Capital work in progress and Capital advances:
Cost of assets not ready for intended use, as on the balance sheet date, is shown as capital work in progress. Advances
given towards acquisition of fixed assets outstanding at each balance sheet date are disclosed as Other Non-Current
Assets.
Depreciation and Amortisation
Depreciation on each part of an item of property, plant and equipment is provided using the WDV Method based on the
useful life of the assets as prescribed in Schedule II to the Act.
1.3 Summary of material accounting policies
(a) Property, Plant & Equipment
Measurement at recognition:
An item of property, plant and equipment that qualifies as an asset is measured on initial recognition at cost. Following
initial recognition, items of property, plant and equipment are carried at its cost less accumulated depreciation and
accumulated impairment losses.
The cost of an item of property, plant and equipment comprises of its purchase price including import duties and other
non-refundable purchase taxes or levies, directly attributable cost of bringing the asset to its working condition for its
intended use and the initial estimate of decommissioning, restoration and similar liabilities, if any. Any trade discounts
and rebates are deducted in arriving at the purchase price. Cost includes cost of replacing a part of a plant and equipment
if the recognition criteria are met. Expenses directly attributable to new manufacturing facility during its construction
period are capitalized if the recognition criteria are met. Expenditure related to plans, designs and drawings of buildings
or plant and machinery is capitalized under relevant heads of property, plant and equipment if the recognition criteria
are met.
Costs in nature of repairs and maintenance are recognized in the Statement of Profit and Loss as and when incurred
The estimated useful life, residual values and depreciation method are reviewed at the end of each reporting period, with
the effect of any changes in estimate accounted for on a prospective basis.
Derecognition:
The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future economic
benefits are expected from its use or disposal. The gain or loss arising from the Derecognition of an item of property,
plant and equipment is measured as the difference between the net disposal proceeds and the carrying amount of the
item and is recognized in the Statement of Profit and Loss when the item is derecognized
(b) Investment property
Properties held to earn rentals and/or capital appreciation are classified as investment property and are measured and
reported at cost, including transaction costs and borrowing costs capitalised for qualifying assets. Policies with respect
to depreciation, useful life and derecognition are followed on the same basis as stated for PPE above.
(c) Intangible Assets
Measurement at recognition:
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible
assets are carried at cost less accumulated amortisation and accumulated impairment loss, if any.
The Company had elected to consider the carrying value of all its intangible assets appearing in the financial statements
prepare in accordance with Accounting Standards notified under the section 133 of the Act, read together with Rule
7 of the Companies (Accounts) Rules, 2014 and used the same as deemed cost in the opening Ind AS Balance sheet
prepared on 1st April, 2022.
Amortisation:
Intangible Assets with finite lives are amortised on a written down value basis over the estimated useful economic life.
The amortisation expense on intangible assets with finite lives is recognized in the Statement of Profit and Loss.
The amortisation period and the amortisation method for an intangible asset with finite useful life is reviewed at the end
of each financial year. If any of these expectations differ from previous estimates, such change is accounted for as a
change in an accounting estimate.
Derecognition:
The carrying amount of an intangible asset is derecognized on disposal or when no future economic benefits are
expected from its use or disposal. The gain or loss arising from the Derecognition of an intangible asset is measured as
the difference between the net disposal proceeds and the carrying amount of the intangible asset and is recognized in
the Statement of Profit and Loss when the asset is derecognized
(d) Revenue Recognition
Revenue from contracts with customers is recognized on transfer of control of promised 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
goods or 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 part of the contract. This variable consideration is estimated based on the expected value of outflow. Revenue (net of
variable consideration) is recognized 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 to the customer. The
performance obligation in case of sale of product is satisfied at a point in time i.e., when the material is shipped to the
customer or on delivery to the customer, as may be specified in the contract.
Revenue is measured based on transaction price, which is the fair value of the consideration received or receivable,
stated net of discounts, returns and goods and services tax. Transaction price is recognized based on the price specified
in the contract, net of the estimated sales incentives/ discounts.
Export Incentive:
Income from Export Incentives such as duty drawback and MEIS are recognised on accrual basis to the extent the
ultimate realisation is reasonably certain.
Contract Balances
Contract Assets
A contract asset is the right to consideration inexchange for goods or services transferred to the customer. If the
Company performs by transferring goods or services to a customer before thecustomer pays consideration or before
payment is due, a contract asset is recognised for the earned consideration that is conditional.
Contract Liabilities
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer
before the Company transfers the related goods . Contract liabilities are recognised as revenue when the Company
performs under the contract (i.e., transfers control of the related goods or services to the customer).
(e) Other Income
Dividends are recognised in the Statement of Profit and 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.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest
rate applicable, which is the rate that exactly discounts estimated future cash receipts over the expected life of the
financial asset to the asset’s gross carrying amount on initial recognition. When calculating the effective interest rate,
the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument.
(f) Inventories
Inventories encompass goods consumed in production (raw materials, packing materials and stores and spare parts),
goods in the production process for sale (work-in-progress) and goods held for sale in the ordinary course of business
(finished goods). Inventories are recognised at the lower of their cost of acquisition calculated by the weighted average
method and at their net realisable value. The net realisable value is the estimated selling price in the ordinary course of
business less estimated cost of completion and expenses necessary to make the sale.
(g) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
(i) Financial Assets
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through
other comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow
characteristics and the Company’s business model for managing them. The Company initially 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.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to
give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding.
This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash
flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business
model.
The Company’s business model for managing financial assets refers to how it manages its financial assets in order
to generate cash flows. The business model determines whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are
held within a business model with the objective to hold financial assets in order to collect contractual cash flows
while financial assets classified and measured at fair value through OCI are held within a business model with the
objective of both holding to collect contractual cash flows and selling.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation
or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the
Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• Debt instruments at amortised cost
• Debt instruments at fair value through other comprehensive income (FVTOCI)
• Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
• Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortised cost
A ‘debt instrument’ is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash
flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal
and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective
interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in Other Income
in the profit or loss. The losses arising from impairment are recognised in the profit or loss.
Debt instrument at FVTOCI
A ‘debt instrument’ is measured as at FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the
financial assets, and
b) The contractual terms of the instrument give rise on specified dates to cash flows that are SPPI on the principal
amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at
fair value. Fair value movements are recognised in the other comprehensive income (OCI). However, the Company
recognises interest income, impairment losses & reversals and foreign exchange gain or loss in the profit or loss.
On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity
to profit or loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the
EIR method.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for
categorisation as at amortised cost or as FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to designate a debt instrument, which otherwise meets amortised cost or
FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement
or recognition inconsistency (referred to as ‘accounting mismatch’).
Debt instruments included within the FVTPL category are measured at fair value with all the changes in the profit
or loss.
Equity instruments
All equity instruments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for
trading are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election
to present subsequent changes in the fair value in OCI. The Company makes such election on an instrument-by¬
instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument,
including foreign exchange gain or loss and excluding dividends, are recognised in the OCI. There is no recycling
of the amounts from OCI to profit or loss, even on sale of investment. However, the Company may transfer the
cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in
the profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
primarily derecognised (i.e. removed from the Company’s balance sheet) when:
• The contractual rights to receive cash flows from the asset have expired, or
• The Company has transferred its rights to receive contractual cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’
arrangement, and either (a) the Company has transferred substantially all the risks and rewards of the asset, or
(b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass¬
through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it
has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control
of the asset, the Company continues to recognise the transferred asset to the extent of the Company’s continuing
involvement. In that case, the Company also recognises an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the
sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in OCI
and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised
in profit or loss on disposal of that financial asset.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and
recognition of impairment loss on the Trade receivables or any contractual right to receive cash or another financial
asset that result from transactions that are within the scope of Ind AS 115. The Company follows ‘simplified
approach’ for recognition of impairment loss allowance on trade receivables or any contractual right to receive
cash or another financial asset.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it
recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio
of its trade receivables.
The provision matrix is based on its historically observed default rates over the expected life of the trade receivables
and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are
updated and changes in the forward-looking estimates are analysed.
Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangements and the definitions of a financial liability and an
equity instrument
(ii) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all
of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct
issue costs.
Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss
is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.
Compound financial instruments
The component parts of compound financial instruments (convertible notes) issued by the Company are classified
separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and
the definitions of a financial liability and an equity instrument.
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net
of directly attributable transaction costs. The Company’s financial liabilities include trade and other payables, loans
and borrowings including bank overdrafts and lease liabilities, financial guarantee contracts and derivative financial
instruments.
Subsequent measurement
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at
FVTPL.
Financial liabilities at fair value through profit or loss
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or is designated upon
initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they
are incurred principally for the purpose of repurchasing in the near term or on initial recognition it is part of a
portfolio of identified financial instruments that the Company manages together and has a recent actual pattern
of short-term profit-taking. This category also includes derivative financial instruments that are not designated as
hedging instruments in hedge relationships as defined by Ind AS 109. Gains or losses on liabilities held for trading
are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such
at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For instruments not held-for-
trading financial liabilities designated as at FVTPL, fair value gains/ losses attributable to changes in own credit
risk are recognised in OCI, unless the recognition of the effects of changes in the liability’s credit risk in OCI would
create or enlarge an accounting mismatch in profit or loss, in which case these effects of changes in credit risk are
recognised in profit or loss. These gains/ losses are not subsequently transferred to profit or loss. All other changes
in fair value of such liability are recognised in the statement of profit or loss.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost
in subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured
at amortised cost are determined based on the effective interest rate (EIR) method. Interest expense that is not
capitalised as part of costs of an asset is included in the ‘Finance costs’ line item in the profit or loss.
After initial recognition, such financial liabilities are subsequently measured at amortised cost using the EIR method.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortisation is included as finance costs in the profit or loss.
Financial guarantee contracts
Financial guarantee contracts are those contracts that require a payment to be made to reimburse the holder
for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms
of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for
transaction costs that are directly attributable to the issuance of the guarantee. If not designated as at FVTPL, are
subsequently measured at the higher of the amount of loss allowance determined as per impairment requirements
of Ind AS 109 and the amount initially recognised less cumulative amount of income recognised.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new liability. The difference between the carrying
amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial
recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities.
For financial assets which are debt instruments, a reclassification is made only if there is a change in the business
model for managing those assets. Changes to the business model are expected to be infrequent. The Company’s
senior management determines change in the business model as a result of external or internal changes which are
significant to the Company’s operations. Such changes are evident to external parties. A change in the business
model occurs when the Company either begins or ceases to perform an activity that is significant to its operations.
If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification
date which is the first day of the immediately next reporting period following the change in business model. The
Company does not restate any previously recognised gains, losses (including impairment gains or losses) or
interest.
Dividend distribution to equity holders of the Company
The Company recognises a liability to make dividend distributions to equity holders of the Company when the
distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate
laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is
recognised directly in equity.
(h) Fair Value Measurement
. Fair value measurement
The Company measures financial instrumentsat each balance sheet date.
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. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or
a liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset
takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best
use or by selling it to another market participant that would use the asset in its highest and best use. The Company uses
valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure
fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement
as a whole:
- Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
- Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines
whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest
level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Compamny has determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.’
(i) Trade Receivables and Loans
Trade receivables are initially recognised at fair value. Subsequently, these assets are held at amortised cost, using
the effective interest rate (EIR) method net of any expected credit losses. The EIR is the rate that discounts estimated
future cash income through the expected life of financial instrument.
(j) Foreign Currency Transactions
The Financial statements are presented in Indian Rupee, which is the Company’s functional and presentation currency.
A company’s functional currency is that of the primary economic environment in which the company operates.
Foreign currency transactions are translated into the functional currency using the exchange rate at the date of the
transaction. Foreign exchange gains/ losses resulting from the settlement of such transactions and from the translation
of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in the
Statement of Profit and Loss.
Monetary items:
Transactions in foreign currencies are initially recorded at their respective exchange rates at the date the transaction
first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at exchange rates prevailing on the
reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in Statement of Profit and
Loss either as profit or loss on foreign currency transaction and translation or as borrowing costs to the extent regarded
as an adjustment to borrowing costs
Non - Monetary items:
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.
(k) Income tax
Tax expense is the aggregate amount included in the determination of profit or loss for the period in respect of current
tax and deferred tax.
Current Tax:
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the
taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively
enacted, at the reporting date in the countries where the Company operates and generates taxable income.
Deferred Tax:
Deferred tax is recognized 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 under Income tax Act,
1961.
Deferred tax liabilities are generally recognized for all taxable temporary differences. However, in case of temporary
differences that arise from initial recognition of assets or liabilities in a transaction (other than business combination)
that affect neither the taxable profit nor the accounting profit, deferred tax liabilities are not recognized. Also, for
temporary differences if any that may arise from initial recognition of goodwill, deferred tax liabilities are not recognized.
Deferred tax assets are generally recognized for all deductible temporary differences to the extent it is probable that
taxable profits will be available against which those deductible temporary difference can be utilized. In case of temporary
differences that arise from initial recognition of assets or liabilities in a transaction (other than business combination)
that affect neither the taxable profit nor the accounting profit, deferred tax assets are not recognized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow the benefits of part or all of such
deferred tax assets to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted by the
balance sheet date and are expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled.
Presentation of current and deferred tax:
Current and deferred tax are recognized as income or an expense in the Statement of Profit and Loss, except when they
relate to items that are recognized in Other Comprehensive Income, in which case, the current and deferred tax income/
expense are recognized in Other Comprehensive Income
The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the
recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability
simultaneously. In case of deferred tax assets and deferred tax liabilities, the same are offset if the Company has a
legally enforceable right to set off corresponding current tax assets against current tax liabilities and the deferred tax
assets and deferred tax liabilities relate to income taxes levied by the same tax authority on the Company
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