3. Material Accounting Policies
3.1. Presentation and disclosure of standalone financial statement
All assets and liabilities have been classified as current and non-current as per Company's normal
operating cycle and other criteria set out in the division II of Schedule III of the Companies Act, 2013 for a
company whose financial statements are made in compliance with the Companies (India Accounting
Standards) Rules, 2015.
Based on the nature of products / services and time between acquisition of assets for processing /
rendering of services and their realization in cash and cash equivalents, operating cycle is less than 12
months, however for the purpose of current/ non- current classification of assets and liabilities, period of
12 months have been considered as its normal operating cycle.
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 realized or intended to be sold or consumed in normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realized within twelve months after the reporting period, or
• Cash or cash equivalents 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.
3.2. Property, Plant and Equipment and Depreciation
Recognition and measurement
Properties, plant and equipment are stated at their cost of acquisition. Cost of an item of property, plant
and equipment includes purchase price including non-refundable taxes and duties, borrowing cost
directly attributable to the qualifying asset, any costs directly attributable to bringing the asset to the
location and condition necessary for its intended use and the present value of the expected cost for the
dismantling/decommissioning of the asset.
Parts (major components) of an item of property, plant and equipment having different useful lives are
accounted as separate items of property, plant and equipment.
Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Company. All other repair and maintenance costs are recognized in statement of profit and loss as
incurred.
Capital work-in-progress comprises of cost incurred on property, plant and equipment under
construction / acquisition that are not yet ready for their intended use at the Balance Sheet Date.
Depreciation and useful lives
Depreciation on the property, plant and equipment (other than freehold land and capital work in
progress) is provided on a straight-line method (SLM) over their useful lives which is in consonance of
useful life mentioned in Schedule II to the Companies Act, 2013, except for the plant and machinery as
per the table given below, for which on the basis of internal technical assessment made by the
management, the depreciation has been provided considering the useful life of the plant.
The assets which have useful life different than as prescribed under Part C of Schedule II of the
Companies Act, 2013 are as follows:
Building on leasehold lands and improvements to building on leasehold land / premises are amortized
over the period of lease or useful life whichever is lower.
Depreciation methods, useful lives and residual values are reviewed at each financial year end and
adjusted prospectively.
Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance
Sheet date is classified as capital advances under ''Other non-current assets''. Cost of assets under
construction / acquisition / not put to use at the Balance sheet date are disclosed under ''Capital work-in¬
progress''
De-recognition
An item of property, plant and equipment and any significant part initially recognized is de-recognized
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 statement of profit and loss when the
asset is de-recognized.
3.3. Intangible assets and amortization
Recognition and measurement
Intangible assets are recognized only if it is probable that the future economic benefits attributable to
asset will flow to the Company and the cost of asset can be measured reliably. Intangible assets are
stated at cost of acquisition/development less accumulated amortization and accumulated impairment
loss if any.
Cost of an intangible asset includes purchase price including non - refundable taxes and duties,
borrowing cost directly attributable to the qualifying asset and any directly attributable expenditure on
making the asset ready for its intended use.
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from
use or disposal. Gains or losses arising from derecognition of an intangible asset are recognized in the
statement of profit and loss when the asset is derecognized.
Intangible assets under development comprises of cost incurred on intangible assets under
development that are not yet ready for their intended use as at the Balance Sheet date.
In case of assets purchased during the year, amortization on such assets is calculated on pro-rata basis
from the date of such addition
3.4. Research and development costs
Research costs are expensed as incurred. Development expenditures are recognized 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 its ability and intention to use or sell the asset
• How the asset will generate future economic benefits
• The availability of resources to complete the asset
The availability of adequate technical, financial and other resources to complete the development
and to use or sell the intangible asset.
• The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less
any accumulated amortization and accumulated impairment losses. Amortization of the asset begins
when development is complete and the asset is available for use. It is amortized over the period of
expected future benefit. Amortization expense is recognized in the statement of profit and loss unless
such expenditure forms part of carrying value of another asset.
3.5. Inventories
Inventories consists of raw materials, consumables, dies, work-in-progress and scrap. Raw materials
and components, packing materials, consumables, stores and spares are valued at lower of cost and
net realizable value. However, materials and other items held for use in the production of inventories are
not written down below cost if the finished products in which they will be incorporated are expected to be
sold at or above cost. The Cost comprises of costs of purchase, duties and taxes (other than those
subsequently recoverable) and other costs incurred in bringing them to their present location and
condition. Cost for raw material is determined on specific identification basis and other materials &
consumables on weighted average method.
Work-in-progress & finished goods is valued at lower of cost and net realizable value. Cost includes
direct materials valued on weighted average basis and costs of conversion which include costs directly
related to the units of production and systematic allocation of fixed and variable production overheads.
Net realizable value is the estimated selling price in the ordinary course of business less estimated costs
of completion and estimated costs necessary to make the sale.
Dies are valued at cost or net realizable value whichever is less. Cost includes material cost and labour
cost. Costs are determined on specific identification basis.
Scrap is valued at net realizable value.
3.6. Revenue recognition
The policy for Revenue as presented in the Company's financial statements are as under:
o The Company recognizes revenue when the amount can be reliably measured, to the extent it is
probable that future economic benefits will flow to the entity and specific criteria have been met for
each of the Company's activities as described below
o Sale of goods is recognized upon transfer of control of promised products to customers in an
amount that reflects the consideration which the Company expects to receive in exchange for
those products. Revenue is measured at the transaction price allocated to that performance
obligation, net of Goods and Service Tax (GST), returns and allowances, trade, volume & other
discounts.
o Accumulated experience is used to estimate and provide for turnover discounts, expected cash
discounts, other eligible discounts, expected returns and incentives. No element of financing is
deemed present as the sales are made with normal credit terms.
o Revenue from export sales are recognized upon transfer of control of promised products to
customers usually on the basis of dates of shipping bills or bill of lading depending on the shipment
terms.
o Sale of services is recognized upon rendering of services and revenue from fixed price, fixed time
frame contracts, where the performance obligations are satisfied over time and where there is no
uncertainty as to measurement or collectability of consideration, is recognized over the period of
contract on pro-rata basis.
o Revenue from sales of electricity is recognized when all the significant risks and rewards of
ownership have been passed to the buyer, usually on transmission of electricity based on the data
provided by the electricity department.
o Export incentives / benefits are recognized as income in Statement of Profit and Loss on export of
goods based on fulfilling specified criteria's and also reasonable certainty of utilizing the benefit by
import of goods/sale of license in open market.
o Revenues from die design and preparation charges are recognized as per the terms of the contract
as and when services are rendered.
• Other income
o Income from guarantee commission is recognized as a percentage of guarantee given on
annual basis.
o Dividend income is recognized when the Company's right to receive the payment is
established, which is generally when shareholders/board of directors approve the dividend as
applicable.
o Interest income is recognized on time proportion basis taking into account the amount
outstanding and rate applicable.
3.7. Investment in subsidiaries
The Company's investment in instruments of subsidiaries are accounted for at cost less accumulated
impairment. Where an indication of impairment exists, the carrying amount of the investment is
assessed. Where the carrying amount of an investment is greater than its estimated recoverable
amount, it is written down immediately to its recoverable amount and the difference is transferred to the
statement of profit and loss. On disposal of investment, the difference between the net disposal
proceeds and the carrying amount is charged or credited to the statement of profit and loss.
3.8. Government grants
Government grants are recognized in the period to which they relate when there is reasonable
assurance that the grant will be received and that the Company will comply with the attached conditions.
When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the
statement of profit and loss over the periods necessary to match them with the related costs, which they
are intended to compensate. In case of Exports Promotion Capital Goods (EPCG) scheme, government
grants is recognised in the statement of profit and loss over the period of fulfilment of export obligation.
Where the grant relates to an asset, it is deducted from the cost of the asset and the net amount of the
asset is capitalized.
3.9. Foreign currency transaction
Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the
date of the transaction. As at the Balance Sheet date, foreign currency monetary items are translated at
closing exchange rate. Exchange difference arising on settlement or translation of foreign currency
monetary items are recognized as income or expense in the year in which they arise.
Foreign currency non-monetary items which are carried at historical cost are reported using the
exchange rate at the date of transactions. Foreign currency non-monetary items which are measured at
fair value are reported using the exchange rate at the date when the fair value is determined. Exchange
difference arising on fair valuation of non-monetary items is recognized in line with the gain of item that
give rise to such exchange difference (i.e. translation differences on items whose gain or loss is
recognized in statement of profit and loss or other comprehensive income is also recognized in
statement of profit or loss or other comprehensive income respectively).
3.10. Employee benefits
• Short term employee benefits
All employee benefits falling due wholly within twelve months of rendering the service are classified
as short-term employee benefits and they are recognized as an expense at the undiscounted
amount in the Statement of Profit and Loss in the period in which the employee renders the related
service.
• Post-employment benefits & other long-term benefits
a. Defined contribution plan
The defined contribution plan is a post-employment benefit plan under which the Company
contributes fixed contribution to a Government Administered Fund and will have no obligation
to pay further contribution. The Company's defined contribution plan comprises of Provident
Fund, Labour Welfare Fund and Employee State Insurance Scheme. The Company's
contribution to defined contribution plans are recognized in the Statement of Profit and Loss in
the period in which the employee renders the related service.
b. Post-employment benefit and other long-term benefits
The Company has defined benefit plans comprising of gratuity and other long-term benefits in
the form of leave benefits and long service rewards. Company's obligation towards gratuity
liability is funded plan and is managed by Life Insurance Corporation of India (LIC). The
present value of the defined benefit obligations and certain other long-term employee benefits
[privilege leave and sick leave] is determined based on actuarial valuation using the projected
unit credit method. The rate used to discount defined benefit obligation is determined by
reference to market yields at the Balance Sheet date on Indian Government Bonds for the
estimated term of obligations. Provision for casual leave is made on arithmetic basis.
For gratuity plan, re-measurements comprising of (a) actuarial gains and losses, (b) the effect
of the asset ceiling (excluding amounts included in net interest on the net defined benefit
liability) and (c) the return on plan assets (excluding amounts included in net interest on the
post-employment benefits liability) are recognized immediately in the balance sheet with a
corresponding debit or credit to retained earnings through other comprehensive income in the
period in which they occur. Such re-measurements are not reclassified to statement of profit
and loss in subsequent periods.
The expected return on plan assets is the Company's expectation of average long-term rate of
return on the investment of the fund over the entire life of the related obligation. Plan assets
are measured at fair value as at the Balance Sheet date.
The interest cost on defined benefit obligation and expected return on plan assets is
recognized under finance cost.
Gains or losses on the curtailment or settlement of defined benefit plan are recognized when
the curtailment or settlement occurs.
Actuarial gains or losses arising on account of experience adjustment and the effect of
changes in actuarial assumptions for other employee benefit plan [other than gratuity] are
recognized immediately in the Statement of Profit and Loss as income or expense.
3.11. Operating Segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker (CODM). Operating Segments are defined as components of an enterprise for
which discrete financial information is available that is evaluated regularly by the CODM, in deciding how
to allocate resources and assessing performance.
3.12. Borrowing cost
Borrowing costs (net of interest income on temporary investments) that are directly attributable to the
acquisition, construction or production of a qualifying asset are capitalized as part of the cost of the
respective asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset
which necessarily takes a substantial period of time to get ready for its intended use or sale. Ancillary
cost of borrowings in respect of loans not disbursed are carried forward and accounted as borrowing cost
in the year of disbursement of loan. All other borrowing costs are expensed in the period in which they
occur. Borrowing costs consist of interest expenses calculated as per effective interest method,
exchange difference arising from foreign currency borrowings to the extent they are treated as an
adjustment to the borrowing cost and other costs that an entity incurs in connection with the borrowing of
funds.
3.13. Taxes on income
Tax expenses for the year comprises of current tax, deferred tax charge or credit and adjustments of
taxes for earlier years. In respect of amounts adjusted outside profit or loss (i.e. in other comprehensive
income or equity), the corresponding tax effect, if any, is also adjusted outside profit or loss.
Provision for current tax is made as per the provisions of Income Tax Act, 1961.
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 liabilities are recognized for all taxable temporary differences, and deferred tax assets are
recognized for all deductible temporary differences, carry forward tax losses and allowances to the
extent that it is probable that future taxable profits will be available against which those deductible
temporary differences, carry forward tax losses and allowances can be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realized 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 assets and deferred tax liabilities
are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and
the deferred taxes relate to the same taxation authority.
Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be
available against which such deferred tax assets can be utilized. In situations where the Company has
unused tax losses and unused tax credits, deferred tax assets are recognized only if it is probable that
they can be utilized against future taxable profits. Deferred tax assets are reviewed for the
appropriateness of their respective carrying amounts at each Balance Sheet date.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes
previously unrecognized deferred tax assets to the extent that it has become probable that future
taxable profit allow deferred tax assets to be recovered.
The Company has adopted the amendments with respect to Deferred Tax related to Assets and
Liabilities arising from a Single Transaction (Amendments to Ind AS 12) from 1st April 2023. The
amendments narrow the scope of the initial recognition exemption to exclude transactions that give rise
to equal and offsetting differences - e.g., leases and decommissioning liabilities. For leases and
decommissioning liabilities, an entity is required to recognise the associated deferred tax assets and
liabilities from the beginning of the earliest comparative period presented, with any cumulative effect
recognised as an adjustment to retained earnings or other components of equity at that date. For all
other transactions, an entity applies the amendments to transactions that occur on or after the beginning
of the earliest period presented.
3.14. Cash and cash equivalent
Cash and cash equivalents include cash in hand, bank balances, deposits with banks (other than on lien)
and all short term and highly liquid investments that are readily convertible into known amounts of cash
and are subject to an insignificant risk of changes in value.
For the purpose of cash flow statement, cash and cash equivalent as calculated above also includes
outstanding bank overdrafts as they are considered an integral part of the Company's cash
management.
3.15. Cash flow statement
Cash flows are reported using the indirect method, where by net profit before tax is adjusted for the
effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with investing or financing cash flows.
The cash flows from operating, investing and financing activities are segregated.
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