2. MATERIAL ACCOUNTING POLICIES
a. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The company has adopted Indian Accounting Standards (Ind AS) with effect from 1st April 2017, with transition
date of 1st April 2016, pursuant to notification issued by Ministry of Corporate Affairs dated 16th February
2015, notifying the Companies (Indian Accounting Standards) Rules, 2015. Accordingly, the financial statements
comply with Ind AS prescribed under section 133 of the Companies Act, 2013 (the "Act"), read together with
Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015, relevant provisions of the Act and other
accounting principles generally accepted in India.
The financial statements upto and for the year ended on 31st March 2017 were prepared in accordance with
the accounting standards notified under Companies (Accounting Standard) Rules,2006 (as amended), as notified
under section 133 of the Act (Previous Indian GAAP) and other relevant provisions of the Act.
The financial statements are prepared on the historical cost convention, except for certain financial instruments
which are measured at fair value. Accounting policies have been consistently applied except where:
i) A newly issued accounting standard is initially adopted or a revision to an existing accounting standard
requires a change in the accounting policy hitherto in use.
ii) The Company presents an additional balance sheet at the beginning of the earliest comparative period
when: it applies an accounting policy retrospectively; it makes a retrospective restatement of items in its
financial statements; or, when it reclassifies items in its financial statements, and the change has a material
effect on the financial statements.
All amounts are stated in Lakhs of Rupees, rounded off to two decimal places, except when otherwise indicated.
The financial statements were authorised for issue by the Board of Directors of the company on 28.04.2025.
b. CURRENT VERSUS NON-CURRENT CLASSIFICATION
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or intended for sale or consumption in, the company's normal operating
cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within twelve months after the reporting period; or
d) it is cash or cash equivalent unless it 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 assets
Liabilities
A Liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company's normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within twelve months after the reporting period; or
d) the company does not have an unconditional right to defer settlement of the liability for at least 12 months
after the reporting period. Terms of liability that could, at the option of the counterparty, result in its
settlement by the issue of equity instruments do not affect its classification.
All other liabilities are classified as non-current liabilities.
c. USE OF ESTIMATES
The preparation of financial statements in conformity with Ind AS requires management to make estimates and
assumptions that affect the reported amounts of Revenue, Expenses, Assets and Liabilities and disclosure of
contingent liabilities at the end of the reporting period. Difference between the actual results and estimates are
recognized in the period in which the results are known / materialized.
d. PROPERTY, PLANT AND EQUIPMENT
Initial recognition and measurement
The cost of an item of property, plant and equipment is recognized as an asset if, and only if:
a) it is probable that future economic benefits associated with the item will flow to the entity; and
b) the cost of the item can be measured reliably.
Property, Plant and Equipment ('PPE') are stated at cost of acquisition or construction including any costs directly
attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the
manner intended by management less accumulated depreciation and cumulative impairment losses & net of
recoverable taxes (net of Cenvat and VAT credit wherever applicable).
Borrowing Cost attributable to acquisition, construction of qualifying assets is capitalized until such time as the
assets are substantially ready for their intended use. Indirect expenses during construction period, which are
required to bring the asset in the condition for its intended use by the management and are directly attributable
to bringing the asset to its position, are also capitalised.
Subsequent Measurement
Subsequent expenditure related to an item of PPE is added to its carrying amount or recognized as a separate
asset, if appropriate and carrying amount of replacement parts is derecognized at its carrying value.
Spare parts or stores meeting the definition of PPE, either procured along with equipment or subsequently, are
capitalized in the asset's carrying amount or recognized as separate asset, if appropriate. However, cost of day-
to-day servicing are recognized in profit or loss as incurred. Cost of day-to-day service primarily include costs of
labour, consumables, and cost of small spare parts.
An item of PPE is derecognized upon disposal or when no future economic benefits are expected to arise
from continued use of the asset. Any gain or loss arising on the disposal or retirement of Property, plant and
equipment is determined as the difference between the sales proceeds and the carrying amount of the assets
and is recognized in profit or loss.
Transition to Ind AS
For transition to Ind AS, the company has elected to continue with the carrying value of all of its property, plant
and equipment recognized as at 1st April, 2015 measured as per previous GAAP and use that carrying value as
the deemed cost of Property, Plant & Equipment.
Depreciation / amortization
a. Depreciation on items of PPE is provided on straight line method in accordance with the useful life as
specified in Schedule II to the Companies Act, 2013.
b. Depreciation on additions to assets or on sale/discard of assets is calculated pro-rata from the date of such
addition or up to the date of such sale / discard.
c. Assets residual values and useful lives are reviewed and adjusted, at the end of each reporting period.
The following useful lives are applied:
e. CAPITAL WORK-IN-PROGRESS
Capital Work in Progress comprises of Property, Plant and Equipment that are not ready for their intended use
at the end of reporting period and are carried at cost. Cost includes related acquisition expenses, construction
cost, borrowing cost capitalized and other direct expenditure. At the point when an asset is capable of operating
in the manner intended by management, the cost of construction is transferred to the appropriate category of
Property, Plant and Equipment. Costs are capitalised till the period of assets are substantially ready for their
intended use. Depreciation is not recorded on capital work-in-progress until construction and installation is
complete and the asset is substantially ready for its intended use.
f. RIGHT OF USE ASSETS
Company as a Lessee
Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with
any option to extend or terminate the lease, if the use of such option is reasonably certain.
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 underlying asset or the site on
which it is located, less any lease incentives received. 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 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.
Finance lease
The Company has entered into land lease arrangement at various locations for a period of 90 years. In case of
lease of land for 90 years and above, it is likely that such leases meet the criteria that at the inception of the
lease the present value of the minimum lease payments amounts to at least substantially all of the fair value of
the leased asset. Accordingly, the Company has classified leasehold land as finance leases applying Ind AS 17.
For such leases, the carrying amount of the right of-use asset at the date of initial application of Ind AS 116 is
the carrying amount of the lease asset on the transition date as measured applying Ind AS 17. Leasehold land is
amortised on a straight-line basis over the unexpired period of their respective lease. Leasehold improvements
are depreciated on straight line basis over their initial agreement period.
g. INTANGIBLE ASSETS
Intangible assets with finite useful life are stated at cost of acquisition, less accumulated depreciation/
amortisation and impairment loss, if any. The cost of Intangible Assets comprises its purchase price net of any
trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable
from the tax authorities). Amortisation is recognised in Statement of Profit and Loss account on straight-line
basis over estimated useful lives of respective intangible assets, but not exceeding useful lives given hereunder:
An item of Intangible Asset or any significant part initially recognised is derecognised 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 net disposal
proceeds and carrying amount of the asset) is included in Statement of Profit and Loss Account when asset is
derecognised.
h. FINANCIAL INSTRUMENTS
1. Financial Assets
Initial recognition and measurement
Financial Assets are recognised when the Company becomes a party to contractual provisions of Financial
Instrument. Financial assets are initially measured at Fair Value. Transaction costs that are directly
attributable to acquisition of financial assets (other than financial assets at Fair Value through Profit or Loss)
are added to fair value of financial assets. Transaction costs directly attributable to acquisition of financial
assets at Fair Value through profit or loss are recognised immediately in statement of Profit and Loss.
Subsequent measurement
I. Debt Instruments at Amortised Cost
A 'debt instrument' is measured at amortised cost if both of the following conditions are met:
a. The asset is held within a business model whose objective is to hold assets for collecting contractual
cash flows, and
b. Contractual terms of asset give rise on specified dates to cash flows that are Solely Payments of
Principal and Interest (SPPI) on principal amount outstanding.
After initial measurement, such Financial Assets are subsequently measured at amortised cost using
Effective Interest Rate (EIR) method. All other debt instruments are measured at Fair Value through
Other Comprehensive Income (FVOCI) or Fair Value through Profit and Loss (FVTPL) based on the
Company's business model.
II. Equity Investments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which
are held for trading are classified as at fair value through Profit and Loss (FVTPL). For all other
equity instruments, the Company decides to classify the same either as at Fair Value through Other
Comprehensive Income (FVOCI) or Fair Value through Profit and Loss (FVTPL) on an instrument-to-
instrument basis.
III. Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement
and recognition of impairment loss on financial assets that are debt instruments, and are measured
at amortised cost e.g., Loans, Debt Securities, Deposits and Trade Receivables or any contractual right
to receive cash or another financial asset that result from transactions that are within scope of Ind AS
115.
The Company follows 'Simplified Approach' for recognition of impairment loss allowance on trade
receivables. Application of simplified approach 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, the Company reverts to recognising impairment loss allowance based on 12 month ECL.
ECL impairment loss allowance (or reversal) recognized during the period is recognized under the
head 'Other Expenses' in the statement of Profit and Loss. The Balance Sheet presentation for various
financial instruments is described below:
i. Financial assets measured as at amortised cost: ECL is presented as an allowance, i.e., as an
integral part of the measurement of those assets in the Balance Sheet. This allowance reduces the
net carrying amount.
ii. Debt instruments measured at FVTPL: Since financial assets are already reflected at fair value,
impairment allowance is not further reduced from its value. Change in fair value is taken to the
statement of Profit and Loss.
iii. Debt instruments measured at FVTOCI: Since financial assets are already reflected at Fair Value,
impairment allowance is not further reduced from its value. Rather, ECL amount is presented as
'Accumulated Impairment Amount' in the Other Comprehensive Income (OCI). The Company does
not have any Purchased or Originated Credit Impaired (POCI) financial assets, i.e., financial assets
which are credit impaired on purchase/origination.
IV. Derecognition of Financial Assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is primarily derecognised when:
i. The rights to receive cash flows from asset has expired, or
ii. 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:-
(a) The Company has transferred substantially all risks and rewards of the asset, or
(b) The Company has neither transferred nor retained substantially all 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 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 recognise
transferred asset to the extent of the Company's continuing involvement. In that case, the
Company also recognises an associated liability. The transferred asset and the associated liability
are measured on a basis that reflects rights and obligations that the Company has retained.
2. Financial liability
Initial recognition and measurement
Financial liabilities are classified at initial recognition as:
a. Financial liabilities at fair value through Profit or Loss
b. Loans and Borrowings
c. Payables
All financial liabilities are recognised initially at fair value and in case of loans and borrowings and payables,
they are recognised net of directly attributable transaction costs.
Subsequent measurement
Measurement of financial liabilities depends on their classification as below:
a. Financial liabilities at Fair Value Through Profit or Loss (FVTPL): Gains or losses on liabilities are
recognised in the statement of profit and loss. Financial liabilities designated upon initial recognition at
fair value through statement of profit and loss are designated as such at the initial date of recognition,
and only if criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/losses
attributable to changes in own credit risk is recognized in OCI. These gains/losses are not subsequently
transferred to statement of profit and loss. However, the Company may transfer cumulative gain or
loss within equity. All other changes in fair value of such liability are recognised in the statement of
profit and loss.
b. Loans and Borrowings: After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the Effective Interest Rate (hereinafter referred as
EIR) method. Gains and Losses are recognised in statement of profit and loss when liabilities are
derecognised as well as through EIR amortisation process. Amortised cost is calculated by taking into
account any discount or premium on acquisition and fees or costs that are an integral part of EIR. EIR
amortisation is included as Finance Costs in the statement of profit and loss.
c. 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.
Derecognition of Financial liability
A Financial Liability is de-recognised when obligation under the liability is discharged or cancelled or expires.
i. INVESTMENTS
Subsidiaries
As per Ind AS 27, Control exists when the Company has power over the entity, is exposed, or has rights
to variable returns from its involvement with the entity and has the ability to affect those returns by
using its power over entity. Power is demonstrated through existing rights that give the ability to direct
relevant activities, those which significantly affect the entity's returns.
Investments in subsidiaries are carried at cost as per Ind AS 27.
Associates and Joint Ventures
A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to net assets of joint venture. Joint control is contractually agreed sharing
of control of an arrangement, which exists only when decisions about relevant activities require
unanimous consent of parties sharing control.
An associate is an entity over which the Company has significant influence. Significant influence is
power to participate in financial and operating policy decisions of investee but is not control or joint
control over those policies.
Investment in joint ventures and associates are carried at cost as per Ind AS 27. Cost comprises price
paid to acquire investment and directly attributable cost.
In the above, cost is arrived at by FIFO cost method. In case of Finished Goods and Stock in Process, it also
includes manufacturing & related establishment overheads, depreciation etc.
All the spares, which are primarily meant to be used for capitalization (except consumables and maintenance
stores), are considered as part of the plant & machinery and shown accordingly.
k. CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents comprise Cash in Hand, Balances in Bank Account, Remittance in Transit, Cheques
in hand and Demand Deposits, together with other short-term, highly liquid investments (original maturity less
than 3 months) that are readily convertible into known amounts of cash and which are subject to an insignificant
risk of changes in value.
l. TAXES
Current Income Tax
Current Income tax assets and liabilities are measured at 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.
Current income tax relating to items recognised outside Profit and Loss is recognised outside profit and
loss (either in Other Comprehensive Income or in Equity). Current tax items are recognised in correlation to
underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken
in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and
establishes provisions where appropriate.
Deferred Tax
Deferred Income Taxes are calculated using Balance Sheet Approach, on temporary differences between tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except when it is probable that
temporary differences will not reverse in foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences and carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are recognised to extent that it is probable that taxable
profit will be available against which deductible temporary differences and carry forward of unused tax credits
and unused tax losses can be utilized.
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 utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised 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 realised 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 recognised outside profit or loss is recognised outside profit or loss (either in
other comprehensive income or in equity). Deferred tax items are recognised 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 and the deferred taxes relate to the same taxable entity and same taxation
authority.
Tax expense for the year comprises of current tax and deferred tax.
Indirect Taxes
Expenses and Assets are recognised net of the amount of Indirect Taxes viz. GST/VAT, except when the tax
incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, indirect
tax is recognised as part of cost of acquisition of asset or as part of expense item, as applicable.
Excise Duty
Excise Duty has been accounted on the basis of both payments made in respect of goods cleared and also
provision made for goods lying in factory premises. Cenvat credit is accounted on accrual basis on purchase of
materials.
m. REVENUE RECOGNITION
Revenue from contracts
Revenue from contracts with customers is recognised when control of the goods or services are transferred
to the customer at an amount that reflects the consideration to which the Company expects to be entitled
in exchange for those goods or services. Revenue is measured based on the transaction price, which is the
consideration, adjusted for discounts, incentive schemes, if any, as per contracts with customers. Taxes collected
from customers on behalf of Government are not treated as Revenue. Refund of duties and taxes received from
government are treated as part of revenue.
Interest Income
Interest income from debt instruments is recognised using the effective interest rate method. The effective
interest rate is rate that exactly discounts estimated future cash receipts through expected life of the financial
asset to gross carrying amount of a financial asset. When calculating effective interest rate, the Company
estimates expected cash flows by considering all contractual terms of financial instrument but does not consider
expected credit losses.
Other Income
Other claims including interest on outstanding are accounted for when there is virtual certainty of ultimate
collection.
n. EMPLOYEE BENEFIT SCHEMES
Short-term employee benefits
Employee benefits payable wholly within twelve months of receiving employee services are classified as short¬
term employee benefits. These benefits include salaries and wages, performance incentives and compensated
absences which are expected to occur in next twelve months.
Compensated Absences
Company provides for encashment of accumulated leaves with pay subject to certain rules. The employees are
entitled to accumulate leave subject to certain limits, for future encashment/availment. The liability is provided
based on number of days of unutilized leave at each Balance Sheet date on basis of an independent actuarial
valuation.
Gratuity
Liabilities with regard to gratuity benefits payable in future are determined by actuarial valuation at each Balance
Sheet date using the Projected Unit Credit method. Actuarial gains and losses arising from changes in actuarial
assumptions are recognized in Other Comprehensive Income and shall not be reclassified to the Statement of
Profit and Loss in subsequent period.
Provident Fund
Eligible employees of the Company receive benefits from a Provident Fund, which is a defined benefit plan. Both
the eligible employee and the Company make monthly contributions to provident fund plan equal to a specified
percentage of covered employee's salary.
o. FOREIGN CURRENCY
Functional and presentation currency
The management has determined the currency of the primary economic environment in which the company
operates i.e., functional currency, to be Indian Rupee (INR). The financial statements are presented in Indian
Rupee in lakhs, which is company's functional and presentation currency.
Transactions and balances
Foreign Currency transactions during the year are recorded at rates of exchange prevailing on the date of
transaction in the functional currency. Foreign currency monetary assets and liabilities are translated at using
the year-end exchange rate. Exchange gains and losses are duly recognised in the Statement of profit and loss.
All monetary assets and liabilities in foreign currency are restated at the end of the accounting period.
p. EARNINGS PER SHARE
a. Basic EPS is calculated by dividing profit/ (loss) attributable to equity shareholders of the Company by
weighted average number of equity shares outstanding during the period.
b. Diluted EPS is computed using profit/ (loss) for the year attributable to shareholder' and weighted average
number of equity and potential equity shares outstanding during the period, except where the result would
be anti-dilutive. Potential equity shares that are converted during the year are included in the calculation
of diluted earnings per share, from the beginning of the year or date of issuance of such potential equity
shares, to the date of conversion.
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