1 Corporate Information
Star Delta Transformers Limited ("the Company") is a public limited company, which is domiciled and incorporated in the Republic of India with
its registered office situated at "92-A, Sector - A, Industrial Area, Govindpura, Bhopal - 462023" The Company was incorporated under the
Companies Act,1956 on February 17, 1977, vide corporate identification no.: L31102MP1977PLC001393. The Equity Shares of your Company is
listed on Bombay Stock Exchange (BSE) Limited.The Company is a manufacturer of distribution and power transformers.
2.1 Basis of Preparation
(a) Statement of Compliance
These Financial Statements have been prepared in accordance with the applicable Indian Accounting Standarda ("Ind AS") prescribed under
Section 133 of the Companies Act, 2015 ("Act") read with the Companies (Indian Accounting Standards) Rules and other relevant provisions
of the Act and Rules thereunder, as amended from time to time.
(b) Basis of Measurement
The Financial Statements have been prepared on the historical cost convention on accrual basis except for certain financial assets and
liabilities that are measured at fair value, amortised cost or present value, as disclosed in accounting policies and Defined Benefit Plans
where Plan Assets are measured at fair value at the end of each reporting period.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
As the operating cycle cannot be identified in normal course due to the special nature of the industry, the same has been assumed to have
duration of 12 months. Accordingly, all assets and liabilities have been classified as current or non-current as per the Company's operating
cycle and other criteria set out in Ind AS-1 Presentation of Financial Statements and Schedule III to the Companies Act. 2013.
The Financial Statements have been presented in Indian Rupees (INR), which is also the Company's functional currency. All values are
rounded off to the nearest two decimal lakhs, unless otherwise indicated.
(c) Fair Value Measurement
Fair Value Measurement: 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 under current market conditions.
Wherever applicable, the Company categorizes assets and liabilities measured at fair value into one of three levels depending on the ability
to observe inputs employed in their measurement which are described as follows:
(i) Level 1: Quoted Prices (unadjusted) in active markets for identical assets or liabilities
(ii) Level 2: inputs that are observable, either directly or indirectly, other than quoted prices included within level 1 for the asset or
liability.
(iii) Level 3: inputs are unobservable inputs for the asset or liability reflecting significant modifications to observable related market data or
Company's assumptions about pricing by market participants.
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.
(c) Recent Accounting Pronouncements
The following Indian Accounting Standards have been modified on miscellaneous issues with effect from April 1, 2023. Such changes
include clarification/guidance on:
(i) Ind AS 101 - First time adoption of Ind AS -Deferred tax assets and deferred tax liabilities to be recognized for all temporary differences
associated with right-of-use assets, lease liabilities, decommissioning / restoration / similar liabilities.
(ii) Ind AS 107 - Financial Instruments: Disclosures - Information about the measurement basis for financial instruments shall be disclosed
as part of material accounting policy information.
(iii) Ind AS 1 - Presentation of Financial Statements & Ind AS 34 - Interim Financial Reporting - Material accounting policy information
(including focus on how an entity applied the requirements of Ind AS) shall be disclosed instead of significant accounting policies as part of
financial statements.
(iv) Ind AS 8 - Accounting policies, changes in accounting estimate and errors - Clarification on what constitutes an accounting estimate
provided.
(v) Ind AS 12 - Income Taxes - In case of a transaction which give rise to equal taxable and deductible temporary differences, the initial
recognition exemption from deferred tax is no longer applicable and deferred tax liability & deferred tax asset shall be recognized on gross
basis for such cases.
None of the above amendments had any material effect on the company's financial statements,Ministry of Corporate Affairs ("MCA")
notifies new standard or amendments to the existing standards. There is no such notification which would have been applicable from April
1, 2024.
2.2 Material Accounting Policies
(a) Property, Plant and Equipment
The Company has elected to continue with the carrying value of its Property Plant & Equipment (PPE) recognised as of April 1, 2017
(transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as on the ramition date as per Para
D7AA of Ind AS 101.
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the Balance
Sheet at cost less accumulated depreciation and impairment losses, if any. Freehold land is not depreciated.
Property,Plant & Equipment (PPE) comprises of Tangible assets and Capital Work in progress (except Right Of Use assets). PPE are stated at
cost, net of tax/duty credit availed, if any, after reducing accumulated depreciation and accumulated impairment losses, if any, until the
date of the Balance Sheet. The cost of PPE comprises of its purchase price or its construction cost (net of applicable tax credit, if any), any
cost directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner
intended by the management. Direct costs are capitalized until the asset is ready for use and includes borrowing cost capitalised in
accordance with the Company's accounting policy.
Capital work in progress includes the cost of PPE that are not yet ready for the intended use.
An item of PPE is de-recognized 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 PPE is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognized in the Statement of Profit and Loss.
Depreciation of these PPE commences when the assets are ready for their intended use.
Depreciation is provided on the cost of Property, Plant and Equipment (other than land and properties under construction) less their
estimated residual value, using the straight-line method over the useful life of PPE as stated in the Schedule II to the Companies Act, 2013
or based on technical assessment by the Company.
The estimated useful lives, residual values and depreciation method are reviewed on an annual basis and if necessary, changes in estimates
are accounted for prospectively.
As per internal technical evaluation carried out by the management, the management of the company believes that its PPE are of such
nature that separate components are not distinctly identifiable having different useful life. And therefore, Component level accounting and
reporting is not practically feasible for the company.
Depreciation on additions/deletions to PPE during the year is provided for on a pro-rata basis with reference to the date of
additions/deletions.
Depreciation on subsequent expenditure on PPE arising on account of capital improvement or other factors is provided for prospectively
over the remaining useful life.
(b) Impairment of non-financial assets
The Company reviews at each reporting period whether there is any indication that an asset may be impaired. If at the end of reporting
period any such indication exists, the company estimates the recoverable amount of the asset. If such recoverable amount of the asset or
the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is
reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit & Loss. If at
the reporting period, there is an indication that there is change in the previously assessed impairment loss, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount.
Recoverable amount is the higher of fair value less costs of disposal and value in use. 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 for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the
asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the Statement of
Profit and Loss.
An assessment is made at an interval of 3 years to see if there are any indications that impairment losses recognized earlier may no longer
exist or may have come down. The impairment loss is reversed, if there has been a change in the estimates which has the effect of
increasing the asset's recoverable amount since the pervious impairment loss was recognized. If it is so, the carrying amount of the asset is
increased to the lower of its recoverable amount and the carrying amount that has been determined, net of depreciation, had no
impairment loss been recognized for the asset in prior years. After a reversal, the depreciation charge is adjusted in future periods to
allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. Reversals of
Impairment loss are recognized in the Statement of Profit and Loss.
(e) Revenue and Income Recognition
Revenues are recognized when the Company satisfies the performance obligation by transferring a promised product or service to a
customer, in an amount that reflects the consideration which the company expects to receive in exchange of those goods or services. A
product is transferred when the customer obtains control of that product, which is either at the point in time when the product is delivered
to the Customer premises or at the point in time when the title is passed to the customer based on the contractual terms.
Revenue from services is recognised at a point in time or over the time depending upon the terms of the contract as and when
performance obligations are fulfilled.
Revenue is measured at the transaction price of the consideration received or receivable duly adjusted for variable consideration and the
same represents amounts receivable for goods and services provided in the normal course of business excluding amounts collected on
behalf of third parties such as goods and services tax or other taxes directly linked to sales. Contract modifications are accounted for as a
part of existing contract or separate contract based on conditions prescribed in Ind AS 115. Any retrospective revision in prices is accounted
for in the year of such revision.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interestrate applicable (provided
that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
Dividend income is recognised when the right to receive the same in established.
Export incentives are accrued in the year when the right to receive the same is established in respect of expons made and are accounted to
the extent there is no significant uncertainty about the measurability and ultimate realization/ utilization of such benefits/ duty credit.
Other income is recognized on accrual basis except when realization of such income is uncertain.
(f) Foreign Exchange Transactions
Transactions in currencies other than the Company's functional currency (foreign currencies) are recognized at the rates of exchange
prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are
translated using exchange rate prevailing on the last day of the reporting period.
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 transaction.
Exchange differences on monetary items are recognized in the Starement of Profit and Loss in the period in which they arise.
(g) Lease
As Lessee
The Company assesses whether a contract, is, or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of time in exchang for consideration. To assess whether a contract
conveys the right to control the use of an identified asset, the Company assesses whether:
-the contract involves the use of an identified asset:
-the Company has substantially all of the economic benefits from use of the asset throughout the period of the lease and
-the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a lease liability for all lease arrangements in which it is a lessee, except
for leases with a term of twelve months or less (short-term leases) and low value leases and corresponding Right-of-use Asset. For these
short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term
of the lease.
The Right-of-use Assets are initially recognized at cost, which comprises the initial amount of the lease liabilities adjusted for any lease
payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are
subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease
liabilities.
The Right-of-use Assets are depreciated on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the
interest rate implicit in the lease or, if it is not readily determinable, using the incremental borrowing rate. Lease liabilities are remeasured
with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an
extension or a termination option.
The Company accounts for each lease component within the contract as a lease separarely from non-lease components of the contract and
allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component
and the aggregate stand-alone price of the non-lease components, except for leases where the company has elected to use practicle
expedient not to separate non-lease payments from the calculation of the lease liability and ROU asset where the entire consideration is
treated as lease component.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term lesses of Property, Plant and Equipment (i.e., those
leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the
lease of low-value assets recognition exemption to leases that are considered of low value. Lesse payments on short-term leases and leases
of low-value assets are recognised as expense on a straight-line basis over the lease term or another systematic basis if that basia is more
representative of the pattern of the lesser's benefit.
As lessor
Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease except where-
(i) Another systematic basis is more representative of the time pattern of the benefit derived from the asset given on lease; or
(ii) The payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessor's expected
inflationary cost increases.
(h) Employees Benefits
(i) Defined Contribution Plan
Provident fund (PF)
Contribution towards PF is determined under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952 and charged to the
Statement of Profit and Loss during the period of incurrence when the services are rendered by the employees.
Employee State Insurance (ESI)
Company's contribution employee state insurance and other funds are determined under the relevant schemes and / or statute and
charged to the Statement of Profit and Loss in the period of incurrence when the services are rendered by the employees
(ii) Defined Benefit Plan
The company has a scheme of arrangement with Life Insurance Corporation of India ("The Corporation") through master policy for
payment of gratuity liabilities of employees. The anual premium paid/payable as determined by the Corporation on actuarial
valuations is recognized in the Statement of Profit and Loss.
(iii) Short Term Employee Benefits
Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized undiscounted
during the period employee renders services. These benefits include salaries, wages, bonus, performance incentives, etc.
(iii) Other Long Term Employee Benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee
renders the related services are recognized as a determined liability at the balance sheet date.
(i) Borrowing Cost
Borrowing costs are interest and ancillary costs incurred in connection with the arrangement of borrowings.
General and specific borrowing costs attributable to acquisition and construction of qualifying assets is added to the cost of the assets upto
the date the asset is ready for its intended use. A qualifying asset is an asset is an asset that necessarily takes a substantial period of time to
get ready for its intended use. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during
extended periods when active development activity on the qualifying assets is interrupted. All other borrowing costs are recognised in the
Statement of Profit and Loss in the period in which they are incurred.
(j) Income Taxes
Income tax expense represents the sum of the current tax and deferred tax.
(i) Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from 'profit before tax as reported in the
Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are
never taxable or deductible. The Company's current tax is calculated using tas rates and laws that have been enacted or substantively
enacted by the end of the reporting period.
(ii) Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Financial Statements
and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all
taxable temporary differences. Deferend tax assets are generally recognized for all deductible temporary differences to the extent that
it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled
or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting
period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the
Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
(iii) Current and Deferred Tax Expense for the Year
Current and deferred tax expense is recognized in the Statement of Profit and Loss, except when they relate to items that are
recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in
other comprehensive income or directly in equity respectively.
(k) Financial Instruments
Financial assets and financial liabilities are recognized when Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition
or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. "Transaction
costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or l oss are recognized
immediately in the Statement of Profit and Loss.
I Financial Assets
a. Classfication and Measurement
(i) Cash and Cash Equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that
are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of
purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for
withdrawal and usage.
(ii) Financial Assets at Amortized Cost
Financial assets are subsequently measured at amortized cost using the effective interest method if these financial assets are
held within a business whose objective is 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.
(iii) Financial Assets at Fair Value through Other Comprehensive Income
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a
business whose objective is achieved by both collecting contractual cash flows and selling 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.
(iv) Financial Assets at Fair Value through Profit and Loss
Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through
other comprehansive income on intial recognition.
b. 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 the financial assets and credit risk exposure.
(i) Simplified Approach
The Company follows 'simplified approach' for recognition of impairment loss allowance on Trade Receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
(ii) General Approach
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-months
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 credir risk
since initial recognition then the entity reverts to recognizing impairment loss allowance based on 12-months ECL.
Lifetime ECL are the expected credit losses resulting from all posible default events over the expected life of a financial
instrument. The 12-months ECL is a portion of the lifetime ECL which results from default events that are possible within 12
months after the reporting date.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on its trade receivables.
The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is
adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes
in the forward-looking estimates are analysed. On that basis, the Company estimates provision on that trade receivabiles at the
reporting date. The specific/individual impairment assessment is carried out for major customers.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as expense (or income) in the
Statement of Profit and Loss.
c. Derecognition of Financial Assets
The Company derecognizes a financial asset when the contractual right to receive the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company
neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the
Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company
retaint 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.
On derecognition of a financial asset in its entirery (except for equity instruments designated ar FVTOCI), the difference between
the asset's carrying amount and the sum of the consideration received and receivable is recognized in the Statement of Profit and
Loss.
II Financial Liabilities
a. Classfication and Measurement
(i) Financial Guarantee Contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a
loss it incurs became a specified debtor fails to make payments when due in accordance with the terms of a debt instrument
Financial guarantee contracts issued by the Company are initially measured at their fair values and, if not designated as at
FVTPL are subsequently measured at the higher of:
-the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
-the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with
principles enunciated in Ind AS 115.
(ii) Other Liability
Other Financial liabilities are measured at amortized coat using the effective interest method.
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest
income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts
through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial
recognition.
(iii) Financial Liabilities and Equity Instruments
Classification as Debt or Equity:
Debt and equity instruments Issued by the Company are classified as financial liabilities or as equity in accordance with the
substance of the Contractual arrangements and the definitions of a financial liability and an equity instrument.
(iv) Derecognition of Financial Liabilities
The company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire. The
difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is
recognized in Statement of Profit and Loss.
III Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of it's liabilities.
Equity Instruments issued by a Company are recognized at the proceeds received.
IV Offsetting
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally
enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the
liability simultaneously.
(l) Government grants
Government grants are recognized only when there is resonable assurance that the conditions attached to them shall be complied with,
and the grants will be received. Deferred income is recognized in the statement of profit or loss on a systematic and rational basis over the
useful life of the asset. Government grants related to revenue are recognized on a systematic basis in the statement of profit or loss over
the periods as and when related obligations are achieved to match them with the related costs which they are intended to compensare.
(m) Earning per Share
Basic earnings per share is computed by dividing the profit/(loss) after tax (including the post-tax effect of exceptional items, if any) by the
weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit/
(loss) after tax (including the post-tax effect of exceptional items, if any) as adjusted for dividend, interest and other charges to expense or
income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares
considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the
conversion of all dilutive potential equity shares.
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