Summary of Material Accounting Policies
2.1 Basis of preparation and presentation
These 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 from time to time) and presentation requirement of Division II of
Schedule III of the Companies Act 2013, (Ind AS Compliant Schedule III), as applicable to financial statements.
Accordingly, the Company has prepared these financial statements which comprise the Balance Sheet as at March 31, 2024, the
Statement of Profit and Loss and the Statement of Changes in Equity for the year ended as on that date, and material accounting
policies and other explanatory information (together hereinafter referred to as "financial statements").
The financial statements have been prepared on a historical cost basis, except for certain financial instruments that are measured at
fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the
fair value of the consideration given in exchange for goods and services.
The financial statements are presented in INR and all values are rounded to the nearest lacs ( 00,000) up to two decimal, except
when otherwise indicated.
(i) Current vs. Non-Current
The Company presents assets and liabilities in the balance sheet based on current / non-current classification. An asset is treated as
current when it is:
• Expected to be realised or intended to be sold or consumed in normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realised within twelve months after the reporting period, or
• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the
reporting period
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in normal operating cycle
• It is held primarily for the purpose of trading
• It is due to be settled within twelve months after the reporting period, or
• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax asset and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.
The Company has identified twelve months as its operating cycle.
(ii) Fair value measurement
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, regardless of whether that price is directly observable or estimated using another valuation
technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or
liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement
date.
Fair value for measurement and/ or disclosure purposes in these financial statements is determined on such a basis, except for
leases that are within the scope of Ind AS 116 and measurements that have some similarities to fair value but are not fair value,
such as value in use in Ind^S 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to
which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in
its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either
directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
(iii) Impairment of non-financial assets
The carrying amounts of the Company's non-financial 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 in order to determine the
extent of the impairment loss, if any.
The recoverable amount of an asset or cash generating unit (as defined below) is the higher of its value in use and its fair value less
costs of disposal. 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 or the cash
generating unit for which the estimates of future cash flows have not been adjusted. For the purpose of impairment testing, assets
are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent
of the cash inflows of other assets or groups of assets (the "cash-generating unit").
An impairment loss is recognised in the profit or loss if the estimated recoverable amount of an asset or its cash generating unit is
lower than its carrying amount. Impairment losses recognised in respect of cash-generating units are allocated to reduce the carrying
amount of the other assets in the unit on a pro-rata basis.
In respect of other asset, impairment losses recognised in prior periods are assessed at each reporting date for any indications 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. An impairment loss is reversed 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.
The Company assesses where climate risks could have a significant impact, such as the introduction of emission-reduction legislation
that may increase manufacturing costs. These risks in relation to climate-related matters are included as key assumptions where
they materially impact the measure of recoverable amount. These assumptions have been included in the cash-flow forecasts in
assessing value-in-use amounts. At present, the impact of climate-related matters is not material to the Company's financial
statements.
(iv) Revenue from contract with customer
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an
amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
The company has concluded that it is the principle in its revenue arrangement, because it typically controls the services before
transferring them to the customer.
Contract balances
Contract asset
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs
by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is
recognised for the earned consideration that is conditional.
Trade receivables
A receivable represents the Company's right to an amount of consideration that is unconditional (i.e., only the passage of time is
required before payment of the consideration is due).
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration
(or an amount of consideration 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.
(v) Interest income
Interest income from a financial asset is recognised when 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, by reference to the principal outstanding
and at 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.
(vi) Taxes
Current income 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.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or
directly in equity.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the
extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses can be utilised.
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 statement of profit or loss is recognised outside statement of profit of loss.
Deferred tax are recognised in correlation to the underlying transaction either in other comprehensive income or substantively
enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is 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.
(vii) 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.
a) Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or
loss, transaction costs that are attributable to the acquisition of the financial asset. 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:
• Financial assets at amortised cost (debt instruments)
• Financial assets at fair value through other comprehensive income (FVTOCI) with recycling of cumulative gains and losses (debt
instruments)
• Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity
instruments)
Financial assets at amortised cost (debt instruments)
A 'financial asset' 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 finance income in the profit or loss. The losses arising from impairment
are recognised in the profit or loss._
Financial assets at fair value through OCI (FVTOCI) (debt instruments)
A 'financial asset' is classified as at the 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 asset's contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. For debt
instruments, at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are
recognised in the profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining
fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value changes recognised in OCI is reclassified from
the equity to profit or loss.
Financial assets designated at fair value through OCI (equity instruments)
On initial recognition, the Company can elect to classify irrevocably its equity investments as equity instruments designated at fair
value through OCI when they meet the definition of equity under Ind AS 32 Financial Instruments: Presentation and are not held for
trading. The classification is determined on an instrument-by-instrument basis. Equity instruments which are held for trading and
contingent consideration recognised by an acquirer in a business combination to which Ind AS103 applies are classified as at FVTPL.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other Income in the
statement of profit and loss when the right of payment has been established, except when the Company benefits from such
proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments
designated at fair value through OCI are not subject to impairment assessment.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value
recognised in the statement of profit and 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 when:
• The rights to receive cash flows from the asset have expired, or
• The Company has transferred its rights to receive 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.
Impairment of financial assets
In accordance with Ind AS 109 Financial Instruments, 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 Revenue from Contracts with Customers.
b) 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.
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.
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. 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.
Subsequent measurement
For purposes of subsequent measurement, financial liabilities are classified in two categories:
• Financial liabilities at fair value through profit or loss
• Financial liabilities at amortised cost (loans and borrowings)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated
upon initial recognition as at fair value through profit or loss.
Financial liabilities at amortised cost (Loans and borrowings)
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method.
Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation
process.
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 statement of profit and loss.
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 in the respective carrying amounts is recognised in the statement of profit and loss.
c) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount Is reported in the consolidated balance sheet if there is a
currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the
assets and settle the liabilities simultaneously.
(viii) Borrowing costs
Borrowing costs that are directly attributable to the construction or production of a qualifying asset are capitalised as part of the
cost of that asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and
other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the
extent regarded as an adjustment to the borrowing costs. A qualifying asset is one that necessarily takes substantial period of time
to get readv for its intended use.
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