Note 2 - I: Material accounting policies
a) Basis of preparation and measurement
i) Compliance with Ind AS
These standalone financial statements of the company have been prepared in accordance with the Indian Accounting
Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) and other relevant provision of the act,
read with Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time.
ii) Basis of measurement
These financial statements have been prepared on the historical cost basis except for defined benefit plans - net defined
benefit (asset) / liabilities which have been measured at fair value based on principles of Ind AS 19 -"Employee benefits"
and certain financial assets and liabilities are measured at fair value (refer note 29 (b) for list of financial assets and liabilities
measured at fair value).
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 under current market conditions, regardless of whether that price is directly
observable or estimated using another valuation technique. In determining the fair value of an asset or a liability, the
Company takes into account the characteristics of the asset or liability if market participants would take those characteristics
into account when pricing the asset or liability at the measurement date.
The Company adopted Disclosures of Accounting policies (Amendments to Ind As 1) from 1 April 2023, although the
amendments did not result in any changes in the accounting policies themselves, they impacted the accounting policy
information disclosed in the financial statements.
The amendments require the disclosure of 'material' rather than 'significant' accounting policies. The amendments also
provide guidance on the application of materiality to disclosure of accounting policies, assisting the entities to provide useful,
entity-specific accounting policy information that users need to understand other information in the financial statement.
Current / Non-current classification:
Based on the time involved between the acquisition of assets for processing and their realization in cash and cash equivalents,
the Company has identified twelve months as its operating cycle for determining current and non-current classification of
assets and liabilities in the balance sheet.
b) Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The board of directors assesses the financial performance and position of the Company, and makes strategic decisions. The
managing director has been identified as being the chief operating decision maker. Refer Note 32 for segment information.
c) Foreign currency transactions and translations
(i) Functional and presentation currency
Items included in Standalone financial statements are measured using the currency of the primary economic environment
in which the entity operates ("functional currency"). The Standalone financial statements are presented in Indian rupee (),
which is the company's functional and presentation currency.
(ii) Transactions and balances
Monetary items denominated in foreign currencies at the year-end are translated into the functional currency at the exchange
rate prevailing on the balance sheet date.
Non-monetary items are carried at historical cost using the exchange rates on the date of transaction, other than those measured
at fair value. 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. Foreign exchange gains and losses are presented in the statement of profit and loss on a
net basis within other incomes/expenses.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss,
within finance costs.
d) Revenue and income recognition
Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods are transferred to the customer, depending
on individual terms, i.e. at the time of dispatch, delivery or formal customer acceptance depending on agreed terms and at an
amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. Similarly for
services, revenue is recognised upon completion of performance obligations as agreed with customer at an amount that reflects
the consideration to which the Company expects to be entitled in exchange for those services.
The Company assesses promises in the contract that are separate performance obligations to which a portion of transaction
price is allocated.
Revenue is measured based on the transaction price as specified in the contract with the customer. It excludes discounts,
incentives, volume rebates, goods & services tax and amounts collected on behalf of third parties. In determining the transaction
price, the Company considers below, if any:
Variable consideration:
This includes discounts, incentives, volume rebates, etc. It 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. It is reassessed at end of each reporting period.
Contract balances
Trade receivables: A receivable represents the Company's right to an amount of consideration that is unconditional i.e. only the
passage of time is required before payment of consideration is due.
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. Contract liabilities are recognised as revenue
when the Company delivers performance obligation under the contract.
Interest Income:
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and
the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the amortised cost
and at the effective interest rate applicable.
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.
Export incentives
Export incentive available under prevalent scheme is accrued in the year when the right to receive credit as per the term of
scheme is established in respect of exports made and accounted to the extent there is no significant uncertainty about the
measurability and ultimate utilization of such duty credit.
Dividend
Dividend income is recognised in the standalone statement of profit and loss only when the right to receive payment is established,
provided it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the
dividend can be measured reliable.
e) 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.
Deferred tax is provided, on all temporary differences at the reporting date between the tax base of assets and liabilities and
their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured at the tax rates that
are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or
substantively enacted at the reporting date. Tax relating to items recognised directly in equity or OCI is recognised in equity or
OCI and not in the Statement of Profit and Loss.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset deferred 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 realize 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.
f) Leases
Ind AS 116 - Leases:
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the site on which it is located, less any lease incentives received. Certain lease arrangements
include the option to extend or terminate the lease before the end of the lease term.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right of-use assets
are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by
lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the
portfolio as a whole.
Lease payments included in the measurement of the lease liability comprises of fixed payments, including in-substance fixed
payments, amounts expected to be payable under a residual value guarantee and the exercise price under a purchase option
that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably
certain to exercise an extension option.
The lease liability is subsequently remeasured at amortised cost using the effective interest method. It is remeasured when there
is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company's estimate
of the amount expected to be payable under a residual value guarantee, or if Company changes its assessment of whether it will
exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right of use
asset or is recorded in the Statement of Profit and Loss if the carrying amount of the right-of-use asset has been reduced to zero.
Lease liability and the right of use asset have been separately presented in the balance sheet and lease payments have been
classified as financing activities.
The Company has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of
less than or equal to 12 months with no purchase option and assets with low value leases. The Company recognises the lease
payments associated with these leases as an expense in Statement of Profit and Loss over the lease term. The related cash flows
are classified as operating activities.
g) Impairment of assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount, which is the higher of the value in use or fair value less cost to sell, of the asset or cash-generating unit, as the case
may be, is estimated and impairment loss (if any) is recognised and the carrying amount is reduced to its recoverable amount.
In assessing the 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 for which the estimates of
future cash flows have not been adjusted. When it is not possible to estimate the recoverable amount of an individual asset, the
Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
When an impairment loss subsequently reverses, the carrying amount of the asset or a cash-generating unit is increased to the
revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) earlier.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least
annually, and whenever there is an indication that the asset may be impaired.
h) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid
investments 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 changes in value.
The Company considers various factors like shelf life, ageing of inventory, product discontinuation, price changes and any
other factor which impact the Company's business in determining the allowance for obsolete, non-saleable and slow moving
inventories. The Company considers the above factors and adjusts the inventory provision to reflect its actual experience on a
periodic basis.
j) Financial assets and liabilities
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
A financial asset is recognised in the balance sheet when the Company becomes party to the contractual provisions of the
instrument. All financial assets are recognised initially at fair value, plus in the case of financial assets not recorded at fair value
through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial assets. However, trade
receivables that do not contain a significant financing component are measured at transaction price.
Subsequent measurement
For purpose of subsequent measurement, financial assets are classified into:
a) Financial assets measured at amortised cost;
b) Financial assets measured at fair value through other comprehensive income (FVTOCI);
c) Financial assets measured at fair value through statement of profit and loss (FVTPL).
The Company classifies its financial assets in the above mentioned categories based on:
a) The Company's business model for managing the financial assets;
b) The contractual cash flows characteristics of the financial asset.
Financial assets measured at amortised cost
A financial asset is measured at amortised cost if both of the following conditions are met:
a) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual
cash flows; and
b) The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal
and interest (SPPI) on the principal amount outstanding.
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 statement of profit and loss. The losses arising from impairment are
recognised in the statement of profit and loss. This category generally applies to trade and other receivables.
Financial assets measured at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:
a) The financial asset is held within a business model whose objective is achieved by both collecting the contractual cash flows
and selling financial assets; and
b) The asset's contractual cash flows represent SPPI.
Financial assets measured at fair value through the statement of profit and loss (FVTPL)
FVTPL is a residual category. Any financial asset, 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 financial asset, 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').
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:
a) The contractual rights to the cash flows from the financial asset have expired, or
b) 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:
i) The Company has transferred substantially all the risks and rewards of the asset, or
ii) The Company has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred
control of the asset.
Impairment of financial assets
The Company assesses impairment based on expected credit loss (ECL) model to the following:
a) Financial assets measured at amortised cost;
b) Financial assets measured at fair value through other comprehensive income
Expected credit losses are measured through a loss allowance at an amount equal to:
a) The 12 month's expected credit losses (expected credit losses that result from those default events on the financial
instrument that are possible within 12 months after the reporting date); or
b) Full time expected credit losses (expected credit losses that result from all possible default events over the life of the financial
instrument).
The Company follows a 'simplified approach' for recognition of impairment loss allowance on trade receivables. Under
the simplified approach, the Company uses a provision matrix to determine impairment loss allowance on the portfolio of
trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade
receivable which is adjusted for management's estimates. At every reporting date, the historical observed default rates are
updated and changes in the forward-looking estimates are analysed.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through statement of profit and 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.
The Company's financial liabilities include trade and other payables.
Subsequent measurement
a) Financial liabilities measured at amortised cost;
b) Financial liabilities subsequently measured at fair value through statement of profit and loss (FVTPL)
Trade and other payables
These amounts represent liability for goods and services provided to the Company prior to the end of financial year which are
unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the
reporting period. They are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised
in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn
down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some
or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period
of the facility to which it relates.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability
for at least 12 months after the reporting period.
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.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when, and only when,
there is a legally enforceable right to offset the recognised amount and there is intention either to settle on net basis or to realise
the assets and to settle the liabilities simultaneously.
k) Property, plant and equipment
Recognition and measurement
Items of PPE are measured at cost less accumulated depreciation and accumulated impairment losses, if any. Cost of an item of
PPE comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts
and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs
of dismantling and removing the item and restoring the site on which it is located.
The cost of property, plant and equipment as at 1 April 2016, the company's date of transition to Ind AS, was determined with
reference to its carrying value recognised as per the previous GAAP (deemed cost), as at the date of transition to Ind AS.
Capital work-in-progress is stated at cost. All the direct expenditure related to implementation including incidental expenditure
incurred during the period of implementation of a project, till it is commissioned, is accounted as Capital work-in-progress and
after commissioning the same is transferred / allocated to the respective item of PPE. Pre-operative costs, being indirect in
nature, are expensed to the Statement of Profit and Loss as and when incurred.
If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components)
of PPE.
Any gain or loss on disposal of an item of PPE is recognised in the Statement of Profit and Loss.
Subsequent expenditure
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will
flow to the Company.
Depreciation methods, estimated useful lives and residual value.
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated
useful lives which are in accordance with Schedule II to the Companies Act, 2013. The property, plant and equipment acquired
under finance leases is depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if
there is no reasonable certainty that the Company will obtain ownership at the end of the lease term.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss
within other incomes/expenses.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Based
on technical evaluation and consequent advice, the management believes that its estimates of useful lives as given above best
represent the period over which management expects to use these assets. Depreciation on additions/(disposals) is provided on
a pro-rata basis i.e. from/ (upto) the date on which asset is ready for use/(disposed off).
l) Intangible assets
Recognition and measurement
Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the assets will
flow to the Company and the cost of the asset can be measured reliably. Intangible assets are initially measured at cost. Such
intangible assets are subsequently measured at cost less accumulated recognised i and any accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is recognised only when it increases the future economic benefits embodied in the specific asset to
which it relates. All other expenditure is recognised in the Statement of Profit and Loss as incurred.
m) Intangible assets under development
The Company expenses costs incurred during research phase to profit or loss in the year in which they are incurred. Development
phase expenses are initially recognised as intangible assets under development until the development phase is complete, upon
which the amount is recognised as intangible asset.
n) Borrowings costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset are recognised. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended
use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for recognised ion.
Other borrowing costs are expensed in the period in which they are incurred.
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