2. Significant Accounting Policies
2.1 Compliance with IND-AS
The Company has prepared financial statements for the year ended March 31, 2024 in accordance with
Indian Accounting Standards (Ind AS) notified by the Ministry of Corporate affairs under the Companies
(Indian Accounting Standards) Rules, 2015 (as amended) together with the comparative period data as at
and for the year ended March 31,2024.
2.2 Basis of preparation and presentation
The financial statements prepared on the historical cost basis, except for certain financial assets that are
measured at fair values at the end of each reporting period as explained in the accounting policies below.
The financial statements are prepared in INR and all values are rounded to the nearest Lakhs, except when
otherwise stated. The company has consistently applied the following accounting policies to all periods
presented in these financial statements.
a) Current versus non-current classification of assets and liabilities:
The Company presents assets and liabilities in the Balance sheet based on current/non-current
classification. An asset is treated as current when it is:
• Expected to be realised or intended to be sold or consumed in normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realised within twelve months after the reporting period, or
• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period.
•
All other assets are classified as non-current
A liability is current when:
• It is expected to be settled in normal operating cycle
• It is held primarily for the purpose of trading
• It is due to be settled within twelve months after the reporting period, or
• There is no unconditional right to defer the settlement of the liability for at least twelve months after
the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The Operating Cycle is the time between the acquisition of assets for business purposes and their realization
into cash and cash equivalents.
b) Property, Plant and Equipment:
Property, Plant and Equipment are recorded at their cost of acquisition, net of refundable taxes or levies,
less accumulated depreciation and impairment losses, if any. The cost thereof comprises of its purchase
price, including import duties and other non-refundable taxes or levies and any directly attributable cost
for bringing the asset to its working condition for its intended use.
An item of property, plant and equipment and any significant part initially recognised is derecognized
upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or
loss arising on de-recognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the Statement of Profit or Loss when the
asset is de-recognised
Machinery Spares which can be used only in connection with a particular item of Fixed Asset and
The use of which is irregular, are capitalized at cost. The cost thereof comprises of its purchase price,
including import duties and other non-refundable taxes or levies and any directly attributable cost for
bringing the asset to its working condition for its intended use.
For transition to Ind AS, the Company has elected to continue with the carrying value of all its property,
plant and equipment and other Non-current Assets recognised as on 1st April, 2016 (date of transition)
measured as per previous GAAP as its deemed cost on the date of transition.
Depreciation:
Depreciation on Property, Plant and Equipment and Investment Properties is provided on different class
of assets based on the method and on the basis of its useful lives as per Schedule II of the Companies
Act, 2013, Depreciation on Fixed Assets other than Plant and Machinery is provided on Written down
value Method.
Depreciation on additions to Fixed Assets is provided on pro-rata basis from the date of acquisition or
installation.
Impairment of Property Plant and Equipment & other Non-Current Assets:
Carrying amount of tangible and intangible assets are reviewed at each Balance Sheet date. These are
treated as impaired when the carrying cost thereof exceeds its recoverable value. Recoverable value is
higher of the asset's net selling price or value in use. Value in use is the present value of estimated future
cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its
useful life. Net selling price is the amount receivable from the sale of an asset in an arm's length
transaction between knowledgeable, willing parties, less the cost of disposal. An impairment loss is
charged for when an asset is identified as impaired.
c) Fair Value Measurement:
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, maximizing the use of relevant observable inputs and
minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorized 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
d) 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-
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded
at fair value through profit or loss, transaction costs that are attributable to the acquisition of the
financial asset. 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 recognized on the
trade date.
Subsequent measurement-
For purposes of subsequent measurement, financial assets are classified in three categories:
i) Financial assets measured at fair value through other comprehensive income (FVTOCI)
ii) Financial assets measured at fair value through profit or loss (FVTPL)
iii) Financial assets at amortized cost
Equity instruments
All equity instruments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are
held for trading are classified as at FVTPL. For all other equity instruments, an irrevocable choice is made
on initial recognition to measure it at FVTOCI. All fair value changes on such investments, excluding
dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to profit or loss, even
on sale or disposal of the investment. However, on sale or disposal the company may transfer the
cumulative gain or loss within equity.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is primarily derecognized (i.e. removed from the Company's balance sheet) when:
• The contractual rights to receive cash flows from the asset have expired, or The Company has
transferred its rights to receive contractual 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 recognize the transferred asset to
the extent of the Company's continuing involvement. In that case, the Company also recognizes 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.
On Derecognition of a financial asset in its entirety, the difference between the asset's carrying amount
and the sum of the consideration received and receivable and the cumulative gain or loss that had
been recognized in OCI and accumulated in equity is recognized in profit or loss if such gain or loss
would have otherwise been recognized in profit or loss on disposal of that financial asset.
FINANCIAL LIABILITIES:
Initial Recognition and Measurement:
All financial liabilities are recognized 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.
Subsequent Measurement:
This is dependent upon the classification thereof as under:
Loans and Borrowings:
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized
cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are
derecognized as well as through the EIR amortization process. Amortized 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 amortization is included as finance costs in the statement of profit and loss.
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 de-recognition 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 or loss.
Equity Instruments:
An equity instrument is any contract that evidences a residual interest in the assets of an entity in
accordance with the substance of the contractual arrangements. These are recognised at the amount
of the proceeds received, net of direct issue costs.
e) Revenue Recognition:
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Company and the revenue can be reliably measured, regardless of when the amount is received.
Revenue is measured at the fair value of the consideration received or receivable, taking into account
contractually defined terms of payment and excluding taxes or duties collected on behalf of the
government, discounts and rebates.
Other Operating Revenue:
Revenue in respect of other income is recognized only when it is reasonably certain that ultimate
collection will be made.
Interest Income:
Interest Income from Financial Assets is recognized using the Effective Interest Rate (EIR) on amortized
cost basis.
Dividend Income:
Dividend income is recognized when the Company's right to receive the payment is established, which
is generally when shareholders approve the dividend.
f) Employee Benefits:
Short term employee benefits are those which are payable wholly within twelve months of rendering
service and are recognized as an expense at the undiscounted amount in Statement of Profit and Loss
of the year in which the related service is rendered.
g) Borrowing Costs:
Borrowing costs comprising of interest and other costs that are incurred in connection with the borrowing
of funds that are attributable to the acquisition or construction of qualifying assets are considered as a
part of cost of such assets less interest earned on the temporary investment. A qualifying asset is one that
necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are
charged to Statement of profit and loss in the year in which they are incurred.
h) Taxes on Income:
Current Income Taxes:
Current income tax liabilities are measured at the amount expected to be paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted, at the reporting date. Current income tax relating to items recognized directly in
other comprehensive income / equity is recognized similarly and not in the statement of profit and loss.
Management periodically evaluates positions taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred Taxes:
Deferred tax is provided using the liability method on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences, when the deferred tax
liability arises from an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable
that taxable profit will be available against which the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses can be utilized, except, when the deferred tax asset
relating to the deductible temporary difference arises from the initial recognition of an asset or liability in
a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting
date and are recognized to the extent that it has become probable that future taxable profits will allow
the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss.
Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in
equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set
off current tax assets against current tax liabilities.
MAT:
Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which give rise to future
economic benefits in the form of adjustment of future income tax liability, is considered as an asset if
there is convincing evidence that the Company will pay normal income tax after the specified years.
Accordingly, MAT is recognized as deferred tax asset in the Balance Sheet when the asset can be
measured reliably and it is probable that the future economic benefits associated with it will flow to the
Company.
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