2.1 Material accounting policies
(a) Basis of preparation
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS)
notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation
requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the
financial statement.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which
have been measured at fair value:
• Derivative financial instruments, refer note 37
• Certain financial assets and liabilities measured at fair value (refer note 1 below for accounting policy regarding financial
instruments)
• Defined benefit pension plans - plan assets measured at fair value, refer note 21
In addition, the carrying values of recognised assets and liabilities designated as hedged items in fair value hedges that
would otherwise be carried at amortised cost are adjusted to record changes in the fair values attributable to the risks that
are being hedged in effective hedge relationships. The financial statements are presented in INR, and all values are rounded
to the nearest millions (INR 000,000), except when otherwise indicated.
The Company segregates assets and liabilities into current and non-current categories for presentation in the balance sheet
after considering its normal operating cycle and other criteria set out in Ind AS 1, "Presentation of Financial Statements". For
this purpose, current assets and liabilities include the current portion of non-current assets and liabilities respectively.
Deferred tax assets and liabilities are always classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash
equivalents. The Company has identified period up to twelve months as its operating cycle.
The Company has prepared the standalone financial statements on the basis that it will continue to operate as a going
concern.
(b) New and amended standards
a) The Company applied for the first-time certain standards and amendments, which are effective for annual periods
beginning on or after 1 April 2025. The Company has not early adopted any standard, interpretation or amendment
that has been issued but is not yet effective.
(i) Amendments to Ind AS 21 - Lack of exchangeability
The Ministry of Corporate Affairs (MCA) notified the Companies (Indian Accounting Standards) Amendment Rules,
2025, which amend Ind AS 21, The Effects of Changes in Foreign Exchange Rates to specify how an entity should
assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is
lacking. The amendments also require disclosure of information that enables users of its financial statements to
understand how the currency not being exchangeable into the other currency affects, or is expected to affect, the
entity's financial performance, financial position and cash flows.
The amendments are effective for annual reporting periods beginning on or after 1 April 2025. When applying the
amendments, an entity cannot restate comparative information.
The amendments do not have a material impact on the Company's financial statements.
(ii) Amendments to Ind AS 1 - Classification of Liabilities as Current or Non-current and Non-current Liabilities with
Covenants
In August 2025, the MCA notified amendments to paragraphs 69 to 76 of Ind AS 1 to specify the requirements for
classifying liabilities as current or non-current. The amendments clarify:
• What is meant by a right to defer settlement
• That a right to defer must exist at the end of the reporting period
• That classification is unaffected by the likelihood that an entity will exercise its deferral right
• That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a
liability not impact its classification In addition, a requirement has been introduced to require disclosure when a
liability arising from a loan agreement is classified as non-current and the entity's right to defer settlement is
contingent on compliance with future covenants within twelve months.
If there is a breach of a material covenant of a long term loan arrangement on or before the end of the reporting
period, resulting in the liability becoming payable on demand as at the reporting date, and the lender agrees—after the
reporting period but before the financial statements are approved for issue—not to demand repayment for at least 12
months as a consequence of the breach, this shall be treated as an adjusting event. Accordingly, the entity is not
required to classify the liability as current.
The amendments are effective for annual reporting periods beginning on or after 1 April 2025 retrospectively in
accordance with Ind AS 8.
The amendments have resulted in additional disclosures in Note 17 but have not had an impact on the classification of
Company's liabilities.
(iii) Amendments to Ind AS 7 and Ind AS 107 - Supplier Finance Arrangements
In August 2025, the MCA notified amendments to Ind AS 7 Statement of Cash Flows and Ind AS 107 Financial
Instruments: Disclosures to clarify the characteristics of supplier finance arrangements and require additional
disclosure of such arrangements. The disclosure requirements in the amendments are intended to assist users of
financial statements in understanding the effects of supplier finance arrangements on an entity's liabilities, cash flows
and exposure to liquidity risk.
As a result of implementing the amendments, the Company has provided additional disclosures about its supplier
finance arrangement.
(c) Foreign currencies
(i) Functional and presentation currency
The Company's functional currency is Indian Rupee (INR) and the financial statements are presented in Indian Rupee
(INR).
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are
generally recognised in profit or loss. They are deferred in other comprehensive income if they relate to qualifying cash
flow hedges
Foreign exchange differences on foreign currency borrowings are presented in the Statement of profit and loss, within
finance costs. All other foreign exchange gains and losses are presented in the Statement of profit and loss on a net
basis within other operating revenue or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the
date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are
reported as part of the fair value gain or loss.
(d) Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer
at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or
services. The Company has generally concluded that it is the principal in its revenue arrangements, except for the agency
services below, because it typically controls the goods or services before transferring them to the customer.
Revenue from sale of components
Revenue from sale of components is recognised at the point in time when control of the asset is transferred to the customer,
generally on delivery of the components.
The Company considers whether there are other promises in the contract that are separate performance obligations to
which a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of
components, the Company considers the effects of variable consideration, the existence of significant financing
components, non-cash consideration, and consideration payable to the customer (if any) including price variations.
Variable consideration
If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which
it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract
inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue
recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Volume rebates
The Company applies the most likely amount method or the expected value method to estimate the variable consideration
in the contract. The selected method that best predicts the amount of variable consideration is primarily driven by the
number of volume thresholds contained in the contract. The most likely amount is used for those contracts with a single
volume threshold, while the expected value method is used for those with more than one volume threshold. The Company
then applies the requirements on constraining estimates in order to determine the amount of variable consideration that can
be included in the transaction price and recognised as revenue. A refund liability is recognised for the expected future
rebates (i.e., the amount not included in the transaction price).
Warranty obligations
The Company typically provides warranties for general repairs of defects that existed at the time of sale, as required by law.
These assurance-type warranties are accounted for under Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets.
Revenue from assembly of components
The Company has contracts with customers to assemble, on their behalf, customised components from various parts
procured from suppliers identified by the customer. The Company is acting as an agent in these arrangements.
When another party is involved in providing goods or services to its customer, the Company determines whether it is a
principal or an agent in these transactions by evaluating the nature of its promise to the customer. The Company is a
principal and records revenue on a gross basis if it controls the promised goods or services before transferring them to the
customer. However, if the Company's role is only to arrange for another entity to provide the goods or services, then the
Company is an agent and will need to record revenue at the net amount that it retains for its agency services.
Revenue from development of tools
The Company develops customised tooling for its customers and recognises its revenue over time using an input method to
measure progress towards complete satisfaction of the tool development.
The Company recognises revenue from development of tools over time if it can reasonably measure its progress towards
complete satisfaction of the performance obligation.
Where the Company cannot reasonably measure the outcome of a performance obligation, but the Company expects to
recover the costs incurred in satisfying the performance obligation. In those circumstances, the Company recognises
revenue only to the extent of the costs incurred until such time that it can reasonably measure the outcome of the
performance obligation
Rental Income
Rental income arising from investment properties given on leases is accounted for on a straight-line basis over the lease
terms unless the receipts are structured to increase in line with expected general inflation to compensate for the lessor's
expected inflationary cost increases and is included in other income in the statement of profit and loss.
Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be
received and the Company will comply with all attached conditions.
Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match
them with the costs that they are intended to compensate and presented within other income.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as
deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and
presented within other income.
When government grants relating to loans or similar assistance are provided by governments or related institutions, with an
interest rate below the current applicable market rate, the effect of this favourable interest is regarded as a government
grant. The loan or assistance is initially recognised and measured at fair value and the government grant is measured as the
difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as
per the accounting policy applicable to financial liabilities.
Judgments applied in determining amount and timing of revenue
The Company applied the following judgements that significantly affect the determination of the amount and timing of
revenue from contracts with customers:
(i) Determining the timing of satisfaction of tooling development
The Company concluded that revenue for development of tooling is to be recognised over time because the
Company's performance does not create asset with an alternative use to the Company since the tools are customised
for each customer and the Company has a legally enforceable right to payment of fair value for performance
completed to date.
The Company determined that the input method is the best method in measuring progress of the tooling development
because there is a direct relationship between the Company's effort (i.e., costs incurred) and the transfer of tooling to
the customer. The Company recognises revenue on the basis of the total costs incurred relative to the total expected
costs to complete the tool.
(ii) Principal versus agent considerations
The Company enters into contracts with its customers to assemble, on their behalf, customised components using
various parts procured from suppliers identified by the customer. Under these contracts, the Company provides
assembly services (i.e., coordinating the procurement of various parts from the identified suppliers and combining or
assembling them into components as desired by the customer). The Company determined that it does not control the
goods before they are transferred to customers, and it does not have the ability to direct the use of the component or
obtain benefits from the component. The following factors indicate that the Company does not control the goods
before they are being transferred to customers. Therefore, the Company determined that it is an agent in these
contracts.
• The Company is not primarily responsible for fulfilling the promise to provide the specified equipment.
• The Company does not have inventory risk before or after the specified component has been transferred to the
customer as it purchases various parts on just-in-time basis and only upon contract of the customer.
• The Company has no discretion in establishing the price for the specified component. The Company's
consideration in these contracts is only based on the difference between the maximum purchase price quoted
by the customer and the cost of various parts purchased from the suppliers.
• In addition, the Company concluded that it transfers control over its services (i.e., assembling the component
from various parts), at a point in time, upon receipt by the customer of the component, because this is when the
customer benefits from the Company's agency service.
Consultancy Income
Fees earned for the provision of services are recognised over time or point in time as per contract with the customer. In case
of contracts where the customer receives and consumes the benefits simultaneously, as the services are rendered, the
revenue is recognised over the term of the contract.
In cases where the customer receives and consume the services at single point in time, revenue is recognised as and when
the performance obligation is satisfied.
Fee and Commission Income
Fees earned for the provision of guarantees are recognised over time as the customer simultaneously receives and
consumes the benefits, as the services are rendered. The revenue for such contracts is recognised over the term of the
guarantee contract.
Trade Receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business.
They are generally due for settlement within one year and therefore are all classified as current. Where the settlement is due
after one year, they are classified as non-current. Trade receivables are recognised initially at the amount of consideration
that is unconditional unless they contain significant financing components, when they are recognised at fair value. The
Company holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them
subsequently at amortised cost using the effective interest method. Trade receivables are disclosed in Note 45.
Contract Assets
A contract asset is the entity's right to consideration in exchange for goods or services that the entity has transferred to the
customer. A contract asset is recognised where receipt of consideration is conditional on successful completion of another
performance obligation. The impairment of contract assets is measured, presented and disclosed on the same basis as
trade receivables. The Company's contract assets are disclosed in Note 45 as unbilled revenue.
Contract Liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received
consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the
Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the
payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the
contract. Contract Liabilities are disclosed in Note 45 as Advances received from customers.
Impairment
An impairment is recognised to the extent that the carrying amount of receivable or asset relating to contracts with
customers (a) the remaining amount of consideration that the Company expects to receive in exchange for the goods or
services to which such asset relates; less (b) the costs that relate directly to providing those goods or services and that have
not been recognised as expenses.
(e) Other income
Interest
Interest is recognised using the effective interest rate (EIR) method, as income for the period in which it occurs. EIR is the rate
that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument to
the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the effective
interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial
instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
Dividend
Dividend income is recognised when the right to receive dividend is established, which is generally when shareholders
approve the dividend. In case of interim dividend, it is recognised as receivable when it is declared by the Board of respective
investee companies.
Duty drawback and export incentives
Income from duty drawback and export incentives is recognized on an accrual basis.
(f) Income tax
The income tax expense or credit for the period is the tax payable on the current period's taxable income based on the
applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in India. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred tax is provided in full, using balance sheet approach, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. Deferred tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit nor loss. Deferred tax is determined using tax rates (and laws) that have been
enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax
asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences only if it is probable that future taxable amounts
will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities
and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset
where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and
settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.
(g) Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the
right to control the use of an identified asset for a period of time in exchange of consideration is considered as lease.
The Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases
of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing
the right to use the underlying assets.
Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is
available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease
incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the
estimated useful lives of the assets.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section (h) Impairment of non¬
financial assets.
Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed
payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase
option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease
term reflects the Company exercising the option to terminate.
Lease liabilities, which separately shown in the financial statement are measured initially at the present value of the lease
payments. Subsequent measurement of a lease liability includes the increase of the carrying amount to reflect interest on
the lease liability and reducing (while affecting other comprehensive income) the carrying amount to reflect the lease
payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the
lease term, a change in the lease payments.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease
term of 12 months or less from the commencement date and do not contain a purchase option). The Company applies the
lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short¬
term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
The Company as a Lessor
Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the
lease term unless the receipts are structured to increase in line with expected general inflation to compensate the lessor for
the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their
respective nature.
(h) Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount.
An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) fair value less costs of disposal and
its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair
value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an
appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for
publicly traded companies or other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately
for each of the Company's CGUs to which the individual assets are allocated. These budgets and forecast calculations
generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future
cash flows after the fifth year. To estimate cash flow projections beyond periods covered by the most recent budgets/
forecasts, the Company extrapolates cash flow projections in the budget using a steady or declining growth rate for
subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the long-term
average growth rate for the products, industries, or country or countries in which the entity operates, or for the market in
which the asset is used. Impairment losses including impairment on inventories, are recognised in the statement of profit
and loss
For assets including goodwill, an assessment is made at each reporting date to determine whether there is an indication that
previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates
the asset's or CGU's recoverable amount. A previously recognised impairment loss is reversed only if there has been a
change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised.
The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the
carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the
asset in prior years. Such reversal is recognised in the statement of profit and loss.
Intangible assets with indefinite useful lives are tested for impairment annually at the end of the financial year at the CGU
level, as appropriate, and when circumstances indicate that the carrying value may be impaired.
(i) Cash and cash equivalents
Cash and cash equivalent includes cash on hand, cash at banks, investment in mutual funds and short term deposits with
original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of change in value (refer note 13). Bank overdrafts are shown within borrowings in current liabilities in the
balance sheet.
(j) Inventories
Raw materials, stores and spares, work in progress, stock in trade and finished goods are stated at the lower of cost and net
realisable value.
Cost of raw material and traded goods comprise cost of purchase and is determined after rebate and discounts. Cost of
work in progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and
fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity.
Cost of inventories also includes all other cost incurred in bringing the inventories to their present location and condition.
Costs are determined on weighted average cost basis.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
(k) 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
Financial assets are classified, at initial recognition and subsequently measured at amortised cost, fair value through other
comprehensive income (OCI), and fair value through profit or loss.
With the exception of trade receivables that do not contain a significant financing component or for which the Company
has applied the practical expedient, the Company initially measures financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant
financing component or for which the Company has applied the practical expedient are measured at the transaction price
determined under Ind AS 115. Refer to the accounting policies in section (d) Revenue from contracts with customers.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to
cash flows that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an instrument level.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or
convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company
commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• Debt instruments at amortised cost
• Debt instruments at fair value through other comprehensive income (FVTOCI)
• Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL)
• Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortised cost
This category is the most relevant to the Company. A 'debt instrument' is measured at the amortised cost if both the
following conditions are met:
a. The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b. Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and
interest (SPPI) on the principal amount outstanding.
After initial measurement, such 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 profit or loss. The losses
arising from impairment are recognised in the profit or loss. This category generally applies to trade and other receivables.
Debt instrument at FVTOCI
A 'debt instrument' is classified as at the FVTOCI if both of the following criteria are met:
a. The objective of the business model is achieved both by collecting contractual cash flows and selling the financial
assets, and
b. The asset's contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value.
Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest
income, impairment losses & reversals and foreign exchange gain or loss in the statement of profit and loss. On derecognition
of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to statement of profit and
loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income in statement of profit and loss
using the EIR method.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, 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 debt instrument, which otherwise meets amortized cost or FVTOCI
criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition
inconsistency (referred to as 'accounting mismatch'). The Company has not designated any debt instrument as at FVTPL.
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement
of profit and loss.
Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading and
contingent consideration recognised by an acquirer in a business combination to which Ind AS103 applies are classified as
at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive
income subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The
classification is made on initial recognition and is irrevocable. The Company elected to classify irrevocably its non-listed
equity investments under this category.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument,
excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of
investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily
derecognised (i.e. removed from the Company's balance sheet) when:
• The rights to receive cash flows from the asset have expired, or
• 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 (a) the
Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred
nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither
transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the
Company continues to recognise the transferred asset to the extent of the Company's continuing involvement. In that case,
the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a
basis that reflects the rights and obligations that the Company has retained.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of
impairment loss on the following financial assets and credit risk exposure:
a. Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits,
trade receivables and bank balance
b. Financial assets that are debt instruments and are measured as at FVTOCI
c. Lease receivables under Ind AS 116
d. Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that
are within the scope of Ind AS 115
e. Loan commitments which are not measured as at FVTPL
f. Financial guarantee contracts which are not measured as at FVTPL
The Company follows 'simplified approach' for recognition of impairment loss allowance on:
• Trade receivables or contract revenue receivables; and
• All lease receivables resulting from transactions within the scope of Ind AS 116
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there
has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month
ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a
subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk
since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial
instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12
months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and
all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement
of profit and loss (P&L). This amount is reflected under the head 'other expenses' in the P&L. The balance sheet presentation
for various financial instruments is described below:
• Financial assets measured as at amortised cost, contractual revenue receivables and lease receivables: ECL is
presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The
allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce
impairment allowance from the gross carrying amount.
• Loan commitments and financial guarantee contracts: ECL is presented as a provision in the balance sheet, i.e. as a
liability. Debt instruments measured at FVTOCI: For debt instruments measured at FVOCI, the expected credit losses
do not reduce the carrying amount in the balance sheet, which remains at fair value. Instead, an amount equal to the
allowance that would arise if the asset was measured at amortised cost is recognised in other comprehensive income
as the "accumulated impairment amount"
The Company does not have any purchased or originated credit-impaired (POCI) financial assets, i.e., financial assets which
are credit impaired on purchase/ origination.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or 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 the case of loans and borrowings and payables, net of directly
attributable transaction costs.
The Company's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts,
financial guarantee contracts and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or 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. This category also includes derivative financial
instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined
by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective
hedging instruments.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial
date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/
losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently transferred to
P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such
liability are recognised in the statement of profit or loss. The Company has not designated any financial liability as at fair
value through profit and loss.
Loans and borrowings
This is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the
liabilities are derecognised as well as through the EIR amortisation process.
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 as finance costs in the statement of profit and loss.
This category generally applies to borrowings and other payables.
Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse
the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms
of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction
costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of
the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less
cumulative amortisation.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement
of profit and loss.
Embedded derivatives
An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract
- with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An
embedded derivative causes some or all of the cash flows that otherwise would be required by the contract to be modified
according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or
rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not
specific to a party to the contract. Reassessment only occurs if there is either a change in the terms of the contract that
significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair
value through profit or loss.
If the hybrid contract contains a host that is a financial asset within the scope of Ind AS 109, the Company does not separate
embedded derivatives. Rather, it applies the classification requirements contained in Ind AS 109 to the entire hybrid contract.
Derivatives embedded in all other host contracts are accounted for as separate derivatives and recorded at fair value if their
economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held
for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with
changes in fair value recognised in statement of profit and loss, unless designated as effective hedging instruments.
Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no
reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are
debt instruments, a reclassification is made only if there is a change in the business model for managing those assets.
Changes to the business model are expected to be infrequent. The Company's senior management determines change in
the business model as a result of external or internal changes which are significant to the Company's operations. Such
changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases
to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the
reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period
following the change in business model. The Company does not restate any previously recognised gains, losses (including
impairment gains or losses) or interest.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently
enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets
and settle the liabilities simultaneously.
(l) Fair value measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date. 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:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
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 economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in
its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available
to measure fair value, maximising the use of relevant observable inputs and minimising 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
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines
whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level
input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Company determines the policies and procedures for both recurring fair value measurement, such as derivative
instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held
for distribution in discontinued operations.
External valuers are involved for valuation of significant assets and liabilities, if any. At each reporting date, the Company
analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the
Company's accounting policies.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
• Disclosures for valuation methods, significant estimates and assumptions (note 2.2, 36 and 37)
• Quantitative disclosures of fair value measurement hierarchy (note 36)
• Investment properties (note 4)
• Financial instruments (including those carried at amortised cost) (note 6, 7, 8, 9, 13, 14, 17, 18, 19, 36, 37 and 46 )
(m) Derivative financial instruments and hedge accounting
Initial recognition and subsequent measurement
The Company uses derivative financial instruments, such as forward currency contracts, interest rate swaps and forward
commodity contracts, to hedge its foreign currency risks, interest rate risks and commodity price risks, respectively. Such
derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into
and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and
as financial liabilities when the fair value is negative.
The purchase contracts that meet the definition of a derivative under Ind AS 109 are recognised in the statement of profit
and loss. Commodity contracts that are entered into and continue to be held for the purpose of the receipt or delivery of a
non-financial item in accordance with the Company's expected purchase, sale or usage requirements are held at cost.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the
effective portion of cash flow hedges, which is recognised in OCI and later reclassified to statement of profit and loss when
the hedge item affects profit and loss or treated as basis adjustment if a hedged forecast transaction subsequently results in
the recognition of a non-financial asset or non-financial liability.
For the purpose of hedge accounting, hedges are classified as:
• Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an
unrecognised firm commitment
• Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk
associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an
unrecognised firm commitment
At inception of the hedge relationship, the Company documents the economic relationship between hedging instruments
and hedged items including whether changes in the cash flows of the hedging instruments are expected to offset changes
in the cash flows of hedged items. The Company documents its risk management objective and strategy for undertaking its
hedge transactions.
Hedges that meet the strict criteria for hedge accounting are accounted for, as described below:
(i) Fair value hedges
The change in the fair value of a hedging instrument is recognised in the statement of profit and loss as finance costs.
The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value
of the hedged item and is also recognised in the statement of profit and loss as finance costs.
For fair value hedges relating to items carried at amortised cost, any adjustment to carrying value is amortised through
profit or loss over the remaining term of the hedge using the EIR method. EIR amortisation may begin as soon as an
adjustment exists and no later than when the hedged item ceases to be adjusted for changes in its fair value
attributable to the risk being hedged.
If the hedged item is derecognised, the unamortised fair value is recognised immediately in profit or loss. When an
unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of
the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or
loss recognised in profit and loss.
The Company has an interest rate swap that is used as a hedge for the exposure of changes in the fair value. See Note
37 for more details.
(ii) Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve,
while any ineffective portion is recognised immediately in the statement of profit and loss.
The Company uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast
transactions and firm commitments, as well as forward commodity contracts for its exposure to volatility in the
commodity prices. The ineffective portion relating to foreign currency contracts is recognised in finance costs and the
ineffective portion relating to commodity contracts is recognised in other income or expenses.
Amounts recognised as OCI are transferred to profit or loss when the hedged transaction affects profit or loss, such as
when the hedged financial income or financial expense is recognised or when a forecast sale occurs. When the
hedged item is the cost of a non-financial asset or non-financial liability, the amounts recognised as OCI are transferred
to the initial carrying amount of the non-financial asset or liability.
If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the
hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss previously recognised in OCI remains separately in equity until the forecast
transaction occurs or the foreign currency firm commitment is met.
(n) Property, Plant and equipment
Property, Plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if
any. Capital work in progress are stated at cost, net of accumulated impairment losses, if any. Such cost includes expenditure
that is directly attributable to the acquisition of the items and the cost of replacing part of the plant and equipment 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 Company depreciates them separately based on their specific useful
lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and
equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in
profit or loss as incurred.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be
measured reliably. The carrying amount of the replaced part is derecognised.
The cost of self-generated assets comprises of raw material, components, direct labour, other direct cost and related
production overheads.
*Useful life of certain assets are different than the life prescribed under Schedule II to the Companies Act, 2013 and those
has been determined based on technical evaluation by the management. The management believes that these estimated
useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
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 of depreciation of property, plant and equipment are reviewed at each financial
year end and adjusted prospectively, if appropriate.
(o) Intangible assets under development
The Company capitalises intangible asset under development for a project in accordance with the accounting policy. Initial
capitalisation of costs is based on management's judgement that technological and economic feasibility is confirmed,
usually when an asset development reaches a defined milestone according to an established management model.
(p) Investment properties
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment
properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition
criteria are met. When significant parts of the investment properties are required to be replaced at intervals, the Company
depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in
profit or loss as incurred.
The Company depreciates building component of investment properties over 30 years.
Though the Company measures investment properties using cost based measurement, the fair value of investment
properties is disclosed in note 4 to the financial statement.
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn
from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds
and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.
(q) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a
business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at
cost less any accumulated amortisation and accumulated impairment losses.
Intangible assets with finite lives are amortised over the useful economic life on straight line basis and assessed for
impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the
amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the
asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting
estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss
unless such expenditure forms part of carrying value of another asset.
Gains or losses arising from derecognition of an intangible asset 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 or loss when the asset is
derecognised.
Goodwill
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred over the fair value of
net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate
consideration transferred, the Company re-assesses whether it has correctly identified all of the assets acquired and all of
the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If
the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration
transferred, then the gain is recognised in other comprehensive income and accumulated in equity as capital reserve.
However, if there is no clear evidence of bargain purchase, the entity recognizes the gain directly in equity as capital reserve,
without routing.
Goodwill has indefinite useful life. Goodwill is not amortised but it is tested for impairment annually or more frequently if
events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment
losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash¬
generating units or Groups of cash-generating units that are expected to benefit from the business combination in which
the goodwill arose. The units or Groups of units are identified at the lowest level at which goodwill is monitored for internal
management purposes, which in our case are the operating segments
Research and development costs
Research costs are expensed as incurred. Development expenditures on an individual 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 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 ability to measure reliably the expenditure during development
Cost incurred by the Company for Research and Development do not meet the recognition criteria and hence have been
classified as research costs and are expensed of in the statement of profit and loss as and when these are incurred.
The amortisation methods, the usual useful lives and the residual values of intangible assets are checked annually.
(r) 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 cost 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.
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