i These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to
as the ‘Ind AS’) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (‘Act’)
read with of the Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the
Act. The accounting policies are applied consistently to all the periods presented in the financial statements
The financial statements have been prepared under the historical cost convention with the exception of certain financial
assets and liabilities which have been measured at fair value, on an accrual basis of accounting.
All the assets and liabilities have been classified as current and non-current as per normal operating cycle of the Company
and other criteria set out in as per the guidance set out in Schedule III to the Act. Based on nature of services, the Company
ascertained its operating cycle as 12 months for the purpose of current and non-current classification of asset and liabilities.
The Company’s financial statements are reported in Indian Rupees, which is also the Company’s functional currency, and
all values are rounded to the nearest lakhs (INR 00,000), except when otherwise indicated.
ii Accounting Estimates
The preparation of the financial statements, in conformity with the Ind AS, requires the management to make estimates
and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and
disclosure of contingent liabilities as at the date of financial statements and the results of operation during the reported
period. Although these estimates are based upon management’s best knowledge of current events and actions, actual results
could differ from these estimates which are recognised in the period in which they are determined.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a
material accounting policy of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year. The Company based its assumptions and estimates on parameters available when the financial statements were
prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes
or circumstances arising that are beyond the control of the Company. Such changes are reflected in the financial statements in
the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
Deferred tax assets
In assessing the realisability of deferred income tax assets, management considers whether some portion or all of the
deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the
generation of future taxable income during the periods in which the temporary differences become deductible. Management
considers the scheduled reversals of deferred income tax liabilities, projected future taxable income and tax planning
strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income
over the periods in which the deferred income tax assets are deductible, management believes that the Company will realize
the benefits of those deductible differences. The amount of the deferred income tax assets considered realizable, however,
could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.
Defined benefit plans
The cost and present value of the gratuity obligation and compensated absences are determined using actuarial valuations.
An actuarial valuation involves making various assumptions that may differ from actual developments in the future.
These include the determination of the discount rate, future salary increases, attrition rate and mortality rates. Due to the
complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes
in these assumptions. All assumptions are reviewed at each reporting date.
iii Property, Plant and Equipment
Property, Plant and Equipment are stated at cost of acquisition including attributable interest and finance costs, if any,
till the date of acquisition/ installation of the assets less accumulated depreciation and accumulated impairment losses, if
any. Subsequent expenditure relating to Property, Plant and Equipment is capitalised 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.
All other repairs and maintenance costs are charged to the Statement of Profit and Loss as incurred. The cost and related
accumulated depreciation are eliminated from the financial statements, either on disposal or when retired from active use
and the resultant gain or loss are recognised in the Statement of Profit and Loss.
Capital work-in-progress, representing expenditure incurred in respect of assets under development and not ready for their
intended use, are carried at cost. Cost includes related acquisition expenses, construction cost, related borrowing cost and
other direct expenditure.
On transition to Ind AS, the Company has opted to continue with the carrying values measured under the previous GAAP
as at 1 April 2016 of its Property, Plant and Equipment and use that carrying value as the deemed cost.
iv Depreciation/ Amortisation
Depreciation/ amortisation is provided :
Tangible Assets:
- Depreciation on other tangible assets is provided on straight line basis considering the useful lives prescribed in
Schedule II to the Act on a pro-rata basis.
The useful lives have been determined based on technical evaluation carried out by the management’s expert, in order to
reflect the actual usage of the assets. The asset’s 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.
v 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.
a) Financial Assets
Initial Recognition
In the case of financial assets, not recorded at fair value through profit or loss (FVPL), financial assets are recognised
initially at fair value plus transaction costs that are directly 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 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 following categories:
Financial Assets at Amortised Cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model
with an objective to hold these assets in order to collect contractual cash flows and the contractual terms of the financial
asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding. Interest income from these financial assets is included in finance income using the effective
interest rate (“EIR”) method. Impairment gains or losses arising on these assets are recognised in the Statement of
Profit and Loss.
Financial Assets Measured at Fair Value
Financial assets are measured at fair value through Other comprehensive income( ‘OCI’ )if these financial assets are
held within a business model with an objective to hold these assets in order to collect contractual cash flows or to sell
these financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding. Movements in the carrying amount are
taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange
gains and losses which are recognised in the Statement of Profit and Loss.
Financial asset not measured at amortised cost or at fair value through OCI is carried at FVPL.
Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies the expected credit loss (“ECL”) model for measurement and
recognition of impairment loss on financial assets and credit risk exposures.
The Company follows ‘simplified approach’ for recognition of impairment loss allowance on trade receivables.
Simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment
loss allowance based on lifetime ECL 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.
ECL is the difference between all contractual cash flows that are due to the group 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. 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 impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the
Statement of Profit and Loss.
De-recognition of Financial Assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire,
or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to
control the transferred asset, the Company recognizes its retained interest in the assets and an associated liability for
amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company
continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
b) Equity Instruments and Financial Liabilities
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the
contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all
of its liabilities. Equity instruments which are issued for cash are recorded at the proceeds received. Equity instruments
which are issued for consideration other than cash are recorded at fair value of the equity instrument.
Financial Liabilities
1) Initial Recognition
Financial liabilities are classified, at initial recognition, as financial liabilities at FVPL, loans and borrowings and
payables as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and
borrowings and payables.
2) Subsequent Measurement
The measurement of financial liabilities depends on their classification, as described below
Financial liabilities at FVPL
Financial liabilities at FVPL include financial liabilities held for trading and financial liabilities designated upon
initial recognition as at FVPL. Financial liabilities are classified as held for trading if they are incurred for the
purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the
Statement of Profit and Loss.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost
using the EIR method. Any difference between the proceeds (net of transaction costs) and the settlement or
redemption of borrowings is recognised over the term of the borrowings in the Statement of Profit and Loss.
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.
3) De-recognition of Financial Liabilities
Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or
expired. 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 de-recognition of the original liability and recognition of a new liability. The difference in the respective
carrying amounts is recognised in the Statement of Profit and Loss.
c) Offsetting 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.
vi Employee Benefits
a Defined Contribution Plan
Contributions to defined contribution schemes such as provident fund, labour welfare are charged as an expense based
on the amount of contribution required to be made as and when services are rendered by the employees. The above
benefits are classified as Defined Contribution Schemes as the Company has no further obligations beyond the monthly
contributions.
b Defined Benefit Plan
The Company also provides for gratuity which is a defined benefit plan, the liabilities of which is determined based on
valuations, as at the balance sheet date, made by an independent actuary using the projected unit credit method. Re¬
measurement, comprising of actuarial gains and losses, in respect of gratuity are recognised in the OCI, in the period
in which they occur. Re-measurement recognised in OCI are not reclassified to the Statement of Profit and Loss in
subsequent periods. Past service cost is recognised in the Statement of Profit and Loss in the year of plan amendment
or curtailment. The classification of the Company’s obligation into current and non-current is as per the actuarial
valuation report.
c Short-term Benefits
Short-term employee benefits such as salaries, wages, performance incentives etc. are recognised as expenses at the
undiscounted amounts in the Statement of Profit and Loss of the period in which the related service is rendered.
Expenses on non-accumulating compensated absences is recognised in the period in which the absences occur.
d Termination benefits
Termination benefits are recognised as an expense as and when incurred.
vii Cash and Cash Equivalents
Cash and cash equivalents in the Balance Sheet comprises of cash at banks and on hand , which are subject to an insignificant
risk of changes in value.
viii Borrowing Costs
Borrowing costs consist of interest and other costs that the Company incurs in connection with the borrowing of funds.
Also, the EIR amortisation is included in finance costs.
Borrowing costs relating to acquisition, construction or production of a qualifying asset which takes substantial period of
time to get ready for its intended use are added to the cost of such asset to the extent they relate to the period till such assets
are ready to be put to use. All other borrowing costs are expensed in the Statement of Profit and Loss in the period in which
they occur.
ix Foreign Exchange Translation and Accounting of Foreign Exchange Transaction
a Initial Recognition
Foreign currency transactions are initially recorded in the reporting currency, by applying to the foreign currency
amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
b Conversion
Monetary assets and liabilities denominated in foreign currencies are reported using the closing rate at the reporting
date. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported
using the exchange rate at the date of the transaction.
c Treatment of Exchange Difference
Exchange differences arising on settlement/ restatement of short-term foreign currency monetary assets and liabilities
of the Company are recognised as income or expense in the Statement of Profit and Loss except those arising from
investment in Non Integral operations.
x Revenue Recognition
a 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.
b Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable
interest rate. Interest income is included under the head “other income” in the Statement of Profit and Loss.
c Revenue in respect of export sales is recognised on shipment of products.
d Dividend income is recognized when the company’s right to receive dividend is established.
e Rental Income is recognized on accrual basis as per the terms of agreement.
f Revenue from conversion charges is recognised on completion of particular Job work.
g Export incentives are recognised in the Statement of Profit and Loss when the right to receive establishes as per the
terms of the Scheme in respect of export made.
h The Interest subsidy accrued under Technology Upgradation Fund (TUF) Scheme are recognised on accrual basis and
reduced from the cost of funds available on loan. The recognition of TUF subsidy amount has been made on the basis
of entitlement under the scheme.
i Purchases are stated inclusive of custom duty, clearing & forwarding charges and net of discounts, returns and rate
differences.
j Sales are excluding GST and are stated net of discounts, returns and rebates.
xi Income Tax
Income tax comprises of current and deferred income tax. Income tax is recognised as an expense or income in the Statement
of Profit and Loss, except to the extent it relates to items directly recognised in equity or in OCI.
Current income tax is recognised based on the estimated tax liability computed after taking credit for allowances and
exemptions in accordance with the Income Tax Act, 1961. Current income tax assets and liabilities are measured at the
amount expected to be recovered from or 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.
b Deferred Income Tax
Deferred tax is determined by applying the Balance Sheet approach. Deferred tax assets and liabilities are recognised
for all deductible temporary differences between the financial statements’ carrying amount of existing assets and
liabilities and their respective tax base. Deferred tax assets and liabilities are measured using the enacted tax rates or
tax rates that are substantively enacted at the Balance Sheet date. The effect on deferred tax assets and liabilities of a
change in tax rates is recognised in the period that includes the enactment date. Deferred tax assets are only recognised
to the extent that it is probable that future taxable profits will be available against which the temporary differences can
be utilised. Such assets are reviewed at each Balance Sheet date to reassess realisation.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset. 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.
xii Impairment of Non-Financial Assets
As at each Balance Sheet date, the Company assesses whether there is an indication that a non-financial asset may be
impaired and also whether there is an indication of reversal of impairment loss recognised in the previous periods. If any
indication exists, or when annual impairment testing for an asset is required, the Company determines the recoverable
amount and impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.
Recoverable amount is determined:
- In case of an individual asset, at the higher of the assets’ fair value less cost to sell and value in use; and
- In case of cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of
cash generating unit’s fair value less cost to sell and value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate
that reflects current market assessments of the time value of money and risk specified to the asset. In determining fair value
less cost to sell, recent market transaction are taken into account. If no such transaction can be identified, an appropriate
valuation model is used.
Impairment losses of continuing operations, including impairment on inventories, are recognised in the Statement of Profit
and Loss, except for properties previously revalued with the revaluation taken to OCI. For such properties, the impairment
is recognised in OCI up to the amount of any previous revaluation.
When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written
off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through the
Statement of Profit and Loss.
xiii Trade receivables
A receivable is classified as a ‘trade receivable’ if it is in respect of the amount due on account of goods sold or services
rendered in the normal course of business. Trade receivables are recognised initially at fair value and subsequently measured
at amortised cost using the EIR method, less provision for impairment.
xiv Trade payables
A payable is classified as a ‘trade payable’ if it is in respect of the amount due on account of goods purchased or services
received in the normal course of business. These amounts represent liabilities for goods and services provided to the
Company prior to the end of the financial year which are unpaid. These amounts are unsecured and are usually settled as per
the payment terms stated in the contract. 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 their fair value and subsequently measured
at amortised cost using the EIR method.
xv Earnings Per Share
Basic earnings per share is computed by dividing the net profit or loss for the period attributable to the equity shareholders
of the Company by the weighted average number of equity shares outstanding during the period. The weighted average
number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus
shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding,
without a corresponding change in resources.
Diluted earnings per share is computed by dividing the net profit or loss for the period attributable to the equity shareholders
of the Company and weighted average number of equity shares considered for deriving basic earnings per equity share and
also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential
equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been
actually issued at fair value (i.e. the average market value of the outstanding equity shares).
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