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.
(vi) New and amended standards adopted by the
Company
The Ministry of Corporate Affairs vide notification
dated May 7, 2025 and August 13, 2025 notified
the Companies (Indian Accounting Standards)
Amendment Rules, 2025 and Companies (Indian
Accounting Standards) Second Amendment
Rules, 2025, respectively, which amended certain
accounting standards (see below), and are effective
for annual reporting periods beginning on or after
April 1, 2025:
(a) Classification of Liabilities as Current or
Non-current and Non-current Liabilities with
Covenants - Amendments to Ind AS 1
As a result of the adoption of the amendments
to Ind AS 1, the Company changed its accounting
policy for the classification of borrowings (Refer
1.4 below).
This new policy did not result in a change in the
classification of the Company's borrowings.
The Company did not make retrospective
adjustments as a result of adopting the
amendments to Ind AS 1.
(b) Supplier Finance Arrangements - Amendments
to Ind AS 7 and Ind AS 107
As a result of the adoption of the amendments
to Ind AS 7 and Ind AS 107, the Company provided
new disclosures for liabilities under supplier
finance arrangements in note 22 and 46.
(c) International Tax Reform - Pillar Two Model
Rules - Amendments to Ind AS 12
Shakti Pumps (India) Limited group is not
within the scope of the OECD Pillar Two Model
Rules, as Pillar Two legislation has not yet been
enacted in any of the jurisdictions in which the
Company operates.
(d) Lack of Exchangeability - Amendments to Ind
AS 21
The amended Ind AS 21 have added requirements
to help entities to determine whether a currency
is exchangeable into another currency, and the
spot exchange rate to use where it is not.
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.
(vii) New standards or amendments not yet adopted
Classification of Liabilities as Current or Non¬
current and Non-current Liabilities with Covenants -
Amendments to Ind AS 1
This amendment also includes specific provisions that
will take effect for reporting periods beginning on or after
April 1, 2026, as outlined below.
Under the existing Ind AS 1, where there is a breach of a
material provision of a long-term loan arrangement on or
before the end of the reporting period with the effect that
the liability becomes payable on demand on the reporting
date, the entity does not classify the liability as current, if
the lender agreed, after the reporting period and before
the approval of the financial statements for issue, not to
demand payment as a consequence of the breach.
However, the amended requirements stipulate that
entities will no longer be permitted to consider lender
waivers that are granted after the reporting date but
before the financial statements are approved for the
purpose of classification of loans. This amendment is
required to be applied retrospectively in accordance with
Ind AS 8.
The Company does not expect this amendment to have an
impact on its operations or financial statements.
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, at
the end of the reporting period, the Company has a right
to defer settlement of the liability for at least 12 months
after the reporting period.
Covenants that the Company is required to comply
with, on or before the end of the reporting period,
are considered in classifying loan arrangements with
covenants as current or non-current. Covenants that the
Company is required to comply with after the reporting
period do not affect the classification.
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.
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