Material Accounting Policies
This note provides a list of the Material accounting policies adopted in the preparation of these financial statements.
These policies have been consistently applied to all the years presented, unless otherwise stated.
1.1 Basis of Preparation of Financial Statements:
The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified
under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules,
2015] on accrual basis and other relevant provisions of the Act. Financial Statements have been prepared in
accordance with the requirements of the information and disclosures mandated by Schedule III, applicable
Ind AS, other applicable pronouncements and regulations.
1.2 Historical Cost Convention:
The financial statements have been prepared on a historical cost basis, except for the following:
i Plant & Equipments and Freehold Land which were accounted at fair value at the date of transition to
Ind AS;
ii Certain financial assets and liabilities (including derivative instruments) that are measured at fair value;
iii Defined benefit plans - plan assets measured at fair value; and
iv Assets held for sale - measured at fair value less cost to sell;
1.3 Functional and Presentation Currency:
Items included in the financial statements are measured using the currency of the primary economic
environment in which the Company operates (‘the functional currency’). The financial statements are
presented in Indian Rupee (INR), which is the functional currency for the Company.
1.4 Use of Estimates:
The preparation of the financial statements requires management to make estimates, assumptions and
judgements that affect the reported balances of assets and liabilities and disclosures as at the date of the
financial statements and the reported amounts of income and expense for the periods presented.
The estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates considering different assumptions
and conditions.
Estimates and underlying assumptions are reviewed on an ongoing basis. Impact on account of revisions to
accounting estimates are recognised in the period in which the estimates are revised and future periods are
affected.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
values of assets and liabilities within the next financial year are discussed below:
a. Estimates of useful lives and residual value of property, plant and equipment and intangible assets;
b. Measurement of defined benefit obligations;
c. Measurement and likelihood of occurrence of provisions and contingencies;
d. Impairment of investments;
e. Recognition of deferred tax assets; and
f. Measurement of recoverable amounts of cash-generating units.
1.5 Current Versus Non Current Classification:
i. The assets and liabilities in the Balance Sheet are based on current / non - current classification.
An asset is current when it is:
1 Expected to be realised or intended to be sold or consumed in normal operating cycle
2 Held primarily for the purpose of trading
3 Expected to be realised within twelve months after the reporting period, or
4 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.
ii A liability is current when it is:
1 Expected to be settled in normal operating cycle,
2 Held primarily for the purpose of trading,
3 Due to be settled within twelve months after the reporting period, or
4 There is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period.
All other liabilities are treated as non - current.
Deferred tax assets and liabilities are classified as non - current assets and liabilities.
1.6 Other Material Accounting Policies:
I Property, Plant and Equipments:
Property, plant and equipment are stated at cost net of accumulated depreciation and accumulated
impairment losses, if any;
The initial cost of an asset comprises its purchase price (including import duties and nonrefundable
taxes), any costs directly attributable to bringing the asset into the location and condition necessary
for it to be capable of operating in the manner intended by management, the initial estimate of any
decommissioning obligation, if any, and, borrowing cost for qualifying assets (i.e. assets that necessarily
take a substantial period of time to get ready for their intended use);
Machinery spares that meet the definition of property, plant and equipment are capitalised;
Property, plant and equipment which are not ready for intended use as on date of Balance Sheet are
disclosed as “Capital work-in-progress”;
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Company and the cost of the item can be measured reliably. All other repairs and maintenance are
charged to the Statement of Profit and Loss during the period in which they are incurred;
An item of property, plant and equipment and any significant part initially recognised separately as part
of property, plant and equipment 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 is included
in the Statement of Profit and Loss when the asset is derecognised;
Assets costing INR 5,000/- or less are charged to the Statement of Profit & Loss in the year of purchase;
Components of the main asset that are significant in value and have different useful lives as compared
to the main asset are depreciated over their estimated useful life. Useful life of such components has
been assessed based on historical experience and internal technical assessment;
Leasehold land is amortised over the primary lease period. Other assets held under finance leases are
depreciated over their expected useful lives on the same basis as owned assets. However, when there
is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are
depreciated over the shorter of the lease term and useful lives;
Freehold land is not depreciated;
The residual values and useful lives of property, plant and equipment are reviewed at each financial
year end and changes, if any, are accounted in the line with revisions to accounting estimates.
II Depreciation:
i. Depreciation is provided, under the Straight Line Method, pro rata to the period of use, based on
useful life specified in Schedule II to the Companies Act, 2013 except the following items, where
useful life estimated on technical assessment, past trends and expected useful life differ from
those provided in Schedule II of the Companies Act, 2013:
The Management believes that the useful life as given above represents the period over which
management expects to use these assets.
ii. In respect of additions/extensions forming an integral part of existing assets, depreciation has
been provided over residual life of the respective assets. Material additions which are required to
be replaced/performed at regular interval are depreciated over the useful life of their specific life.
iii. Depreciation methods, useful life and residual values are reviewed at each reporting date and
adjusted if appropriate.
iv. The Company has initiated major drive for refurbishment/ restoration of some of its existing
fixed assets. This will enhance balance useful life of those assets. Accordingly, assets for which
refurbishment is completed, the cost incurred is capitalised and it will be written off over balance
useful life of the original asset.
III Investment property:
Investment property is property (land or a building — or part of a building — or both) held either to earn
rental income or for capital appreciation or for both, but not for sale in the ordinary course of business,
use in production or supply of goods or services or for administrative purposes. Investment properties
are stated at cost net of accumulated depreciation and accumulated impairment losses, if any;
Any gain or loss on disposal of investment property is calculated as the difference between the net
proceeds from disposal and the carrying amount of the investment property is recognised in Statement
of Profit and Loss;
IV Intangible Assets:
Intangible assets are recognised only if it is probable that the future economic benefits that are
attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably;
Intangible assets are recognised only if it is probable that the future economic benefits that are
attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably;
The intangible assets with a finite useful life are amortised using straight line method over their estimated
useful lives.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected
from use or disposal. Gains or losses on de-recognition are determined by comparing proceeds with
carrying amount. These are included in profit or loss within other gains/(losses);
The estimated useful life is reviewed at each financial year end and changes, if any, are accounted in
the line with revisions to accounting estimates.
V Fair Value Measurement:
The Company measures certain financial instruments at fair value at each reporting date;
Certain accounting policies and disclosures require the measurement of fair values, for both financial
and non- financial assets and liabilities;
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 in the principal or, in its absence, the
most advantageous market to which the Company has access at that date. The fair value of a liability
also reflects its non-performance risk;
The best estimate of the fair value of a financial instrument on initial recognition is normally the transaction
price - i.e. the fair value of the consideration given or received. If the Company determines that the fair
value on initial recognition differs from the transaction price and the fair value is evidenced neither by a
quoted price in an active market for an identical asset or liability nor based on a valuation technique that
uses only data from observable markets, then the financial instrument is initially measured at fair value,
adjusted to defer the difference between the fair value on initial recognition and the transaction price.
Subsequently that difference is recognised in Statement of Profit and Loss on an appropriate basis over
the life of the instrument but no later than when the valuation is wholly supported by observable market
data or the transaction is closed out.
While measuring the fair value of an asset or liability, the Company uses observable market data as far
as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs
used in the valuation technique as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included in Level 1 that are observable for the assets or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices);
Level 3: inputs for the assets or liability that are not based on observable market data (unobservable
inputs);
When quoted price in active market for an instrument is available, the Company measures the fair value
of the instrument using that price. A market is regarded as active if transactions for the asset or liability
take place with sufficient frequency and volume to provide pricing information on an ongoing basis;
If there is no quoted price in an active market, then the Company uses valuation techniques that
maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The
chosen valuation technique incorporates all of the factors that market participants would take into
account in pricing a transaction;
The Company regularly reviews significant unobservable inputs and valuation adjustments. If third party
information, such as broker quotes or pricing services, is used to measure fair values, then the Company
assesses the evidence obtained from third parties to support the conclusion that these valuations meet
the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should
be classified.
VI Inventories:
i. Inventories comprising Closing stock of finished goods, raw material and consumables and spares
are valued at lower of cost (on weighted average) and net realisable value after providing for
obsolescence and other losses, where considered necessary;
ii. Cost includes all charges in bringing the goods to their present location and condition. Work-
inprogress and finished goods include appropriate proportion of overheads and, where applicable,
excise duty;
iii. 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.
VII IND AS 116 - Leases:
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified
asset to lessee for a period of time in exchange for consideration. The Company shall reassess whether
a contract is, or contains, a lease only if the terms and conditions of the contract are changed.
As a Lessee
At the commencement date, Company recognises a right-of-use (RoU) asset at cost and a lease liability
at present value of the lease payments that are not paid at commencement date. The Lease Payments
shall be discounted using Company’s incremental borrowing rate on periodic basis. Subsequently,
RoU asset is depreciated over lease term and lease liability is reduced as payments are made and an
imputed finance cost on lease liability is recognised in Statement of Profit and Loss using the Company’s
incremental borrowing rate. If a lease, at the commencement date, has a lease term of 12 months or less,
it is treated as Short term lease. Lease payments associated with short term leases are treated as an
expense on systematic basis.
As a Lessor
A lessor shall classify each of its leases as either an operating lease or a finance lease.
Finance leases
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental
to ownership of an underlying asset. Company shall recognise assets held under a finance lease in its
balance sheet and present them as a receivable at an amount equal to the net investment in the lease.
Operating leases
A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards
incidental to ownership of an underlying asset. Company shall recognise lease payments from operating
leases as income on systematic basis in the pattern in which benefit from the use of the underlying asset
is diminished.
VIII Government Subsidy:
Government grants are recognized where there is reasonable assurance that the grant will be received
and all attached conditions will be complied with;
When the grant relates to an expense item, it is recognized in Statement of Profit and Loss on a
systematic basis over the periods that the related costs, for which it is intended to compensate, are
expensed;
Government grants relating to property, plant and equipment are presented as deferred income and are
credited to the Statement of Profit and Loss on a systematic and rational basis over the useful life of the
asset.
IX Foreign Currency Transactions:
The financial statements are presented in INR, the functional currency of the Company (i.e. the currency
of the primary economic environment in which the Company operates);
Monetary items:
Transactions in foreign currencies are initially recorded at their respective exchange rates at the date
the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at exchange rates
prevailing on the reporting date.
Exchange differences arising on settlement or translation of monetary items (except for long term
foreign currency monetary items outstanding as of March 31, 2025 which are accumulated in “Foreign
Currency Monetary Item Translation Difference Account” and amortised over balance period of liability)
are recognised in Statement of Profit and Loss either as profit or loss on foreign currency transaction
and translation or as borrowing costs to the extent regarded as an adjustment to borrowing costs.
Non - Monetary items:
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial transactions.
X Financial Instruments:
Financial Assets:
Financial assets are recognised when the Company becomes a party to the contractual provisions of
the instrument.
On initial recognition, a financial asset is recognised at fair value, in case of financial assets which are
recognised at fair value through profit and loss, its transaction cost are recognised in the statement of
profit and loss. In other cases, the transaction cost are attributed to the acquisition value of the financial
asset.
Financial assets are subsequently classified as measured a
- amortised cost
- fair value through profit and loss (FVTPL)
- fair value through other comprehensive income (FVOCI).
Financial assets are not reclassified subsequent to their recognition, except if and in the period the
Company changes its business model for managing financial assets.
Trade Receivables and Loans:
Trade receivables and loans are initially recognised at fair value. Subsequently, these assets are held at
amortised cost, using the effective interest rate (EIR) method net of any expected credit losses. The EIR
is the rate that discounts estimated future cash income through the expected life of financial instrument.
Debt instruments:
Debt instruments are subsequently measured at amortised cost, FVOCI or FVTPL till derecognition on
the basis of:
- the entity’s business model for managing the financial assets and
- the contractual cash flow characteristics of the financial asset.
Measured at amortised cost:
Financial assets that are held within a business model whose objective is to hold financial assets in order
to collect contractual cash flows that are solely payments of principal and interest, are subsequently
measured at amortised cost using the effective interest rate (‘EIR’) method less impairment, if any. The
amortisation of EIR and loss arising from impairment, if any is recognised in the Statement of Profit and
Loss.
Measured at FVOCI:
Financial assets that are held within a business model whose objective is achieved by both, selling
financial assets and collecting contractual cash flows that are solely payments of principal and interest,
are subsequently measured at FVOCI. Fair value movements are recognized in the other comprehensive
income (OCI). Interest income measured using the EIR method and impairment losses, if any are
recognised in the Statement of Profit and Loss. On de-recognition, cumulative gain or loss previously
recognised in OCI is reclassified from the equity to ‘other income’ in the Statement of Profit and Loss.
Measured at FVTPL:
A financial asset not classified as either amortised cost or FVOCI, is classified as FVTPL. Such financial
assets are measured at fair value with all changes in fair value, including interest income and dividend
income if any, recognised as ‘other income’ in the Statement of Profit and Loss.
Equity Instruments:
All investments in equity instruments classified under financial assets are initially measured at
fair value, the Company may, on initial recognition, irrevocably elect to measure the same either at
FVOCI or FVTPL.
The Company makes such election on an instrument-by-instrument basis. Fair value changes on
an equity instrument is recognised as other income in the Statement of Profit and Loss unless the
Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends,
on an equity instrument measured at FVOCI are recognised in OCI. Amounts recognised in OCI are not
subsequently reclassified to the Statement of Profit and Loss. Dividend income on the investments in
equity instruments are recognised as ‘other income’ in the Statement of Profit and Loss.
De-recognition:
The Company derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset;
Preference shares/Debentures:
Preference shares/Debentures are separated into liability and equity components based on the terms
of the contract.
On issuance of the Preference shares/Debentures, the fair value of the liability component is determined
using a market rate for an equivalent non convertible instrument. This amount is classified as financial
liability measured at amortized cost (net of transaction cost) until it is extinguished on redemption.
Transaction cost are apportioned between the liability and equity component of the Preference shares/
Debentures based on the allocation of the proceed to the liability and equity component when the
instrument are initially recognized.
Financial Liabilities:
Initial recognition and measurement:
Financial liabilities are recognised when the Company becomes a party to the contractual provisions
of the instrument. Financial liabilities are initially measured at the amortised cost unless at initial
recognition, they are classified as FVTPL. In case of trade payables, they are initially recognised at fair
value and subsequently, these liabilities are held at amortised cost, using the effective interest method.
Subsequent measurement:
Financial liabilities are subsequently measured at amortised cost using the EIR method. Financial
liabilities carried at FVTPL are measured at fair value with all changes in fair value recognised in the
Statement of Profit and Loss.
De-recognition:
A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled
or expires.
Financial guarantees:
Financial guarantee contracts issued by the Company are those contracts that require a payment to be
made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment
when due in accordance with the terms of the debt instrument. Financial guarantee contracts are
recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable
to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount
of loss allowance determined as per impairment requirements of Ind AS 109 and the fair value initially
recognised less cumulative amortisation;
Derivative financial instruments:
The Company uses derivative financial instruments to manage the exposure on account of fluctuation
in interest rate and foreign exchange rates. Such derivative financial instruments are initially recognised
at fair value on the date on which a derivative contract is entered into and are subsequently measured
at fair value with the changes being recognised in the Statement of Profit and Loss. Derivatives are
carried as financial assets when the fair value is positive and as financial liabilities when the fair value is
negative;
Embedded derivatives:
If the hybrid contract contains a host that is a financial asset within the scope of Ind-AS 109, the
classification requirements contained in Ind AS 109 are applied to the entire hybrid contract. Derivatives
embedded in all other host contracts, including financial liabilities are accounted for as separate
derivatives and recorded at fair value if their economic characteristics and risks are not closely related to
those of the host contracts and the host contracts are not held for trading or designated at FVTPL. These
embedded derivatives are measured at fair value with changes in fair value recognised in Statement of
Profit and Loss, unless designated as effective hedging instruments. Reassessment only occurs if there
is either a change in the terms of the contract that significantly modifies the cash flows;
Offsetting of financial instruments:
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet,
if there is a currently enforceable legal right to offset the recognised amounts and there is an intention
to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
XI Earnings per share:
Basic earnings per share are calculated by dividing the profit or loss for the period attributable to equity
shareholders (after deducting preference dividends, if any, and attributable taxes) by the weighted
average number of equity shares outstanding during the period;
For the purpose of calculating diluted earnings per share, the profit or loss for the period attributable
to equity shareholders and the weighted average number of shares outstanding during the year are
adjusted for the effect of all dilutive potential equity shares.
XII Non-currents assets held for sale:
Non-current assets are classified as held for sale if their carrying amounts will be recovered through a
sale transaction rather than through continuing use. This condition is regarded as met only when the
sale is highly probable and the asset is available for immediate sale in its present condition subject only
to terms that are usual and customary for sale of such assets;
Non-current assets classified as held for sale are measured at the lower of carrying amount and fair
value less costs to sell;
Non - current assets classified as held for sale are not depreciated or amortized from the date when
they are classified as held for sale.
XIII Impairment of Non-financial Assets:
Non-financial assets other than inventories, deferred tax assets and non-current assets classified as
held for sale are reviewed at each Balance Sheet date to determine whether there is any indication of
impairment. If any indication of such impairment exists, the recoverable amount of such assets / cash
generating unit is estimated and in case the carrying amount of these assets exceeds their recoverable
amount, an impairment is recognised;
The recoverable amount is the higher of the fair value less costs of disposal and their value in use. Value
in use is arrived at by discounting the future cash flows to their present value based on an appropriate
discount factor. Assessment is also done at each Balance Sheet date as to whether there is indication
that an impairment loss recognised for an asset in prior accounting periods no longer exists or may have
decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss.
XIV Investment in Subsidiaries:
Investments in equity shares of Subsidiaries are recorded at cost and reviewed for impairment at each
reporting date.
XV Cash and Cash Equivalents:
Cash and Cash Equivalents in the Balance Sheet include cash at bank, cash, cheque, draft on hand and
demand deposits with an original maturity of less than three months, which are subject to an insignificant
risk of changes in value.
For the purpose of Statement of Cash Flows, Cash and Cash Equivalents include cash at bank, cash,
cheque and draft on hand. The Company considers all highly liquid investments with a remaining
maturity at the date of purchase of three months or less and that are readily convertible to known
amounts of cash to be cash equivalents.
XVI Cash Flows:
Cash flows are reported using the indirect method, where by net profit before tax is adjusted for the
effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with investing or financing cash flows.
The cash flows from operating, investing and financing activities are segregated.
XVII Dividend:
Final dividend on shares are recorded as a liability on the date of approval by the shareholders and
interim dividends are recorded as a liability on the date of declaration by the Company’s Board of
Directors.
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