Note 2. Significant accounting policies
2.1 Basis of preparation
The financial statements of the Company have been
prepared in accordance with Indian Accounting Standards
(Ind AS) notified under the Companies (Indian Accounting
Standards) Rules, 2015.
For all periods up to and including the year ended 31 March
2024, the Company prepared its financial statements
in accordance accounting standards notified under the
section 133 of the Companies Act 2013, read together with
paragraph 7 of the Companies (Accounts) Rules, 2014
(Indian GAAP). These financial statements for the year
ended 31 March 2025 are the first the Company has
prepared in accordance with Ind AS. Refer note 49 for
information on how the Company adopted Ind AS.
The financial statements have been prepared on a
historical cost basis, except for the following assets and
liabilities which have been measured at fair value:
Derivative financial
• instruments,
• Certain financial assets and liabilities measured at
fair value (refer accounting policy regarding financial
instruments),
The financial statements are presented in INR and all
values are rounded to the nearest rupee, except when
otherwise indicated.
a. ) Current versus non-current classification
The Company presents assets and liabilities in
the balance sheet based on current/ non-current
classification. An asset is treated as current when
it is:
• Expected to be realised or intended to be sold or
consumed in normal operating cycle
• Expected to be realised within twelve months
after the reporting period, or
• Cash or cash equivalent unless 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.
A liability is current when:
• It is expected to be settled in normal operating
cycle
• It is due to be settled within twelve months after
the reporting period, or
• There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period
The Company classifies all other liabilities as
non-current.
Deferred tax assets and liabilities are classified as
non-current assets and liabilities. The operating
cycle is the time between the acquisition of
assets for processing and their realisation in
cash and cash equivalents. The company has
identified twelve months as its operating cycle.
b. ) Foreign currencies
The Company's financial statements are
presented in INR.
(i) Initial recognition
Foreign currency transactions are recorded
in the functional currency, by applying to
the foreign currency amount the exchange
rate between the functional currency and
the foreign currency at the date of the
transaction.
(ii) Conversion
Monetary assets and liabilities denominated
in foreign currencies are translated at the
functional currency spot rates of exchange
at the reporting date. Non-monetary items,
which are measured in terms of historical
cost denominated in a foreign currency,
are reported using the exchange rate at the
date of the transaction. Non-monetary items
measured at fair value in a foreign
currency are translated using the exchange
rates at the date when the fair value is
determined. The gain or loss arising on
translation of non-monetary items measured
at fair value is treated in line with the
recognition of the gain or loss on the change
in fair value of the item.(i.e., translation
differences on items whose fair value gain
or loss is recognised in OCI or profit or loss
are also recognised in OCI or profit or loss,
respectively).
The company has continued the policy
adopted for accounting for exchange
differences arising from translation of long¬
term foreign currency monetary items
recognised in the financial statements
for the period ending immediately before
the beginning of the first Ind AS financial
reporting period as per the previous GAAP.
c.) Fair value measurement
The Company measures financial instruments at
fair value at each balance sheet date. Fair value
is the price that would be received to sell an
asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement
is based on the presumption that the transaction
to sell the asset or transfer the liability takes
place either:
In the principal market for the asset or liability, or
In the absence of a principal market, in the most
advantageous market for the asset or liability
The principal or the most advantageous market
must be accessible by the Company The fair
value of an asset or a liability is measured using
the assumptions that market participants would
use when pricing the asset or liability, assuming
that market participants act in their economic
best interest.
A fair value measurement of a non-financial
asset takes into account a market participant's
ability to generate economic benefits by using
the asset in its highest and best use or by selling
it to another market participant that would use
the asset in its highest and best use.
The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorised within the fair value hierarchy,
described as follows, based on the lowest
level input that is significant to the fair value
measurement as a whole:
Level 1— Quoted (unadjusted) market prices in
active markets for identical assets or
liabilities
Level 2— Valuation techniques for which the
lowest level input that is significant to
the fair value measurement is
directly or indirectly observable
Level 3— Valuation techniques for which the
lowest level input that is significant to
the fair value measurement is
unobservable
For assets and liabilities that are recognised in
the financial statements on a recurring basis, the
Company determines whether transfers have
occurred between levels in the hierarchy by re¬
assessing categorisation (based on the lowest
level input that is significant to the fair value
measurement as a whole) at the end of each
reporting period.
For the purpose of fair value disclosures, the
Company has determined classes of assets and
liabilities on the basis of the nature, characteristics
and risks of the asset or liability and the level of
the fair value hierarchy as explained above.
This note summarises accounting policy for fair
value. Other fair value related disclosures are
given in the relevant notes.
Disclosures for valuation methods, significant
estimates and assumptions (note 35)
Contingent consideration (note 27)
Quantitative disclosures of fair value
measurement hierarchy (note 34)
Financial instruments (including those carried at
amortised cost)
d.) Revenue recognition
Revenue is recognised to the extent that it is
probable that the economic benefits will flow
to the Company and the revenue can be reliably
measured, regardless of when the payment is
being made. Revenue is measured at the fair
value of the consideration received or receivable,
taking into account contractually defined terms
of payment and excluding taxes or duties
collected on behalf of the government. The
Company has concluded that it is the principal
in all of its revenue arrangements since it is the
primary obligor in all the revenue arrangements
as it has pricing latitude and is also exposed to
inventory and credit risks.
The specific recognition criteria described below
must also be met before revenue is recognised.
Sale of goods
Revenue from the sale of goods is recognised
when the significant risks and rewards of
ownership of the goods have passed to the
buyer, usually on delivery of the goods. Revenue
from the sale of goods is measured at the fair
value of the consideration received or receivable,
net of returns and allowances, trade discounts
and volume rebates.
Income from services
Revenue from services is recognised as and
when services are rendered. The Company
collects GST on behalf of the government and,
therefore, it is not an economic benefit flowing to
the company. Hence, it is excluded from revenue.
Scrap Sale
Scrap sale is recognized when the Control of the
scrap is transferred to the buyer.
The amount of revenue can be measured reliably
and it is probable that economic benefits will
flow to the entity.
Interest
For all debt instruments measured either at
amortised cost or at fair value through other
comprehensive income, interest income is
recorded using the effective interest rate
(EIR). EIR is the rate that exactly discounts the
estimated future cash payments or receipts
over the expected life of the financial instrument
or a shorter period, where appropriate, to the
gross carrying amount of the financial asset
or to the amortised cost of a financial liability.
When calculating the effective interest rate, the
Company estimates the expected cash flows
by considering all the contractual terms of the
financial instrument (for example, prepayment,
extension, call and similar options) but does
not consider the expected credit losses. Interest
income is included in finance income in the
statement of profit and loss.
Subsidy Received
Subsidies are recognised when there is
reasonable assurance that the entity will comply
with the conditions attached to it.
It is reasonably certain that the subsidy will be
received.
e.) Taxes
Current income tax
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.
Current income tax relating to items recognised
outside profit or loss is recognised outside profit
or loss (either in other comprehensive income
or in equity). Current tax items are recognised
in correlation to the underlying transaction
either in OCI or directly in equity. Management
periodically evaluates positions taken in the
tax returns with respect to situations in which
applicable tax regulations are subject to
interpretation and establishes provisions where
appropriate.
Deferred tax
Deferred tax is provided using the liability method
on temporary differences between the 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 the deferred tax liability arises from
the initial recognition of goodwill or an
asset or liability in a transaction that is not a
business combination and, at the time of the
transaction, affects neither the accounting
profit nor taxable profit or loss
• In respect of taxable temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures, when
the timing of the reversal of the temporary
differences can be controlled and it is
probable that the temporary differences will
not reverse in the foreseeable future Deferred
tax assets are recognised for all deductible
temporary differences, the carry forward of
unused tax credits and any unused tax losses.
Deferred tax assets are recognised to the
extent that it is probable that taxable profit
will be available against which the deductible
temporary differences, and the carry forward
of unused tax credits and unused tax losses
can be utilised, except:
• When the deferred tax asset relating to the
deductible temporary difference arises from
the initial recognition of an asset or liability in a
transaction that is not a business combination
and, at the time of the transaction, affects
neither the accounting profit nor taxable
profit or loss
• In respect of deductible temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures,
deferred tax assets are recognised only to the
extent that it is probable that the temporary
differences will reverse in the foreseeable
future and taxable profit will be available
against which the temporary differences can
be utilised
The 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 the same taxation
authority.
GST paid on acquisition of assets or on incurring
expenses
Expenses and assets are recognised net of the
amount of Goods and Service Taxes paid (GST),
except:
• When the tax incurred on a purchase of
assets or services is not recoverable from the
taxation authority, in which case, the tax paid
is recognised as part of the cost of acquisition
of the asset or as part of the expense item, as
applicable
• When receivables and payables are stated
with the amount of tax included
The net amount of tax recoverable from, or
payable to, the taxation authority is included as
part of receivables or payables in the balance
sheet.
f. ) Property, plant and equipment
The company has elected to continue with the
carrying value for all of its property, plant
and equipment as recognised in the financial
statements as at the date of transition to Ind
ASs, measured as per the previous GAAP and
use that as its deemed cost as at the date of
transition after making necessary adjustments
in accordance with the relevant IND AS Building,
Capital work in progress, plant and equipment is
stated at cost, net of accumulated depreciation
and accumulated impairment losses, if any. Such
cost includes the cost of replacing part of the
plant and equipment and borrowing costs for
long-term construction projects if the recognition
criteria are met. When significant parts of plant
and equipment are required to be replaced
at intervals, the company depreciates them
separately based on their specific useful lives.
Likewise, when a major inspection is performed,
its cost is recognised in the carrying amount of
the plant and equipment as a replacement if the
recognition criteria are satisfied. All other repair
and maintenance costs are recognised in profit
or loss as incurred.
Depreciation on fixed assets is calculated on
a straight-line basis based on the useful lives
estimated by the management.
g. ) Intangible assets
Intangible assets acquired separately are
measured on initial recognition at cost. Following
initial recognition, intangible assets are carried
at cost less any accumulated amortisation and
accumulated impairment losses. Internally
generated intangibles are not capitalised and the
related expenditure is reflected in profit or loss in
the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed
as either finite or indefinite.
Intangible assets with finite lives are amortised
over the useful economic life and assessed for
impairment whenever there is an indication
that the intangible asset may be impaired.
The amortisation period and the amortisation
method for an intangible asset with a finite
useful life are reviewed at least at the end of each
reporting period. Changes in the expected useful
life or the expected pattern of consumption
of future economic benefits embodied in the
asset are considered to modify the amortisation
period or method, as appropriate, and are
treated as changes in accounting estimates.
The amortisation expense on intangible assets
with finite lives is recognised in the statement
of profit and loss unless such expenditure forms
part of carrying value of another asset.
Intangible assets with indefinite useful lives are
not amortised, but are tested for impairment
annually, either individually or at the cash¬
generating unit level. The assessment of indefinite
life is reviewed annually to determine whether
the indefinite life continues to be supportable. If
not, the change in useful life from indefinite to
finite is made on a prospective basis.
Gains or losses arising from derecognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the
carrying amount of the asset and are recognised
in the statement of profit and loss when the
asset is derecognised.
h.) Borrowing costs
Borrowing costs directly attributable to the
acquisition, construction or production of an
asset that necessarily takes a substantial period
of time to get ready for its intended use or sale
are capitalised as part of the cost of the asset.
All other borrowing costs are expensed in the
period in which they occur. Borrowing costs
consist of interest and other costs that an entity
incurs in connection with the borrowing of
funds. Borrowing cost also includes exchange
differences to the extent regarded as an
adjustment to the borrowing costs.
i.) Leases
The determination of whether an arrangement is
(or contains) a lease is based on the substance
of the arrangement at the inception of the
lease. The arrangement is, or contains, a lease
if fulfilment of the arrangement is dependent
on the use of a specific asset or assets and the
arrangement conveys a right to use the asset or
assets, even if that right is not explicitly specified
in an arrangement.
Lease is a contract that provides to the customer
(lessee) the right to use an asset for a period of
time in exchange for consideration.
Company as a lessee
A lessee is required to recognise assets
and liabilities for all leases and to recognise
depreciation of leased assets separately from
interest on lease liabilities in the statement of
Profit and Loss. The Company uses the practical
expedient to apply the requirements of this
standard to a portfolio of leases with similar
characteristics if the effect on the financial
statements of applying to the portfolio does not
differ materially from applying the requirement
to the individual leases within that portfolio.
However according to Ind AS 116, for leases with
a lease term of 12 months or less (short-term
leases) and for leases for which the underlying
asset is of low value, not to recognize a right-
of-use asset and a lease liability. The Company
applies both recognitionexemptions. The
lease payments associated with those leases
are generally recognized as an expense on a
straight-line basis over the lease term or another
systematic basis if appropriate.
Right to use asset
Right-of-use assets, are measured at cost less
any accumulated depreciation and, if necessary,
any accumulated impairment.
The cost of a right-of-use asset comprises the
present value of the outstanding lease payments
plus any lease payments made at or before the
commencement date less any lease incentives
received, any initial direct costs and an estimate
of costs to be incurred in dismantling or removing
the underlying asset.
In this context, the Group also applies the practical
expedient that the payments for non-lease
components are generally recognized as lease
payments. If the lease transfers ownership of the
underlying asset to the lessee at the end of the
lease term or if the cost of the right-of-use asset
reflects that the lessee will exercise a purchase
option, the right-of-use asset is depreciated to
the end of the useful life of the underlying asset.
Otherwise, the right-of-use asset is depreciated
to the end of the lease term.
Lease liability
Lease liabilities, which are assigned to financing
liabilities, are measured initially at the present
value of the lease payments.
Subsequent measurement of a lease liability
includes the increase of the carrying amount
to reflect interest on the lease liability and
reducing the carrying amount to reflect the lease
payments made.
Company as a Lessor
Leases in which the Company does not
transfer substantially all the risks and rewards
of ownership of an asset are classified as
operating leases. Where the Company is a
lessor under an operating lease, the asset is
capitalised within property, plant and equipment
& Investment Property and depreciated over its
useful economic life. Payments received under
operating leases are recognised in the Statement
of profit and Loss on a straight-line basis over
the term of the lease.
j.) Inventories
Inventories are valued at the lower of cost and
net realisable value.
Costs incurred in bringing each product to its
present location and condition are accounted
for as follows:
• Raw materials; components and spares and
packing materials are valued at lower of cost
and net realisable value. However, materials
and other items held for use in the production
of inventories are not written down below
cost if the finished products in which they
will be incorporated are expected to be
sold at or above cost. Cost of raw materials,
components, stores and spares and packing
material is determined on a weighted average
basis.
• Semi-finished goods and finished goods are
valued at lower of cost and net realisable value.
Cost includes direct materials and labour and
a proportion of manufacturing overheads
based on normal operating capacity. Cost
of finished goods and semi finished goods
is determined on a weighted average basis.
Cost of finished goods includes excise duty.
• Net realisable value is the estimated selling
price in the ordinary course of business, less
estimated costs of completion and estimated
costs necessary to make the sale.
k.) Impairment of non-financial assets
The company assesses, at each reporting date,
whether there is an indication that an asset
may be impaired. If any indication exists, or
when annual impairment testing for an asset
is required, the company estimates the asset's
recoverable amount. An asset's recoverable
amount is the higher of an asset's or cash¬
generating unit's (CGU) fair value less costs
of disposal and its value in use. Recoverable
amount is determined for an individual asset,
unless the asset does not generate cash inflows
that are largely independent of those from
other assets or companys of assets. When the
carrying amount of an asset or CGU exceeds
its recoverable amount, the asset is considered
impaired and is written down to its recoverable
amount.
In assessing value in use, the estimated future
cash flows are discounted to their present value
using a pre-tax discount rate that reflects current
market assessments of the time value of money
and the risks specific to the asset. In determining
fair value less costs of disposal, recent market
transactions are taken into account. If no such
transactions can be identified, an appropriate
valuation model is used. These calculations are
corroborated by valuation multiples, quoted
share prices for publicly traded companies or
other available fair value indicators.
The company bases its impairment calculation
on detailed budgets and forecast calculations,
which are prepared separately for each of the
company's CGUs to which the individual assets
are allocated.
Impairment losses of continuing operations,
including impairment on inventories, are
recognised in the statement of profit and loss.
For assets excluding goodwill, an assessment
is made at each reporting date to determine
whether there is an indication that previously
recognised impairment losses no longer exist
or have decreased. If such indication exists,
the Company estimates the asset's or CGU's
recoverable amount. A previously recognised
impairment loss is reversed only if there has been
a change in the assumptions used to determine
the asset's recoverable amount since the last
impairment loss was recognised. The reversal is
limited so that the carrying amount of the asset
does not exceed its recoverable amount, nor
exceed the carrying amount that would have
been determined, net of depreciation, had no
impairment loss been recognised for the asset
in prior years. Such reversal is recognised in the
statement of profit or loss unless the asset is
carried at a revalued amount, in which case, the
reversal is treated as a revaluation increase.
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