(2) Significant Accounting Policies
(i) Basis of Preparation of Financial Statements and use of estimates
(a) The financial statements of the Company have been prepared in accordance with Indian Accounting
Standards (Ind AS) as prescribed under Section 133 of the Act to be read with Rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment
Rules, 2016. The Company’s Financial Statements for the year ended 31st March, 2025 comprises of
the Balance Sheet, Statement of Profit and Loss (including Other Comprehensive Income), Cash Flow
Statement, Statement of Changes in Equity and the Notes to Financial Statements.
(b) Accounting policies have been consistently applied except where a newly issued accounting
standard is initially adopted or a revision to an existing accounting standard requires a change in the
accounting policy hitherto in use.
(c) The preparation of financial statements, in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent liabilities at the date of the financial statements and the
results of operations during the reporting period end. Although these estimates are based upon
management’s best knowledge of current events and actions, actual results could differ from these
estimates.
(ii) Revenue Recognition
a) The Company earns revenue primarily from Manufacture and Sale of goods & rendering services.
b) Revenue is recognized upon transfer of control of promised products or services to customers in an
amount that reflects the consideration which the Company expects to receive in exchange for those
products or services.
Revenue from the sale of goods is recognized at the point in time when
• Control is transferred to the customer.
• The company retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold.
• The amount of revenue can be measured reliably.
c) Revenue is measured based on the transaction price, which is the consideration, adjusted for price
concessions also excludes taxes collected from customers.
d) Use ofsignificant judgments in revenue recognition
The Company’s order from customers could include promises to transfer products and services to a
customer. The Company assesses the products / services promised in an order and identifies distinct
performance obligations in the contract. Identification of distinct performance obligation involves
judgement to determine the deliverables and the ability of the customer to benefit independently from
such deliverables.
The Company uses judgement to determine an appropriate standalone selling price for a performance
obligation. The Company allocates the transaction price to each performance obligation on the basis of
the relative standalone selling price of each distinct product or service promised in order.
e) Income from investments / other income is recognized on accrual basis.
(iii) Inventories are valued as under
a) Raw materials, Components, : At moving weighted average cost or
Stores & Spares, Loose Tools net realizable value whichever
is lower.
b) Finished Goods : At lower of cost or net realizable
value
c) Work-in-Progress : At lower ofestimated cost or
net realizable value
d) Goods in Transit and under clearance : At lower of actual cost till date
(inclusive of customs duty payable thereon)
or net realizable value
e) Stock of Scrap : At estimated net realizable value.
(iv) Employee Benefits
a) Short Term Employee Benefits
All employee benefits falling due wholly within twelve months of rendering service are classified as short
term benefits. The benefits like salaries, wages etc. and the expected cost of bonus, ex-gratia are
recognized in the period in which the employees have rendered the related service.
b) Employment Benefits
i. Defined Contribution Plan
Defined contribution plan consists of Government Provident Fund Scheme and Employee State
Insurance scheme. Company’s contribution paid/payable during the year under these schemes are
recognized as expense in the statement of Profit and Loss. There are no other obligations other than
the contribution made by the company.
ii. Defined Benefit Plan
The employees’ gratuity schemes and long term compensated absences are the defined benefit plans.
Company’s liabilities towards gratuity and leave encashment are determined using the projected unit
credit method which considers each period of service as giving rise to an additional unit of benefit
entitlement and measures each unit separately to build up the final obligation.
Actuarial gains and losses arise due to re-measurement as result of the actual experience and the
assumed parameters and changes in the assumptions used for valuation are recognized in the Other
Comprehensive Income (OCI). Obligation is measured at the present value of estimated future cash
flow using a discount rate that is determined by the reference to market yields at the Balance Sheet
date on Government bonds.
(v) Property, Plant and Equipment and Intangible assets
a) Property, Plant and Equipment
Property, Plant and Equipment (except free hold land) are stated at cost of acquisition or construction
including installation cost, attributable interest and financial cost till such time assets are ready for its
intended use and foreign exchange fluctuation on long term borrowings related to Property, Plant and
Equipment, less accumulated depreciation, impairment losses and specific grants received if any. Free
hold land is stated at revalued amount.
b) Intangibles assets:
Product Development Expenditure and License / Technical know-how fees:
Product Development expenditure of capital nature are added to Intangible assets. Expenditure on
license and technical know-how fees and other related expenditure towards technological improvement
of the products and/or components for captive use are treated as intangible assets. Expenditure of
these natures are initially recognized as Intangible Assets under development and eventually
transferred to Intangible assets block as appropriate on the commencement of the commercial
production afterthe viability of the product is proven.
(vi) Depreciation and amortization on Property, Plant & Equipment and Intangible assets
a) Depreciation on Property, Plant and Equipment except free hold land is provided on pro-rata basis
on straight line method over the useful lives of the assets prescribed in the Schedule II of the
Companies Act, 2013.
b) Depreciation on Property, Plant and Equipment sold or scrapped during the year is provided up to
the month in which such Property, Plant and Equipment are sold or scrapped. Depreciation on
additions to Property, Plant and Equipment is calculated on pro-rata basis from the month ofaddition.
c) Product Development expenditure and License/Technical know-how fees are amortized over a
period of 5 years from the accounting year in which the commercial production of such improved
product commences.
(vii) Investment Properties
Property that is held for long-term rental yields or for capital appreciation or both and that is not own
occupied by the company is classified as investment property. Investment property is measured initially
at its cost, including related transaction costs and where applicable borrowing costs. Subsequent
expenditure is capitalized to the asset’s carrying amount only when it is probable that future economic
benefits associated with the expenditure will flow to the company and the cost of the item can be
measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of
an investment property is replaced, the carrying amount of the replaced part is derecognized.
Investment properties are depreciated using the straight-line method over their estimated useful lives.
Though the company measures investment property using cost based measurement, the fair value of
investment property is disclosed in the notes.
(viii) Impairment of Assets:
In accordance with Indian Accounting Standard 36 (INDAS 36) on “Impairment of Assets”, where there
is an indication of impairment of the Company’s assets, the carrying amounts of the Company’s assets
are reviewed at each balance sheet date to determine whether there is any impairment based on
internal/external factors. An impairment loss, if any, is recognized in the Statement of Profit & Loss,
wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable
amount of the assets is estimated at the higher of its net selling price and its value in use. In assessing
the value in use, the estimated future cash flows are discounted to the present value at the weighted
average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the
assets over its remaining useful life. Previously recognized impairment loss is further provided or
reversed depending on changes in circumstances.
(ix) Non - current assets held for sale
Non - current assets are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met only
when the asset is available for immediate sale in its present condition subject only to terms that are
usual and customary for sales of such asset and its sale is highly probable.
Non - current assets classified as held for sale are measured at the lower of their carrying amount and
fair value less costs to sell.
Non - current assets held for sale are disclosed under "Other Assets"
(x) Foreign Currency Transactions
a) Foreign Currency transactions are recorded on the basis of exchange rates prevailing on the date of
their occurrence.
b) Foreign currency monetary assets and liabilities as on the Balance Sheet date are revalued in the
accounts on the basis of exchange rates prevailing at the close of the year and exchange difference
arising there-from is charged / credited to the Statement of Profit & Loss - except for the exchange
difference arising on long term borrowings related to fixed assets, which are capitalized.
(xi) Leases
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS
116. Identification of a lease requires significant judgment. The Company uses significant judgement in
assessing the lease term (including anticipated renewals) and the applicable discount rate. The
Company determines the lease term as the non-cancellable period of a lease, together with both
periods covered by an option to extend the lease if the Company is reasonably certain to exercise that
option; and periods covered by an option to terminate the lease if the Company is reasonably certain
not to exercise that option. In assessing whether the Company is reasonably certain to exercise an
option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts
and circumstances that create an economic incentive for the Company to exercise the option to extend
the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if
there is a change in the non-cancellable period of a lease. The discount rate is generally based on the
incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar
characteristics.
Right of use assets
The Company as a lessee: The Company’s lease asset classes primarily consist of leases for land and
buildings. 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 of the economic benefits from use of the
asset through the period ofthe lease and (iii) the Company has the right to direct the use ofthe asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset (“ROU”) and a
corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a
term of twelve months or less (short-term leases), variable lease and low value leases. For these short¬
term, variable lease and low value leases, the Company recognizes the lease payments as an
operating expense on a straight-line basis over the term ofthe lease.
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 right-of-use assets are initially recognized at cost, which comprises the initial amount ofthe 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. They are subsequently measured at cost less
accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the
shorter of the lease term or useful life of the underlying asset. Right of use assets are evaluated for
recoverability whenever events or changes in circumstances indicate that their carrying value may not
be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher ofthe
fair value less cost to sale 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.
The lease liability is initially measured at amortized 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.
Lease liabilities are re-measured with a corresponding adjustment to the related right of use asset if the
Company changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease
payments have been classified as financing cash flows.
(xii) Customs Duty
Customs duty is accounted for as and when paid/provided.
(xiii) Borrowing Cost
As per Indian Accounting Standard 23 (Ind AS 23) on “Borrowing Costs” borrowing costs that are:
(a) directly attributable to the acquisition, construction, production of a qualifying asset are capitalized as
a part of cost of such asset till the time the asset is ready for its intended use and;
(b) not directly attributable to qualifying assets are determined by applying a weighted average rate and
are capitalized as a part of the cost of such qualifying asset till the time the asset is ready for its
intended use. Remaining borrowing costs are recognized as an expense in the period in which they are
incurred.
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