition
Intangible assets are derecognised on disposal, or when no future
economic benefits are expected from use or disposal. Gains or losses
arising from derecognition of an intangible asset are determined as the
difference between the net disposal proceeds and the carrying amount
and recognized in the Statement of Profit and Loss.
(C) Impairment
At the end of each reporting year, the Company reviews the carrying
amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment loss (if
any). Where it is not possible to estimate the recoverable amount of an
individual asset, the Company estimates the recoverable amount of the
cash-generating unit to which the asset belongs. Where a reasonable
and consistent basis of allocation can be identified, corporate assets
are also allocated to individual cash-generating units, or otherwise they
are allocated to the smallest group of cash-generating units for which a
reasonable and consistent allocation basis can be identified.
Intangible assets including Goodwill with indefinite useful lives and
intangible assets not yet available for use are tested for impairment at
least annually, and whenever there is an indication the asset may be
impaired.
Recoverable amount is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows
are 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 asset for which the estimates of future cash flows
have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount of
the asset (or cash-generating unit) is reduced to its recoverable amount.
An impairment loss is recognised immediately in the Statement of Profit
and Loss.
If there is any indication that the impairment loss recognized in prior
periods for an asset other than goodwill may no longer exist or have
decreased, the Company shall estimate the recoverable value of such
asset and shall recognize such asset at the recoverable amount. Any
difference between the Current carrying value and recoverable amount
shall be recognized as Gain in Other Income in the Statement of Profit
and Loss.
(D) Inventories
Raw materials
Raw materials are stated at cost or Net Realizable Value whichever
is lower. Raw Material cost is computed on FIFO basis. Cost of raw
materials and traded goods comprises cost of purchases net of returns,
GST and duties and other recoverable taxes.
Raw materials are not written below cost if the finished goods in which
they will be incorporated are expected to be sold at or above cost.
However, when a decline in the price of raw materials indicates that
the cost of the finished products exceeds net realisable value, the raw
materials are written down to net realizable value. In such circumstances,
the replacement cost of the materials may be the best available measure
of their net realisable value.
Work in progress and finished goods
Work in Progress and Finished Goods are valued at lower of cost or net
realizable on FIFO basis.
Cost of work-in-progress and finished goods comprises direct
materials, direct labour and an appropriate proportion of variable and
fixed overhead expenditure net of recoverable taxes. Fixed overheads
are allocated on the basis of production of finished goods and semi¬
finished goods. Cost of inventories also include all other costs incurred
in bringing the inventories to their present location and condition.
Costs of purchased inventory are determined after deducting rebates
and discounts. Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and
the estimated costs necessary to make the sale.
Net realisable value represents the estimated selling price for inventories
less all estimated costs of completion and costs necessary to make the
sale.
Stores and spares, Accessories and Packing Material
Inventory of stores and spare parts, accessories and packing materials
are valued at cost or net realisable value, whichever is lower. The cost
of Stores and Spares, accessories and packing material is computed on
FIFO basis. Cost of stores and spares, accessories and packing material
comprises cost of purchases net of discounts, rebates received, returns,
GST and duties and other recoverable taxes.
Provisioning for Obsolete Items
Provisions are made for obsolete and non-moving inventories.
Unserviceable and scrap items, when determined, are valued at
estimated net realisable value.
(E) Non-current assets or disposal held for sale and discontinued
operations
Non-current assets or disposal held for sale
Non-current assets or disposal groups are classified as held for sale
if their carrying amounts will be recovered principally through a sale
transaction rather than through continuing use. Such assets or disposal
groups are classified only when both the conditions are satisfied -
> The sale is highly probable, and
> The asset or disposal group is available for immediate sale in its
present condition subject only to terms that are usual and customary
for sale of such assets.
Management must be committed to the sale, which should be expected
to qualify for recognition as a completed sale within one year from the
date of classification as held for sale, and actions required to complete
the plan of sale should indicate that it is unlikely that significant changes
to the plan will be made or that the plan will be withdrawn. Noncurrent
assets or disposal group are presented separately from the other assets
in the balance sheet. The liabilities of a disposal group classified as held
for sale are presented separately from other liabilities in the balance
sheet.
Upon classification, non-current assets or disposal group held for sale
are measured at the lower of carrying amount and fair value less costs
to sell. Non-current assets which are subject to depreciation are not
depreciated or amortized once those classified as held for sale.
Currently the Company does not have any Non-Current asset or
Disposal held for sale
Discontinued Operation
A discontinued operation is a component of the entity that has been
disposed of or is classified as held for sale and that represents a separate
major line of business or geographical area of operations, is part of a
single co-ordinated plan to dispose of such a line of business or area of
operations, or is a subsidiary acquired exclusively with a view to resale.
The results of discontinued operations are presented separately as a
single amount as profit or loss after tax from discontinued operational in
the statement of profit and loss.
Currently, the Company does not have any discontinued operations.
(F) Revenue recognition
Revenue from sale of goods is recognised when control of the products
being sold is transferred to our customer and when there are no longer
any unfulfilled obligations. Export incentives are recognised as income as
per the terms of the scheme in respect of the exports made and included
as part of other operating revenue. Income from services rendered is
recognised based on agreements/arrangements with the customers as
the service is performed and there are no unfulfilled obligations.
The Company recognizes revenue from goods sold and services
rendered at Transaction Price which is the amount of consideration
Company expects to be entitled to in exchange for transferring promised
goods or services to a customer, excluding the amounts collected on
behalf of third party. The Transaction price is net of discounts, sales
incentives, rebates granted, returns, sales taxes, GST and duties and any
other recoverable taxes.
Contract Liability
A contract liability is the obligation to transfer goods or services to
a customer for which the Company has received consideration or is
due from the customer. If a customer pays consideration before the
Company transfers goods or services to the customer, a contract
liability is recognised when the payment is made, or the payment is
due (whichever is earlier). Contract liabilities are recognised as revenue
when the Company performs under the contract.
Dividend and interest income
Dividend income from investments is recognised when the Company's
right to receive payment has been established (provided that it is
probable that the economic benefits will flow to the Company and the
amount of income can be measured reliably). Interest income is accrued
on a time basis, using the effective interest rate applicable, which is the
rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset's net carrying amount on
initial recognition.
Foreign exchange transaction and translation
The functional currency of the Company is Indian Rupees which
represents the currency of the primary economic environment in which
it operates.
Foreign currency transactions are recorded into the functional currency
using the exchange rates at the dates of the transactions. Monetary
balances arising from the transactions denominated in foreign currency
are translated to functional currency using the exchange rate as on the
reporting date. Foreign exchange gains and losses resulting from the
settlement of such transactions and any gains or loss on such translation,
are generally recognised in profit or loss except to the extent of exchange
differences which are regarded as an adjustment to the interest cost
on foreign currency borrowings that are directly attributable to the
acquisition or construction of the qualifying assets which are capitalized
as a part of the cost of the asset.
Exchange differences on monetary items are recognised in Statement of
Profit and Loss in the year in which they arise.
Non-monetary items that are measured in terms of historical cost in a
foreign currency are recorded using the exchange rates at the date of
the transaction and are not revalued. Non-monetary items measured at
fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was measured. 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 recognised in Other Comprehensive Income or Statement of
Profit and Loss are also recognised in Other Comprehensive Income or
Statement of Profit and Loss, respectively). In case of an asset, expense
or income where a non-monetary advance is paid/received, the date of
transaction is the date on which the advance was initially recognised.
If there were multiple payments or receipts in advance, multiple dates
of transactions are determined for each payment or receipt of advance
consideration.
(G) Income taxes
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.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from 'profit before tax' as reported in the Statement of Profit
and Loss because of items of income or expense that are taxable or
deductible in other years and items that are never taxable or deductible.
The Company's current tax is calculated using tax rates and laws that
have been enacted or substantively enacted by the end of the reporting
period.
Current tax Assets or Liabilities are measured at the amount expected
to be recovered from or paid to Income Tax Authorities based on the tax
rates and laws that are enacted or substantially enacted as at the balance
sheet date.
Current 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.
Deferred tax
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the Financial Statements
and the corresponding tax bases used in the computation of taxable
profit. Deferred tax liabilities are generally recognised for all taxable
temporary differences. Deferred tax assets are generally recognised
for all deductible temporary differences to the extent that it is probable
that taxable profits will be available against which those deductible
temporary differences can be utilised. Such deferred tax assets and
liabilities are not recognised if the temporary difference arises from the
initial recognition (other than in a business combination) of assets and
liabilities in a transaction that affects neither the taxable profit nor the
accounting profit. In addition, deferred tax liabilities are not recognised
if the temporary difference arises from the initial recognition of goodwill.
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 relating to items recognised outside profit or loss is
recognised outside profit or loss (either in other comprehensive
income or in equity). Deferred tax items are recognised in correlation
to the underlying transaction either in Other Comprehensive Income or
directly in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority.
(H) Borrowing costs
Borrowing costs, general or specific, that are directly attributable to the
acquisition or construction of qualifying assets is capitalised as part of
such assets. A qualifying asset is one that necessarily takes substantial
period to get ready for intended use. All other borrowing costs are
charged to the Statement of Profit and Loss.
The Company determines the amount of borrowing costs eligible for
capitalisation as the actual borrowing costs incurred on that borrowing
during the year less any interest income earned on temporary investment
of specific borrowings pending their expenditure on qualifying assets, to
the extent that an entity borrows funds specifically for the purpose of
obtaining a qualifying asset. In case if the Company borrows generally
and uses the funds for obtaining a qualifying asset, borrowing costs
eligible for capitalisation are determined by applying a capitalisation rate
to the expenditures on that asset.
Borrowing cost includes exchange differences arising from foreign
currency borrowings to the extent they are regarded as an adjustment
to the finance cost.
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