1. MATERIAL ACCOUNTING POLICIES
This note provides a list of the material accounting policies
adopted in the preparation of these standalone financial
statements. These policies have been consistently
applied to all the years presented.
1.1 Basis of Preparation
(i) Compliance with Ind AS
The standalone financial statements of the
Company have been prepared in accordance with
Indian Accounting Standards (Ind AS) notified
under Section 133 of the Companies Act, 2013 read
with Companies (Indian Accounting Standards)
Rules, 2015, as amended from time to time and
other relevant provisions of the Companies Act,
2013 ('the Act'). The financial statements have been
prepared on accrual and going concern basis.
(ii) Historical cost convention
The financial statements have been prepared on
historical cost basis, except for following:
- defined benefit plans- plan assets measured at
fair value
- share based payment transactions
(iii) Current and non-current classification
All assets and liabilities have been classified as
current or non-current as per the Company's
operating cycle and other criteria set out in
Schedule III (Division II) of the Companies Act,
2013. Based on the nature of products and the time
between the acquisition of assets for processing
and their realization in cash and cash equivalents,
the Company has ascertained its operating cycle
as 12 months for the purpose of current and non¬
current classification of assets and liabilities.
(iv) Functional currency
These financial statements have been prepared in
Indian Rupee which is the functional currency of
the Company.
(v) Rounding off amounts
All amounts disclosed in the financial statements
and notes have been rounded off to the nearest
INR crores as per the requirement of Schedule
III, unless otherwise stated. The Company from
the quarter ended June 2024, has changed its
rounding off denomination to crores from lakhs in
order to make it more useful to users of financial
statements. Accordingly, the figures of the
comparative period have also been changed to
give this effect. Further, the said change is in line
with Schedule III of the Companies Act, 2013.
(vi) New and amended standards adopted by the
Company
The Ministry of Corporate Affairs vide notification
dated September 9, 2024 and September 28,
2024 notified the Companies (Indian Accounting
Standards) Second Amendment Rules, 2024 and
Companies (Indian Accounting Standards) Third
Amendment Rules, 2024, respectively, which
amended/ notified certain accounting standards
(see below), and are effective for annual reporting
periods beginning on or after April 1, 2024:
• Insurance contracts - Ind AS 117; and
• Lease Liability in Sale and Leaseback -
Amendments to Ind AS 116
These amendments did not have any material
impact on the amounts recognised in prior periods
and are not expected to significantly affect the
current or future periods.
1.2 Property, plant and equipment
Freehold land is carried at historical cost. All other
items of property, plant and equipment are stated
at historical cost of acquisition or construction
less accumulated depreciation and accumulated
impairment loss, if any.
The cost of an item of property, plant and equipment
comprises its purchase price, including import duties
and other non-refundable taxes or levies and any
directly attributable cost of bringing the asset to
its working condition for its intended use including
relevant borrowing cost for qualifying assets. Any
trade discounts and rebates are deducted in arriving
at the purchase price.
When parts of an item of property, plant and equipment
have different useful lives, they are accounted for as
separate items (major components) of property, plant
and equipment.
Subsequent cost are included in the asset's carrying
amount or recognized as a separate asset, as
appropriate, only when it is probable that the future
economic benefits associated with the item will flow
to the Company and its cost can be measured reliably.
The carrying amount of any component accounted for
as a separate asset is derecognised when replaced. All
other repairs and maintenance are charged to profit
or loss during the reporting period in which they are
incurred.
An item of property, plant and equipment is
derecognised upon disposal or when no future
benefits are expected from its use or disposal. Gains
and losses on disposal of an item of property, plant
and equipment are determined by comparing the
proceeds from disposal with the carrying amount of
property, plant and equipment, and are recognised
net within other income/expenses in the statement of
profit and loss.
Cost of Capital Work in Progress ('CWIP') comprises
amount paid towards acquisition of property, plant and
equipment outstanding as of each balance sheet date
and construction expenditures, other expenditures
necessary for the purpose of preparing the CWIP for
its intended use and borrowing cost incurred before
the qualifying asset is ready for intended use. CWIP is
not depreciated until such time as the relevant asset is
completed and ready for its intended use.
DEPRECIATION METHODS, ESTIMATED USEFUL
LIVES AND RESIDUAL VALUE
Depreciation is calculated using the straight-line
method to allocate the cost of the assets, net of their
residual values, over their estimated useful lives as
follows:
The useful lives have been determined based on technical
evaluation done by the management which in certain class of
assets are different from those specified by Schedule II to the
Companies Act, 2013, in order to reflect the actual usage of
the assets. The residual values are not more than 5% of the
original cost of the asset.
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
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.
1.3 Inventories
Inventories are stated at the lower of cost and net
realisable value.
Cost of raw materials and packing materials comprises
cost of purchases. Cost of work-in-progress and
finished goods comprises direct material, 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 include all other costs incurred in
bringing the inventories to their present location and
condition and are net of rebates and discounts.
The costs of individual items of inventory are
determined on a weighted average cost basis.
Net realisable value represents 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. Raw material and
packing material are not written down below the cost
if the finished products in which they will be used are
expected to sell at or above the cost.
1.4 Borrowings
Borrowings are initially recognised at fair value, net
of transaction costs incurred and 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.
Borrowings are derecognised from the balance
sheet when the obligation specified in the contract
is discharged, cancelled or expired. The difference
between the carrying amount of a financial liability
that has been extinguished or transferred to another
party and the consideration paid, including any non¬
cash assets transferred or liabilities assumed, is
recognized in profit or loss as other income or other
expenses.
Borrowings are classified as current liabilities unless,
as at the end of the reporting period, the Company
has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting
period.
1.5 Borrowing Costs
General and specific borrowing costs that are
directly attributable to the acquisition, construction
or production of a qualifying asset are capitalized
during the period of time that is required to complete
and prepare the asset for its intended use or sale.
Qualifying assets are assets that necessarily take a
substantial period of time to get ready for its intended
use or sale. All other borrowing costs are expensed in
the period in which they are incurred.
1.6 Income tax
The income tax expense or credit for the year is the tax
payable on the current year's taxable income based on
the applicable income tax rate adjusted by changes
in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses (if
any).
The Company's current income tax charge is calculated
on the basis of the tax laws enacted or substantively
enacted at the balance sheet date in the countries
where the Company and its branch operates and
generates taxable income. Management periodically
evaluates positions taken in tax returns with respect
to situations in which applicable tax regulations is
subject to interpretation and considers whether it
is probable that a taxation authority will accept an
uncertain tax treatment. The Company measures its
tax balances either based on the most likely amount
or the expected value, depending on which method
provides a better prediction of the resolution of the
uncertainty.
Deferred tax is provided in full, using the liability
method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying
amounts in the standalone financial statements.
Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted
by the end of the reporting year and are expected to
apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible
temporary differences and unused tax losses 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.
1.7 Trade receivables
Trade receivables are amounts due from customers
for goods sold or services performed in the ordinary
course of business and reflect the Company's
unconditional right to consideration (that is, payment
is due only on the passage of time).
Trade receivables are recognised initially at the
transaction price as they do not contain significant
financing components. The Company holds the
trade receivables with the objective of collecting the
contractual cash flows and therefore measures them
subsequently at amortised cost using the effective
interest method, less loss allowance.
For trade receivables and contract assets, the
Company applies the simplified approach required
by Ind AS 109, which requires expected lifetime
losses to be recognised from initial recognition of the
receivables.
1.8 Trade and Other Payables
These amounts represent liabilities, 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 initially recognised at their fair value
and subsequently measured at amortised cost using
the effective interest method.
|