1.2 MATERIAL ACCOUNTING POLICIES1.2.1 STATEMENT OF COMPLIANCE
The standalone financial statements of the Company have
been prepared in accordance with Indian Accounting
standards (Ind AS) prescribed under Section 133 of
the Companies Act, 2013 read with Companies (Indian
Accounting Standards) Rules, as amended from time to time
and other relevant provisions of the Act.
Company's standalone financial statements are presented in
Indian Rupees (?) which is also its functional currency, and
all values are rounded to the nearest lakhs (? 00000) except
when otherwise indicated.
The standalone financial statement of the Company for
the year ended 31st March 2026 were approved for issue in
accordance with the resolution of the Board of Directors on
14th May 2026.
1.2.2 PREPARATION OF STANDALONE FINANCIAL
STATEMENTS(a) Basis of Accounting
The standalone financial statements have been
prepared on an accrual basis and in accordance with
the historical cost basis except for certain financial
instruments measured at fair value at the end of
each reporting period as explained in the accounting
policies below.
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
standalone financial statements is determined on
such basis except for measurements that have some
similarities to fair value but are not fair value such as net
realisable value in Ind AS 2.
(b) Significant accounting judgments estimates and
assumptions
The preparation of the Company's standalone financial
statements in conformity with Ind AS requires the
management to make judgments estimates and
assumptions that affect the reported amounts of
revenues expenses assets and liabilities and the
accompanying disclosures and the disclosure of
contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes
that require a material adjustment to the carrying
amount of assets or liabilities affected in future periods.
The management believes that the estimates used
in preparation of standalone financial statements are
prudent and reasonable.
Estimates and underlying assumptions are reviewed at
each reporting date. Revisions to accounting estimates
are recognised in the period in which the estimate is
revised and future period is effected.
(c) Current/ Non-Current Classification
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
(i) Expected to be realised or intended to be sold or
consumed in normal operating cycle
(ii) Held primarily for the purpose of trading
(iii) Expected to be realised within twelve months
after the reporting period or
(iv) 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
(i) I t is expected to be settled in normal operating
cycle
(ii) It is held primarily for the purpose of trading
(iii) I t is due to be settled within twelve months after
the reporting period or
(iv) it does not have the right at the end of the
reporting period to defer settlement of the
liability for at least twelve months after the
reporting period.
The Company classifies all other liabilities as non¬
current.
1.2.3A. PROPERTY PLANT AND EQUIPMENT
Freehold land is measured at cost and not depreciated.
All other items of property plant and equipment
(includes Tools and Dies) are stated at cost less
accumulated depreciation and impairment loss if any.
Cost includes cost of acquisition installation or
construction other direct expenses incurred to bring
the assets to its working condition net of discounts
and rebate and finance costs incurred up to the date
the asset is ready for its intended use and excludes GST
eligible for credit / setoff.
Such cost includes the cost of replacing part of the plant
and equipment costs of dismantling and removing the
item and restoring the site on which it is located and
borrowing costs for long-term construction projects if
the recognition criteria are met. When significant parts
of plant and equipment are required to be replaced at
intervals the same were depreciated separately based
on their specific useful lives.
The Company does not recognise in the carrying
amount of an item of property, plant & equipment
the cost of day-to-day servicing of the item. Rather
these costs are recognised in Profit & Loss as incurred.
Costs of day-to-day servicing are primarily the costs of
labour and consumables and may include the cost of
small parts. The purpose of these expenditures is often
described as for the 'repairs and maintenance' of the
item of property, plant and equipment.
The Company records a provision for dismantling cost
towards Plant and Machinery wherever applicable.
Dismantling costs are provided at the present value
of future expenditure using the current pre-tax rate
expected to be incurred to fulfil dismantling obligation
and are recognised as part of the cost of the underlined
asset. Any change in the present value of expenditure
other than unwinding of discount on the provision
is reflected as adjustment to the provision and the
corresponding asset. The change in the provision due
to the unwinding of discount is recognised in the
statement of profit and loss.
Capital work-in-progress in respect of assets which
are not ready for their intended use are carried at cost
comprising of direct costs related incidental expenses
and attributable interest.
All identifiable Revenue expenses including interest
incurred in respect of various projects / expansion net
of income earned during the project development
stage prior to its intended use are considered as pre -
operative expenses and disclosed under Capital Work-
in-Progress.
Depreciation is not recorded on capital work-in¬
progress until construction and installation is complete
and the asset is ready for its intended use (available for
use).
Advances paid towards the acquisition of fixed assets
outstanding at each balance sheet date are disclosed
as "Capital Advances" under other non-current assets.
Property plant and equipment are eliminated from
standalone financial statements either on disposal or
when retired from active use. Losses arising in the case
of the retirement of property plant and equipment and
gains or losses arising from disposal of property plant
and equipment are recognised in the statement of
profit and loss in the year of occurrence.
Depreciable amount for assets is the cost of an asset
or other amount substituted for cost less its estimated
residual value. Property, plant and equipment is
provided on straight-line method over the useful life of
the assets as specified in Schedule II to the Companies
Act, 2013. Building constructed on leasehold land
is depreciated based on the useful life specified in
Schedule II to the Companies Act, 2013 where the lease
period of the land is beyond the life of the building.
Any Capital Expenditure costing ' 5,000 or less are
treated as a Revenue Expenditure and recognised in
the statement of profit and loss in the year in which it is
incurred.
B. INTANGIBLE ASSETS
I ntangible assets are recognised when it is probable
that the future economic benefits that are attributable
to the assets will flow to the Company and the cost of
the assets can be measured reliably.
I ntangible assets are stated at cost or acquisition less
accumulated amortisation and impairment loss if any.
I ntangible assets including software is amortised over
their estimated useful life on straight line basis from
the date they are available for intended use subject to
impairment test.
The estimated useful life and the amortisation period
of the intangible assets are reviewed at the end of each
financial year and the amortisation period is revised to
reflect the changed pattern if any.
Development expenditures on an individual product/
project are recognised as an intangible asset when the
Company can demonstrate the technical feasibility of
completing the intangible asset so that the asset will
be available for use or sale its intention to complete
and use or sell the asset its ability to use or sell the asset
how the asset will generate future economic benefits
the availability of resources to complete the asset and
the availability to measure reliably the expenditure
during development.
Product development cost is amortised on a straight¬
line basis over a period of 60 months.
Subsequent cost
Subsequent costs incurred for replacement of a
major component of an asset are included in the
asset's carrying cost or recognised as a separate asset
as appropriate. The carrying values of the replaced
components are recognised to statement of Profit and
Loss when replaced.
De-recognition
An item of property plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss
arising on de-recognition of the asset (calculated as the
difference between the net disposal proceeds and the
carrying amount of the asset) is included in the income
statement when the asset is derecognised.
Gains or losses arising from de-recognition of an
intangible assets 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 derecognised.
1.2.4IMPAIRMENT OF NON-FINANCIAL ASSETS
An asset is treated as impaired when the carrying cost of
asset exceeds its recoverable value. An impairment loss is
charged to the Statement of Profit and Loss in the year in
which an asset is identified as impaired. The impairment loss
recognised in prior accounting period is reversed if there has
been a change in the estimate of recoverable amount.
Assessment of impairment is done at each Balance Sheet
date as to whether there is any indication that an asset
(tangible and intangible) may be impaired. For assessing
impairment, the smallest identifiable group of assets that
generates cash inflows from continuing use that are largely
independent of the cash inflows from other assets or groups
of assets is considered as a cash generating unit. If any such
indication exists an estimate of the recoverable amount of
the individual asset/cash generating unit is made.
An impairment loss is reversed in the statement of profit
and loss if there has been a change in the estimates
used to determine the recoverable amount. The carrying
amount of the asset is increased to its revised recoverable
amount provided that this amount does not exceed the
carrying amount that would have been determined (net
of any accumulated amortisation or depreciation) had no
impairment loss been recognised for the asset in prior years.
1.2.5REVENUE RECOGNITION
Revenue from contracts with customers is recognised when
control of the goods or services is transferred to the customer
at an amount that reflects the consideration entitled in
exchange for those goods or services.
The control is transferred upon shipment of goods to the
customer or when the goods are made available to the
customer, provided transfer of title to the customer occurs
and the Company has not retained any significant risks of
ownership or future obligations with respect to the goods
shipped.
Revenue from rendering services is recognised over time
by measuring progress towards complete satisfaction of
performance obligations in the reporting period. While in
case of Job work services, the same is recognised after the
completion of service.
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 offered by the Company as part of the contract.
Variable considerations are determined based on the most
likely amount. Consideration is due upon satisfaction of
performance obligations and a receivable is recognised
when it becomes unconditional.
Payment terms agreed with a customer are as per business
practice and there is no financing component involved in
the transaction price.
(a) Interest income
Interest Income from financial asset is recognised
when it is probable that the economic benefits 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 applicable which is the rate
that exactly discounts estimated future cash receipts
through the expected life of the financial asset to the
asset's net carrying amount on initial recognition.
(b) Dividend income
Dividend income is recognised when the Company's
right to receive the payment is established, which is
generally when shareholders approve the dividend.
(c) Other income
Revenue in respect of other incomes is recognised
when a reasonable certainty as to its realisation exists.
Income from export incentives under Foreign Trade
Policy relating to Rod Tep, duty drawback premium
on sale of import licenses and lease license fee are
recognised as income when the right to receive credit
as per the terms of the Scheme is established in respect
of the exports made and where there is no significant
uncertainty regarding the ultimate collection of the
relevant export proceeds.
1.2.6INVESTMENTS
The Company has accounted for its investment in subsidiaries
at cost less impairment loss (if any).
All other equity investments are measured at fair value, with
value changes recognised in the Statement of Profit and Loss,
except for those equity investments for which the Company
has elected to present the change in 'Other Comprehensive
Income'.
Investments are classified into current and non-current
investments. Investments that are readily realisable and
intended to be held for not more than a year from the
date of acquisition are classified as current investments. All
other investments are classified as non-current investments.
However, that part of long term investments which are
expected to be realised within twelve months from Balance
Sheet date is also presented under "Current Investment"
under "Current portion of long term investments" in
consonance with the current / non-current classification of
Schedule III of the Act.
1.2.7 INVENTORIES
(a) Inventories include raw material, work in progress,
finished goods, scrap and stores, spares and
consumables. Work in progress, finished goods and
scrap are carried at the weighted average cost or net
realisable value whichever is lower.
(b) Raw materials including materials in transit, stores and
spares, consumables and additives are valued at lower
of cost or net realisable value. However, these items are
realisable at cost if the finished products in which they
will be used, are expected to be sold at or above cost.
The cost is computed on weighted average basis and
the same is charged off to revenue on its issue.
(c) The cost of inventories is computed to include cost of
purchases net of discount and rebates and includes,
cost of conversion standard overheads and other
related cost incurred in bringing the inventories to
their present condition excludes GST eligible for credit
/ setoff.
(d) Net realisable value is the estimated selling price in the
ordinary course of business less the estimated cost of
completion and the estimated costs necessary to make
the sale.
1.2.8 CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the balance sheet comprise
cash at Banks and on hand and short-term deposits with an
original maturity of three months or less, which are subject
to an insignificant risk of changes in value.
For the statement of cash flows, cash and cash equivalents
consist of cash and short-term deposits, as defined above.
1.2.9 FOREIGN CURRENCY TRANSACTIONS AND BALANCES
Items included in the standalone financial statements are
measured using the currency of the primary economic
environment in which the Company operates (functional
currency'). The standalone financial statements are presented
in Indian Rupee (?) which is the Company's functional and
presentation currency.
Foreign exchange differences arising on foreign currency
borrowings is disclosed under finance cost other than
on 'Borrowing costs' in accordance with Ind AS 23 which
is directly attributable to the acquisition construction or
production of a qualifying asset forming part of the cost of
the asset.
Net gain or loss on foreign currency translations on trade
receivables and trade payables is classified under other
income or other expenses.
(a) Initial Recognition
Foreign currency transactions are translated into the
functional currency using the exchange rates at the
date of the transaction. Exchange differences arising
on foreign currency transactions settled during the
year are recognised in the Statement of Profit and Loss.
(b) Measurement of foreign currency items at the
Balance Sheet date
Monetary assets and liabilities denominated in foreign
currencies as at the balance sheet date not covered
by forward exchange contracts are translated at year
end rates. The resultant exchange differences are
recognised in the Statement of Profit and Loss. Non¬
Monetary assets are recorded at the rates prevailing on
the date of the transaction.
1.2.10EMPLOYEE BENEFITSShort-term employee benefits
All employee benefits payable wholly within twelve months
after the end of the annual reporting period in which the
employees render the related services, are classified as short¬
term employee benefits. Benefits such as salaries, wages,
short-term compensated absences, performance incentives
etc., and the expected cost of bonus, ex-gratia are recognised
during the period in which the employee renders related
service.
Post-employment benefits
Defined Contribution Plan
Payments to defined contribution retirement benefit
plans are recognised as an expense when employees have
rendered the service entitling them to the contributions.
Contribution as per Employee's Provident Funds and
Miscellaneous Provisions Act, 1952 towards Provident Fund
and Family Pension Fund are provided for and payments
in respect thereof are made to the relevant authorities on
actual basis.
Short term employee benefits are recognised on an
undiscounted basis whereas long term employee benefits
are recognised on a discounted basis.
Defined Benefit Plan
The cost of providing benefits under the defined benefit
plan is determined using the projected unit credit method
with the actuarial valuations being carried out at the end of
each annual reporting period.
Gratuity: In accordance with applicable Indian Laws the
Company provides gratuity, a defined benefit retirement plan
(the Gratuity Plan) covering eligible employees. The gratuity
plan provides a lump sum payment to vested employees at
retirement or termination of employment an amount based
on the respective employees' last drawn salary and the
years of employment with the Company. Liability regarding
Gratuity Plan is accrued based on actuarial valuation at the
Balance Sheet date.
Remeasurements comprising of actuarial gains and losses
the effect of the asset ceiling excluding amounts included in
net interest on the net defined benefit liability and the return
on plan assets (excluding amounts included in net interest on
the net defined benefit liability) are recognised immediately
in the balance sheet with a corresponding debit or credit to
retained earnings through Other Comprehensive Income
(OCI) in the period in which they occur. Remeasurements are
not reclassified to profit or loss in subsequent periods.
Leave Encashment: In accordance with applicable Indian
Laws the Company provides Encashment of Leave a
defined benefit plan (Leave Encashment Plan) covering all
employees. Liability with regard to Leave Encashment Plan
is accrued based on actuarial valuation at the Balance Sheet
date.
Past service costs are recognised in profit or loss on the
earlier of
(i) The date of the plan amendment or curtailment and
(ii) The date that the Company recognises related
restructuring costs
Net interest is calculated by applying the discount rate
to the net defined benefit liability or asset. The Company
recognises the following changes in the net defined benefit
obligation as an expense in the statement of profit and loss
(i) Service costs comprising current service costs past-
service costs gains and losses on curtailments and non¬
routine Settlements; and
(ii) Net interest expense or income
Termination Benefits
When the employee early retirement/termination/
resignation/withdrawal the normal retirement benefit will
be paid based on the service up to the date of exit.
Employee Share based payments
The Company operates equity settled share-based plan for
the employees (Referred to as Employee Stock Option Plan
(ESOP)). ESOP granted to the employees are measured at fair
value of the stock options at the grant date. Such fair value
of the equity settled share-based payments is expensed on
a straight-line basis over the vesting period, based on the
Company's estimate of equity shares that will eventually
vest, with a corresponding increase in equity (Share based
payment reserve). At the end of each reporting period, the
Company revises its estimate of the number of equity shares
expected to vest. The impact of the revision of the original
estimates, if any, is recognised in the Statement of Profit
and Loss such that cumulative expense reflects the revision
estimate, with a corresponding adjustment to the Share
option outstanding reserve.
The Company grants stock options to the employees of its
subsidiaries. The cost of such options, as determined based
on the fair value on the grant date, is accounted for as an
employee benefit expense in the books of the Company.
Since the Company does not recover this cost from its
subsidiaries, the corresponding amount is treated as a
deemed investment in the respective subsidiaries.
Treasury Shares
The Company has established the Pitti Engineering Limited
Employee Welfare Trust for administering its Employee
Stock Option Scheme and provided a loan to the Trust for
acquiring the Company's shares from the secondary market,
of which shares were purchased during the year. As the Trust
is considered an extension of the Company, all transactions
between the Company and the Trust including the loan
and the investment in shares have been eliminated in the
standalone financial statements, and the shares held by the
Trust have been treated as treasury shares. These shares are
recognised at cost and is disclosed separately as reduction
from Other Equity as Treasury Shares. No gain or loss is
recognised in the Statement of Profit and Loss on purchase,
sale, issuance, or cancellation of Treasury Shares.
1.2.11BUSINESS COMBINATION
Business combinations involving entities or businesses
under common control are accounted for using the pooling
of interest method. Under pooling of interest method, the
assets and liabilities of the combining entities or businesses
are reflected at their carrying amounts after adjusting
necessary to harmonise the accounting policies. The
financial information in the financial statements in respect of
prior periods is restated as if the business combination had
occurred from the beginning of the preceding period in the
financial statements, irrespective of the actual date of the
combination. The identity of the reserves is preserved in the
same form in which they appear in the financial statements
of the transferor and the difference, if any, between the
amount recorded as share capital issued plus any additional
consideration in the form of cash or other assets and the
amount of share capital of the transferor is transferred to
capital reserve.
1.2.12BORROWING COSTS
Borrowing costs which are directly attributable to the
acquisition/construction or production of a qualifying asset
which are the assets that necessarily takes substantial period
to get ready for intended use or sale till the time such assets
are ready for intended use are capitalised as part of the costs
of such assets. Other Borrowing costs are recognised as
expenses in the year in which they are incurred.
Borrowing cost includes interest amortisation of ancillary
costs incurred in connection with the arrangement of
borrowings and exchange differences arising from foreign
currency borrowings to the extent they are regarded as an
adjustment to the interest cost if any.
1.2.13LEASESThe Company as a lessee
As per Ind AS-116 the Company has recognised lease
liabilities and corresponding equivalent right-of-use assets.
The Company's lease asset primarily consist of leases for land,
buildings, plant & machinery and vehicles. The Company
assesses whether a contract contains a lease at inception of
a contract. A contract is or contains a lease if the 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
(i) The contract involves the use of an identified asset.
(ii) The Company has substantially all the economic
benefits from use of the asset through the period of
the lease and
(iii) The Company has the right to direct the use of the
asset
At the date of commencement of the lease the Company
recognises a Right-of-Use (ROU) asset and a corresponding
lease liability for all lease arrangements in which it is a lessee
except for leases with a term of 12 months or less (short-term
leases) and low value leases. For these short-term and low-
value leases the Company recognises the lease payments on
straight line basis as an operating expense in profit and loss
account.
Certain lease arrangements include the options to extend
or terminate the lease before the end of the lease term.
ROU assets and lease liabilities includes these options when
it is reasonably certain that they will be exercised.
The lease liability is initially measured at amortised cost at
the present value of the future lease payments. The lease
payments are discounted using the interest rate implicit in
the lease or if not readily determinable using the incremental
borrowing rates in the country of domicile of these leases.
ROU assets are depreciated from the commencement
date on a straight-line basis over the shorter of the lease
term and useful life of the underlying asset. ROU assets are
evaluated for recoverability whenever events or changes in
circumstances indicate that their carrying amounts may not
be recoverable. For the purpose of impairment testing the
recoverable amount (i.e. the higher of the fair value less cost
to sell and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash flows
that are largely independent of those from other assets. In
such cases the recoverable amount is determined for the
Cash Generating Unit (CGU) to which the asset belongs.
Lease liability and ROU assets have been separately
presented in the Balance Sheet and lease payments have
been classified as financing cash flows.
1.2.14EARNINGS PER SHARE
The basic Earnings Per Share ('EPS') is computed by dividing
the net profit after tax for the period attributable to equity
shareholders (after deducting preference dividends and
attributable taxes) by the weighted average number of
equity shares outstanding during the year, adjusted with
treasury shares.
For calculating Diluted earnings Per Share the net profit after
tax for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the
year are adjusted for the effects of all dilutive potential equity
shares. The dilutive potential equity shares are deemed to be
converted as of the beginning of the year unless they have
been issued at a later date. After considering the number of
options as per Scheme, The effect is antidilution, hence there
is no change in diluted earning per share.
Potential equity shares are deemed to be dilutive only if their
conversion to equity shares decrease the net profit per share
from continuing ordinary operations. Potential dilutive equity
shares are deemed to be converted as at the beginning of
the period unless they have been issued at a later date. The
dilutive potential equity shares are adjusted for the proceeds
receivable had the shares been actually issued at fair value
(i.e. average market value of the outstanding shares). Dilutive
potential equity shares are determined independently for
each period presented. The number of equity shares and
potentially dilutive equity shares are adjusted for share splits
/ reverse share splits and bonus shares as appropriate.
1.2.15SEGMENT REPORTING
Operating segments are reported in a manner consistent
with the internal reporting provided to the Chief Operating
Decision Maker. The Founder & Chairman and Managing
Director & Chief Executive Officer have been identified as
the Chief Operating Decision Maker. Refer note 25.6 for the
segment information presented.
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