B. MATERIAL ACCOUNTING POLICIES
i. Basis of Preparation:
The accompanying financial statements have been
presented for the year ended March 31, 2025 along with
comparative information for the year ended March 31,
2024. These financial statements have been prepared in
accordance with Indian Accounting Standards (Ind AS)
on going concern basis under the historical cost
convention on the accrual basis of accounting and the
relevant provisions prescribed in the Companies Act
2013, besides the pronouncements/guidelines of the
Institute of Chartered Accountants of India and of the
Securities and Exchange Board of India. The Ind AS are
prescribed under Section 133 of the Act read with Rule 3
of the Companies (Indian Accounting Standards) Rules,
2015 and Companies (Indian Accounting Standards)
Amendment Rules, 2016. The accounting policies have
been consistently applied by the Company 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.
ii. Use of estimates:
The preparation of the financial statements in conformity
with Ind AS requires the Management to make estimates
and assumptions that affect the reported balances of
assets and liabilities and disclosures relating to
contingent liabilities as at the date of the financial
statements and reported amounts of income and
expenses during the period. Accounting estimates could
change from period to period. Actual results could differ
from those estimates. Appropriate changes in estimates
are made as the Management becomes aware of changes
in circumstances surrounding the estimates. Changes in
estimates are reflected in the financial statements in the
period in which such changes are made.
ii. Property, plant and equipment
Property, plant and equipment (Tangible and Intangible)
are stated at cost less accumulated depreciation. Cost
comprises the purchase price and any cost attributable
to bringing the asset to the location and condition
necessary for its intended use. The Company carried out
fair valuation of Freehold land, buildings and plant and
machinery (PPE). However, it was determined that fair
value does not differ materially from the carrying value
of assets. Accordingly, the Company has not revalued
the PPE as at March 31, 2025.
Capital work in progress is stated at cost.
In case of revaluation, surplus is recorded in OCI and
credited to the asset revaluation reserve in equity.
However, to the extent that it reverses a revaluation deficit
of the same asset previously recognised in statement of
profit or loss, the increase is recognised in statement of
profit and loss. A revaluation deficit is recognised in the
statement of profit and loss, except to the extent that it
offsets an existing surplus on the same asset recognised
in the asset revaluation reserve.
An annual transfer from the asset revaluation reserve to
retained earnings is made for the difference between
depreciation based on the revalued carrying amount of
the asset and depreciation based on the asset's original
cost. Additionally, accumulated depreciation as at the
revaluation date is eliminated against the gross carrying
amount of the asset and the net amount is restated to the
revalued amount of the asset. Upon disposal, any
revaluation reserve relating to the particular asset being
sold is transferred directly to retained earnings.
Depreciation is calculated on a straight-line basis over
the estimated useful lives of the assets as follows:
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 derecognition 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 derecognised.
The residual values, useful lives and methods ol
depreciation of property, plant and equipment are
reviewed at each financial year end and adjustec
prospectively, if appropriate.
iv. Intangible assets
Intangible assets acquired separately are measured or
initial recognition at cost. Following initial recognition
intangible assets are carried at cost less any accumulated
amortisation and accumulated impairment losses
Internally generated intangibles, excluding capitalised
development costs, are not capitalised and the related
expenditure is reflected in profit or loss in the period in
which the expenditure is incurred.
Gains or losses arising from de-recognition of an
intangible asset are measured as the difference between
the net disposal proceeds and the carrying amount o1
the asset and are recognised in the statement of profil
and loss when the asset is derecognised.
v. Depreciation & Amortization:
Depreciation on PPE bought/sold during the year i<
charged on straight line method as per the useful life in
Schedule II of Companies Act, 2013 depending upon the
financial year in which the assets are installed/sold.
With respect to the plant and machinery generating
renewable energy, the useful life of the asset i<
determined in accordance with KERC/CERC guidelines.
The amortization period and the amortization method
are reviewed at least at each financial year end. If the
expected useful life of the asset is significantly differenl
from previous estimates, the amortization period i<
changed accordingly. If there has been a significa n1
change in the expected pattern of economic benefits from
the asset, the amortization method is changed to reflecl
the changed pattern.
vi. Investments
Investments that are readily realizable and intended tc
be held for not more than a year are classified as currenl
investments. All other investments are classified as non¬
current investments. Current investments are carried a1
lower of cost or fair value / market value determined on
an individual investment basis. Non-current investment
are carried at cost. However, provision for diminution in
value is made to recognize a decline other than temporary
in the value of the investments. Profit/loss on sale ol
investments is computed with reference to their average
cost.
vii. Borrowing costs
Borrowing costs directly attributable to the acquisition
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use or sale are capitalised as part of the cosl
of the asset. All other borrowing costs are expensed in
the period in which they occur. Borrowing costs consist
of interest and other costs that an entity incurs in
connection with the borrowing of funds. Borrowing cost
also includes exchange differences to the extent regarded
as an adjustment to the borrowing costs.
viii. Inventories
Inventories are valued at the lower of cost and net
realisable value.
Costs incurred in bringing each product to its present
location and condition are accounted for as follows:
a. Finished goods and work in progress: cost includes
cost of direct materials and labour and a proportion
of manufacturing overheads based on the normal
operating capacity, but excluding borrowing costs.
Cost is determined on first in, first out basis.
b. Traded goods: cost includes cost of purchase and
other costs incurred in bringing the inventories to
their present location and condition. Cost is
determined on weighted average basis.
Net realisable value is the estimated selling price in
the ordinary course of business, less estimated costs
of completion and the estimated costs necessary to
make the sale.
ix. Foreign currency transactions:
Functional Currency
The functional currency of the Company is the Indian
rupee. These financial statements presented in Indian
rupees (rounded off to millions, one million equals ten
lakhs).
Initial Recognition:
Transactions in foreign currencies are initially recorded
by the Company at functional currency rates at the date
of the transaction.
Conversion:
Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency rates
of exchange at the reporting date. Non-monetary items
that are measured in terms 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 when the
fair value is determined. The gain or loss arising on
translation of non-monetary items measured at fair value
is treated in line with the recognition of the gain or loss
on the change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is
recognised in Other Comprehensive Income (OCI) or
profit or loss are also recognised in OCI or profit or
loss, respectively).
Exchange Differences:
Exchange differences arising on the settlement of
monetary items or on reporting company's monetary
items at rates different from those at which they were
initially recorded during the period or reported in
previous financial statements, are recognized as income
or as expenses in the period in which they arise.
x. Revenue recognition
Ind AS 115 supersedes Ind AS 11 Construction Contracts
and Ind AS 18 Revenue and it applies, with limited
exceptions, to all revenue arising from contracts with
customers. Ind AS 115 establishes a five-step model to
account for revenue arising from contracts with
customers and requires that revenue be recognized at an
amount that reflects the consideration to which an entity
expects to be entitled in exchange for transferring goods
or services to a customer.
Ind AS 115 requires entities to exercise judgment, taking
into consideration all of the relevant facts and
circumstances when applying each step of the model to
contracts with their customers. The standard also
specifies the accounting for the incremental costs of
obtaining a contract and the costs directly related to
fulfilling a contract. In addition, the standard requires
extensive disclosures.
The Company adopted Ind AS 115 using the modified
retrospective method of adoption with the date of initial
application of 1 April 2018. Under this method, the
standard can be applied either to all contracts at the
date of initial application or only to contracts that are
not completed at this date. The Company elected to apply
the standard to all contracts as at 1 April 2018.
The cumulative effect of initially applying Ind AS 115 is
recognized at the date of initial application as an
adjustment to the opening balance of retained earnings
for the year ended March 31, 2019.
<i. Income Tax
Tax expenses comprise both current and deferred taxes.
The current tax is based on taxable profit for the year.
Taxable profit differs from 'profit before tax' as reported
in the statement of profit and loss due to the effect of
items of income or expense that are taxable or deductible
in other years and items that are not taxable or deductible.
The Company's current tax is calculated using tax rates
that have been enacted or substantively enacted by the
end of the reporting period. Current income tax relating
to items recognised outside profit or loss is recognised
either in other comprehensive income or in equity.
Deferred tax:
Deferred tax is recognized using the balance sheet
approach. Deferred tax assets and liabilities are
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. Deferred tax liabilities
are generally recognized for all taxable temporary
differences. Deferred tax assets are generally recognized
for all deductible temporary differences to the extent
that it is reasonably certain that taxable profits will be
available against which those deductible temporary
differences can be utilized. 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 all or part of the asset to be utilized.
Deferred tax liabilities and assets are measured at the
tax rates that are expected to apply in the period in which
the liability is settled or the asset realized, based on tax
rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the
manner in which the Company expects, at the end of the
reporting period, to recover or settle the carrying amount
of its assets and liabilities.
xii. Provisions and Contingent liabilities:
Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of
the amount of the obligation.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, when appropriate, the risks specific to the
liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a
finance cost.
A contingent liability is a possible obligation that arises
from past events whose existence will be confirmed by
the occurrence or non-occurrence of one or more
uncertain future events beyond the control of the
Company or a present obligation that is not recognized
because it is not probable that an outflow of resources
will be required to settle the obligation. A contingent
liability also arises in extremely rare cases where there
is a liability that cannot be recognized because it cannot
be measured reliably. The Company does not recognize a
contingent liability but discloses its existence in the
financial statements.
xiii. Retirement and other employee benefits
Retirement benefit in the form of provident fund is a
defined contribution scheme. The Company has no
obligation, other than the contribution payable to the
provident fund. The Company recognizes contribution
payable to the provident fund scheme as an expense in
the statement of profit and loss.
|