2. Material Accounting Policy Information
(a) Basis of preparation
(i) Statement of compliance
These financial statements (“financial statements") have been prepared in accordance with Indian
Accounting Standards (Ind AS) prescribed under section 133 of the Companies Act, 2013 read with the
Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and, other relevant
provisions of the Act and guidelines issued by Securities and Exchange Board of India (SEBI) to the
extent applicable.
The financial statements have been prepared on accrual and going concern basis.
The financial statements were authorized for issue by the Company’s Board of Directors on 30 May 2025.
(ii) Functional and presentation currency
The functional currency of the Company is the Indian Rupee. These financial statements are presented in
Indian Rupees. All amounts have been rounded-off to the nearest lakhs, up to two places of decimal,
unless otherwise indicated.
(iii) Basis of measurement
The financial statements have been prepared on the historical cost basis except for the following items:
Estimates and underlying assumptions are reviewed on an ongoing basis. Any revisions to accounting
estimates are recognized prospectively in current and future periods.
Judgments
Information about judgments made in applying accounting policies that have the most significant effects
on the amounts recognised in the financial statements is included in the following notes:
- Note 2 (b) and 3 - Assessment of useful life and residual value of Property, plant and equipment
- Note 2 (c) and 3 - Assessment of useful life of Intangible assets
- Note 2 (d) and 8 - Inventory valuation
- Note 2 (f), 2 (g), 18 A, 18 B and 31 - Provisions and contingent liabilities
- Note 2 (i) and 23 - Revenue recognition
- Note 2 (l) and 39 - Income taxes
- Note 2 (m), 3 and 32 - Leases
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant impact on the
financial statements are as mentioned below:
Note 2 (e), 18 (A), 18 (B) and 37 - measurement of defined benefit obligations: key actuarial assumptions
Note 2 (g), 18 (A), 18 (B) and 31 - recognition and measurement of provisions and contingencies: key
assumptions about the likelihood and magnitude of an outflow of resources.
Note 2 (o) (ii) - Impairment test of non-financial assets: key assumptions underlying recoverable
amounts
Note 2 (o) (i) - Impairment of financial assets
Note 38 (B) and 2 (a) (v) - Fair value measurement of financial instruments
Note 19 and 2 (l) -Recognition of deferred tax assets: availability of future taxable profits against which
such deferred tax assets can be adjusted
(v) Measurement of fair values
A number of the Company’s accounting policies and disclosures require measurement of fair values, for
both financial and non-financial assets and liabilities. The Company has an established control
framework with respect to measurement of fair values.
Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the
valuation techniques as follows.
- Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices)
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs)
When measuring the fair value of an asset or liability, the Company uses observable market data as far as
possible. If the inputs used to measure the fair value of an asset or liability fall into different levels of the
fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the
fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting
period during which the changes have occurred.
Further information about the assumptions made while measuring fair values is included
in note 38 - financial instruments.
(vi) New Accounting Standards and amendments adopted by the Company
The Ministry of Corporate Affairs vide notification dated 9 September 2024 and 28 September 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 on or after 1 April 2024:
- Insurance Contracts —Ind AS 117
- Lease liability in sale and leaseback - amendments to Ind AS 116
These amendments did not have any material impact on the financial statements of the Company.
(b) Property, plant and equipment ('PPE')
(i) Recognition and measurement
Property, plant and equipment are measured at cost, which includes capitalised borrowing costs, less
accumulated depreciation and/ or accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties
and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly
attributable costs 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 a self-constructed item of property, plant and equipment comprises the cost of materials and
direct labor, any other costs directly attributable to bringing the item to working condition for its intended
use, and estimated costs of dismantling and removing the item and restoring the site on which it is
located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
accounted for as separate items (major components) of property, plant and equipment.
Capital work-in-progress comprises the cost of PPE that are not ready for their intended use at the
reporting date.
Advances paid towards acquisition of PPE outstanding at each Balance sheet date, are shown as capital
advances under other non-current assets.
Any gain or loss on disposal of item of PPE is recognised in the Statement of Profit and Loss.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated
with the expenditure will flow to the Company.
(iii) Depreciation
Depreciation is calculated on cost of items of PPE less their estimated residual values over their
estimated useful lives using the straight-line method, and is recognised in the Statement of Profit and
Loss. Assets acquired under finance leases are depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease
term. Freehold land is not depreciated.
Depreciation on items of PPE is calculated on the basis useful lives as specified below:
Depreciation method, useful lives and residual values are reviewed at each financial year-end 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 of).
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal
or retirement of an item of property, plant and equipment is determined as the difference between the
sales proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and
Loss.
(c) Intangible assets
(i) Intangible assets acquired separately:
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated
amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis
over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the
end of each reporting period, with the effect of any changes in estimate being accounted for on a
prospective basis.
(ii) Internally generated: Research and development
Expenditure on research activities is recognised in the Statement of Profit and Loss as incurred.
Development expenditure is capitalised as part of the cost of the resulting intangible asset only if the
expenditure can be measured reliably, the product or process is technically and commercially feasible,
future economic benefits are probable, and the Company intends to and has sufficient resources to
complete development and to use or sell the asset. Otherwise, it is recognised in the Statement of Profit
and Loss as incurred. Subsequent to initial recognition, the asset is measured at cost less accumulated
amortisation and/ or any accumulated impairment losses.
(iii) Subsequent expenditure
' Subsequent expenditure is capitalised 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.
(iv) Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values
over their estimated useful lives using the straight-line method, and is included in depreciation and
amortisation in the Statement of Profit and Loss.
The estimated useful lives are as follows:
- Software 3-10 years
- Technical know-how 2.5-15 years
Amortisation method, useful lives and residual values are reviewed at the end of each financial year and
adjusted if appropriate.
(v) Derecognition
Intangible assets are derecognised on disposal or when no future economic benefits are expected from
their use and disposal.
(d) Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on
the moving weighted average method, and includes expenditure incurred in acquiring the inventories,
production or conversion costs and other costs incurred in bringing them to their present location and
condition. In the case of manufactured inventories and work-in-progress, cost includes an appropriate
share of fixed production overheads based on normal operating capacity.
Net realisable value is 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.
The net realisable value of work-in-progress is determined with reference to the selling prices of related
finished products.
Raw materials, components and other supplies held for use in the production of finished products are not
written down below cost except in cases where material prices have declined and it is estimated that the
cost of the finished products will exceed their net realisable value. The comparison of cost and net
realisable value is made on an item-by-item basis.
(e) Employee benefits
Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as
the related service is provided. A liability is recognised for the amount expected to be paid e.g., salaries
and wages, short term compensated absences and bonus etc., if the Company has a present legal or
constructive obligation to pay this amount as a result of past service provided by the employee, and the
amount of obligation can be estimated reliably.
Post-employment benefits
- Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed
contributions and will have no legal or constructive obligation to pay further amounts. The Company
makes specified contributions towards these schemes such as Superannuation Fund, Provident Fund,
Employee State Insurance and other funds as determined under relevant schemes and/ or statue.
Obligations for contributions to defined contribution plans are recognised as an employee benefit
expense in the Statement of Profit and Loss in the periods during which the related services are rendered
by employees.
- Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. Gratuity is
a defined benefit plan. The liability or asset recognised in the balance sheet in respect of gratuity plan is
the present value of the defined benefits obligation at the end of the reporting period less the fair value of
plan assets. The defined benefit obligation is calculated annually by an actuary using the projected unit
credit method.
Remeasurement of the net defined benefit liability i.e. Gratuity, which comprise actuarial gains and
losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding
interest), are recognised in retained earnings. The Company determines the net interest expense
(income) on the net defined benefit liability (asset) for the period by applying the discount rate used to
measure the defined benefit obligation at the beginning of the annual period to the then-net defined
benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during
the period as a result of contributions and benefit payments. Net interest expense and other expenses
related to defined benefit plans are recognised in the Statement of Profit and Loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefits that
relates to past service (‘past service cost’ or ‘past service gain’) or the gain or loss on curtailment is
recognised immediately in the Statement of Profit and Loss. The Company recognises gains and losses
on the settlement of a defined benefit plan when the settlement occurs.
Other long-term employee benefits
Compensated absences
The Company’s net obligations in respect of long-term employee benefits other than post-employment
benefits is the amount of future benefits that employees have earned in return for their service in the
current and prior periods; that benefit is discounted to determine its present value, and the fair value of
any related assets is deducted. Obligations such as those related to compensated absences are
measured on the basis of an annual independent actuarial valuation using the projected unit cost credit
method. The employees can carry forward unutilized compensated absences and utilize them in future
periods or receive cash in lieu thereof as per the Company’s policy. Remeasurement gains or losses are
recognised in the Statement of Profit and Loss in the period in which they arise.
Termination benefits
Termination benefits are recognised as an expense when, as a result of past event, the Company has a
present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits
will be required to settle the obligation.
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