1. MATERIAL ACCOUNTING POLICIES:
1.1. Basis of preparation of financial statements
(i) Compliance with Ind AS
These financial statements have been prepared in accordance with Indian Accounting Standards
(hereinafter referred to as the 'Ind AS') as notified under Section 133 of the Companies Act, 2013 ("Act)
read with the Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant
provisions of the Act.
These financial statements have been prepared and presented under the historical cost convention,
on the accrual basis of accounting except for certain financial assets and financial liabilities that are
measured at fair values and Defined benefit planned assets measured at fair value at the end of each
reporting period, as stated in the accounting policies set out below. The accounting policies have been
applied consistently over all the periods presented in these financial statements.
Application of New Accounting Pronouncements
The company has applied the following Ind AS Pronouncements pursuance to issuance of the Companies
(Indian Accounting Standards) Amendment Rules, 2023 with effect from 1st April 2023.
The effect is described below: -
Ind AS 1-Presentation of Financial Statements: - The amendment requires disclosure of material
accounting policies instead of significant accounting policies. This amendment aims to help entities
provide accounting policy disclosures that are more useful by replacing the requirement to disclose
'significant' accounting policies with a requirement to disclose 'material' accounting policies and adding
guidance on how entities apply the concept of materiality in making decisions about accounting policy
disclosures. In the Financial statements, the disclosure of accounting policies has been accordingly
modified. The impact of such modifications to the accounting policies is insignificant.
Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors -The amendment
has defined accounting estimate as well as clarified the distinction between changes in accounting
estimates, accounting policies and the correction of errors. There is no impact of the amendment on the
Financial Statements.
Ind AS 12-Income taxes -The amendment narrows the scope of initial recognition exception, so that it
no longer applies to transactions that give rise to equal taxable and deductible temporary differences
such as leases and decommissioning liabilities. There is no impact of the amendment on the financial
statements.
(ii) Use of estimates and judgments
The estimates and judgments used in the preparation of the financial statements are continuously
evaluated by the Company and arebased on historical experience and various other assumptions and
factors (including expectations of future events) that the Companybelieves to be reasonable under the
existing circumstances. Differences between actual results and estimates are recognised in theperiod
in which the results are known/materialised.
The said estimates are based on the facts and events, that existed as at the reporting date, or that
occurred after that date but provideadditional evidence about conditions existing as at the reporting
date.
(iii) Current / Non- Current Classification
All assets and liabilities have been classified as current or noncurrent as per the Company's normal
operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013.
(iv) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lacs
as per the requirement of Schedule III, unless otherwise stated.
1.2. Property, Plant and Equipment:
Freehold land is carried at historical cost.All other items of property, plant and equipment are stated
at cost less depreciation and impairment, if any. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
The Company identifies and determines cost of each part of an item of property, plant and equipment
separately, if the part has a cost which is significant to the total cost of that item of property, plant and
equipment and has useful life that is materially different from that of the remaining item.
The cost of an item of property, plant and equipment comprises of its purchase price including import
duties and other nonrefundable 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.
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:
Depreciation on each part of an item of property, plant and equipment is provided using the Straight
Line Method based on the useful life of the asset as estimated by the management and is charged to
the Statement of Profit and Loss as per the requirement of Schedule II of the Companies Act, 2013. The
estimate of the useful life of the assets is determined as prescribed in Schedule II of Companies Act,
2013.
The residual values are not more than 5% of the original cost of the asset. The assets residual values and
useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
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.
1.3. Impairment
Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are
tested for impairment annually and whenever there is an indication that the asset may be impaired.
Assets that are subject to depreciation are reviewed for impairment, whenever events or changes in
circumstances indicate that carrying amount maynot be recoverable. Such circumstances include,
though are not limited to, significant or sustained decline in revenues orearnings and material adverse
changes in the economic environment.
An impairment loss is recognized whenever the carrying amount of an asset or its cash generating
unit (CGU) exceeds itsrecoverable amount. The recoverable amount of an asset is the greater of its fair
value less cost to sell and value in use. Tocalculate value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate thatreflects current market rates and
the risk specific to the asset. For an asset that does not generate largely independent cashinflows, the
recoverable amount is determined for the CGU to which the asset belongs. Fair value less cost to sell
is the bestestimate of the amount obtainable from the sale of an asset in an arm's length transaction
between knowledgeable, willingparties, less the cost of disposal.
Impairment losses, if any, are recognized in the Statement of Profit and Loss and included in depreciation
and amortizationexpense. Impairment losses are reversed in the Statement of Profit and Loss only to
the extent that the asset's carryingamount does not exceed the carrying amount that would have been
determined if no impairment loss had previously beenrecognized.
1.4. Lease
The Company as lessee :
At inception of a contract, the Company assesses whether a contract is or contains a lease. A contract
is, or contains, a lease if a contract conveys the right to control the use of an identified asset for a period
of time in exchange for consideration. To assess whether a contract conveys the right to control the use
of an identified asset, the Company assesses whether:
- the contract conveys the right to use an identified asset;
- the Company has the right to obtain substantially all the economic benefits from use of the asset
throughout the period of use; and
- the Company has the right to direct the use of the identified asset.
At the date of commencement of a lease, the Company recognises a right-of-use asset ("ROU assets")
and a corresponding lease liability for all leases, except for leases with a term of twelve months or less
(short-term leases) and low value leases. For short-term and low value leases, the Company recognises
the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the
lease term. Lease payments to be made under such reasonably certain extension options are included
in the measurement of ROU assets and lease liabilities.
Lease liability is measured by discounting the lease payments using the interest rate implicit in the lease
or, if not readily determinable, using the incremental borrowing rates in the country of domicile of the
leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset
if the Company changes its assessment of whether it will exercise an extension or a termination option.
Lease payments are allocated between principal and finance cost. The finance cost is charged to
statement of profit and 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.
The ROU assets are initially recognised at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial
direct costs less any lease incentives and restoration costs.
They are subsequently measured at cost less accumulated depreciation and impairment losses, if any.
ROU assets are depreciated on a straight-line basis over the asset's useful life or the lease whichever is
shorter.
Impairment of ROU assets is in accordance with the Company's accounting policy for impairment of
tangible and intangible assets.
Short-term leases and leases of low-value assets:
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases
that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the
lease payments associated with these leases as an expense on a straight-line basis over the lease term.
The Company as lessor:
Lease income from operating leases wherethe Company is a lessor is recognised in thestatement of
profit and loss on a straight- linebasis over the lease term.
1.5. 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.
Financial assets
Initial recognition and measurement
A financial asset is recognised in the balance sheet when the Company becomes party to the contractual
provisions of the instrument. At initial recognition, the Company measures a financial asset at its fair
value plus or minus, in the case of a financial asset not at fair value through statement of profit and loss,
transaction costs that are directly attributable to the acquisition or issue of the financial asset.
Subsequent measurement
For purpose of subsequent measurement, financial assets are classified into:
a. Financial assets measured at amortised cost;
b. Financial assets measured at fair value through other comprehensive income (FVTOCI);
c. Financial assets measured at fair value through statement of profit and loss (FVTPL)
The Company classifies its financial assets in the above mentioned categories based on:
a. The Company's business model for managing the financial assets;
b. The contractual cash flows characteristics of the financial asset.
Financial assets measured at amortised cost
This category generally applies to trade and other receivables.
A financial asset is measured at amortised cost if both of the following conditions are met:
a. The financial asset is held within a business model whose objective is to hold financial assets in
order to collect contractual cash flows;
b. The contractual terms of the financial assets give rise on specified dates to cash flows that are
solely payments of principal and interest (SPPI) on the principal amount outstanding.
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
statement of profit and loss. The losses arising from impairment are recognised in the statement of
profit and loss.
Financial assets measured at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at fair value through other comprehensive income if both of the following
conditions are met:
a. The financial asset is held within a business model whose objective is achieved by both collecting
the contractual cash flows and selling financial assets;
b. The asset's contractual cash flows represent SPPI.
Financial assets measured at fair value through the statement of profit and loss (FVTPL)
FVTPL is a residual category. Any financial asset, which does not meet the criteria for categorization
as at amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to
designate a financial asset, which otherwise meets amortized costor FVTOCI criteria, as at FVTPL. Such
financial assets are measured at fair value with all changes in fair value, including interest income and
dividend income if any, recognised as 'other income' in the Statement of Profit and Loss.
Equity Instruments
All the 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.
If the company decides to classify an equity instrument as at FVTOCI, then all the fair value changes on
the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from
OCI to statement of profit and loss, even on sale of investment. However, the company may transfer the
cumulative gain or loss within equity. Equity instruments included within FVTPL category are measured
at fair value with all the changes recognized in 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 derecognized (i.e. removed from the Company's balance sheet) when:
a. The contractual rights to the cash flows from the financial asset have expired, or
b. 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
c. The Company has transferred substantially all the risks and rewards of the asset, or
d. The Company has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.
Impairment of financial assets
In accordance with Ind AS 109, the Company assesses impairment based on expected credit loss (ECL)
model to the following:
a. Financial assets measured at amortised cost;
b. Financial assets measured at fair value through other comprehensive income
Expected credit losses are measured through a loss allowance at an amount equal to:
a. The 12-months expected credit losses (expected credit losses that result from those default events
on the financial instrument that are possible within 12 months after the reporting date); or
b. Full time expected credit losses (expected credit losses that result from all possible default events
over the life of the financial instrument).
The Company follows simplified approach for recognition of impairment loss allowance on trade
receivables,under the simplified approach; the Company uses a provision matrix to determine impairment
loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically
observed default rates over the expected life of the trade receivable which is adjusted for management's
estimates. At every reporting date, the historical observed default rates are updated and changes in the
forward-looking estimates are analysed.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through
statement of profit and 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 case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Company's financial liabilities include trade and other payables and short term borrowings.
Subsequent measurement
a. Financial liabilities measured at amortised cost;
b. Financial liabilities subsequently measured at fair value through statement of profit and 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 are classified as held for trading if they are incurred for the purpose of repurchasing in the near
term. Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
Financial liabilities designated upon initial recognition at fair value through statement of profit and loss
are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied.
Trade and other payables
These amounts represent liability for goods and services provided to the Company prior to the end of
financial year which are unpaid. Trade and other payables are presented as current liabilities unless
payment is not due within 12 months after the reporting period. They are recognised initially at fair value
and subsequently measured at amortised cost using the effective interest method.
Fair Value
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:
(i) In the principal market for the asset or liability, or
(ii) In the absence of a principal market, in the most advantageous market for the asset or liability
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 best economic
interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and
minimizing 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.
1.6. Inventories
Raw materials, finished goods, stock-in-trade, and stores and spares are carried at the lower of cost and
net realizable value after providing for obsolescence, if any. The comparison of cost and net realizable
value is made on an item-by item basis.
In determining the cost of raw materials, stock-in-trade, stores and spares, First-in-First-Out (FIFO)
method is used. Cost of inventory comprises all costs of purchase, duties, taxes (other than those
subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to
their present location and condition.
Cost of finished goods includes the cost of raw materials, an appropriate share of fixed and variable
production overheads and other costs incurred in bringing the inventories to their present location and
condition.
1.7. Revenue Recognition
(i) Revenue from Contracts with Customers
Revenue from contracts with customers is recognized on transfer of control of promised goods
or services to a customer atan amount that reflects the consideration to which the Company is
expected to be entitled to in exchange for those goodsor services.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction
price (net of variableconsideration) allocated to that performance obligation. The transaction
price of goods sold and services rendered is netof 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 whenuncertainty 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. Theperformance obligation in case of sale of product is satisfied at a point in time
i.e., when the material is shipped to thecustomer or on delivery to the customer, as may be specified
in the contract.
Revenue from services:
Revenue from services is recognized over time by measuring progress towards satisfaction of
performance obligation for theservices rendered.
(ii) Other Income
Interest and dividends:
Interest income is recognized using effective interest method. Dividend income is recognized
when the right to receive dividend is established.
Other Operating Revenue -Export Incentive:
Export Incentives are recognized as income when right to receive credit as per the terms of the
scheme is established in respect of the exports made and when there is no significant uncertainty
regarding the ultimate collection of the relevant export proceeds.
1.8. Borrowing Costs
Interest and other borrowing costs attributable to qualifying assets are capitalised. Other interest and
borrowing costs are charged to Statement of Profit and Loss.
1.9. Earnings per Share
Basic earnings per share
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the
Company by the weighted average number of Equity Shares outstanding during the year.
Diluted earnings per share
Diluted earnings per share is calculated by dividing the profit for the year attributable to the equity
holders of the Company by weighted average number of Equity shares outstanding during the year plus
the weighted average number of equity shares that would be issued on conversion of all the dilutive
potential Equity shares in to Equity shares.
1.10. Foreign Currency Translation
Functional and presentation currency
The financial statements are presented in Indian rupee (INR), which is Company's functional and
presentation currency.
Initial Recognition:
On initial recognition, transactions in foreign currencies entered into by the Company are recorded in the
functional currency (i.e. Indian Rupees), by applying to the foreign currency amount, the spot exchange
rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange
transactions settled during the year are recognized in the Statement of Profit and Loss.
Transactions and balances:
Transactions in foreign currencies are recognised at the prevailing exchange rates on the transaction
dates. Realised gains and losses on settlement of foreign currency transactions are recognised in the
Statement of Profit and Loss.
Monetary foreign currency assets and liabilities at the year-end are translated at the year-end exchange
rates and the resultant exchange differences are recognised in the Statement of Profit and Loss.
Non-monetary items that are measured interms of historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial transactions.Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date whenthe fair value is
determined.
1.11. Income Taxes
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 tax is the amount of income taxes payable in respect of taxable profit for a period. 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 under the Income Tax Act, 1961.
Current tax is measured using tax rates that have been enacted by the end of reporting period for the
amounts expected to be recovered from or paid to the taxation authorities.
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 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 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.
Minimum Alternate Tax credit is recognised as deferred tax asset only when and to the extent there is
convincing evidence that the Company will pay normal income tax during the specified period. Such
asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written
down to the extent there is no longer a convincing evidence to the effect that the Company will pay
normal income tax during the specified period.
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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