1.1 Company's Overview
Swaraj Engines Limited (SEL) is a public limited company incorporated and domiciled in India. SEL has its works /
principal place of business at Plot No. 2, Phase-IX, Industrial Area, S.A.S. Nagar (Mohali), Punjab, India and registered
office at Phase-IV, Industrial Area, S.A.S. Nagar (Mohali), Punjab, India.
SEL is in the business of manufacturing diesel engines and hi-tech engine components. Diesel Engines are specifically
designed for tractor application.
The Shares of the Company are listed on both BSE Limited and National Stock Exchange of India Limited.
1.2 Basis of Preparation and Presentation
These financial statements are prepared in accordance with Indian Accounting Standards ('Ind AS') under the historical
cost convention on the accrual basis except for certain financial instruments, which are measured at fair values. The
financial statements of the Company have been prepared to comply with the Indian Accounting standards ('Ind AS'),
including the rules notified under the relevant provisions of the Companies Act, 2013 as amended.
The financial statements are approved by the Company's Board of Directors and authorised for issue on 13th April,
2026.
1.3 Current and 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:
i) expected to be realised or intended to be sold or consumed in normal operating cycle,
ii) held primarily for the purpose of trading,
iii) expected to be realised within twelve months after the reporting period,
iv) cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve
months after the reporting period, or
v) carrying current portion of non-current financial assets.
All other assets are classified as non-current.
A liability is current when:
i) it is expected to be settled in normal operating cycle,
ii) it is held primarily for the purpose of trading,
iii) it is due to be settled within twelve months after the reporting period,
iv) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting
period, or
v) it includes current portion of non-current financial liabilities.
All other liabilities are classified as non-current.
1.4 Property, Plant and Equipment
i) Property, plant and equipment are stated at cost of construction or acquisition, less accumulated depreciation and
impairment losses, if any. 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 entity and the cost can be measured reliably.
ii) When an asset is scrapped, or otherwise disposed off, the cost and related depreciation are removed from the
books of account and resultant profit (including capital profit) or loss, if any, is reflected in Profit and Loss Account.
iii) Depreciation on Tangible Assets (except Land) is provided on Straight Line Method, pro-rata monthly rests, as per
the life prescribed in Schedule II of the Companies Act, 2013 except for fixed assets mentioned in para (iv) below,
based on the Company's expected usage Pattern supported by technical assessment
Nature of Assets Life adopted in Accounts
a. Patterns, Blocks and Dies 8 Years
b. Vehicles 4 Years
iv) The assets' residual value, useful lives and methods of depreciation are reviewed at each financial year end, and
adjustment if any, is made prospectively.
1.5 Investment Properties
Investment Properties are properties held to earn rentals and/or for capital appreciation. Investment properties are
measured at cost and the same is derecognized upon disposal or when it is permanently withdrawn from use with no
future economic benefits are expected from the disposal.
Depreciation is provided on Straight Line Method, pro-rata monthly rests, as per the life prescribed for Building in
Schedule II of the Companies Act, 2013.
1.6 Inventories
Inventories are valued at cost or net realizable value, whichever is lower. Cost of inventories comprises of cost of
purchase, cost of conversion and other costs including manufacturing overheads and is ascertained on weighted average
basis, net of recoverable taxes incurred in bringing them to their respective present location and condition. Cost of raw
materials and stores and spares are determined on weighted average basis.
1.7 Foreign Currency T ransactions
Foreign currency transactions are recorded at the rates of exchange prevailing on the date of transaction. Monetary
foreign currency assets and liabilities outstanding at the close of the financial year are revalued at the exchange rates
prevailing on the balance sheet date. Exchange differences arising on account of fluctuation in the rate of exchange is
recognised in the statement of profit and loss.
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.
1.8 Employee Benefit
Company's contributions paid/payable during the year to Employees State Insurance Corporation and Labour Welfare
Fund are recognized in the Statement of Profit and Loss.
Company contributes to the appropriate authorities its share of the Members Provident Fund Account as per the Employees'
Provident Fund Act, 1952.
Company contributes to a trust, which has taken Master Policy with the Life Insurance Corporation of India to cover its
liability towards employees' gratuity. Provisions in respect of liabilities of gratuity and leave encashment are made
based on actuarial valuation made by an independent actuary as at the balance sheet date. Gains and Losses through
re-measurements of the net defined benefit liability are recognized in other comprehensive income. The actual return of
the plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit
obligation is recognized in other comprehensive income.
In respect of Employee Stock Option Scheme:
The compensation cost of stock options granted to employees is measured by the Fair Value Method. The fair value,
determined at the grant date of the underlying equity shares, is recognized and amortised on straight line basis over the
vesting period.
1.9 Revenue Recognition
The Company's revenue recognition policy is aligned to the principles enunciated in Ind AS 115. The company recognises
revenue from contracts with customers when it satisfies a performance obligation by transferring a promised good or
service to a customer. Revenue towards satisfaction of a performance obligation is measured at the amount of transaction
price allocated to the performance obligation. The transaction price of goods sold and services rendered is net of
variable consideration on account of various discounts and schemes offered by the Company as part of the contract, if
any.
Transaction price is the amount of a consideration to which the Company expects to be entitled in exchange for
transferring good or service to a customer. Payment terms agreed with a customer are as per business practice and
there is no financing component involved in the transaction price.
Sale of goods
Revenue from sale of goods is recognised when the control of the same is transferred to the customer and it is probable
that the Company will collect the consideration to which it is entitled in exchange of goods.
Rendering of services
Revenue from rendering services is recognised when performance obligation is satisfied and customer obtains the
control of the transferred services. Following criteria is required to be met for transfer of control of services:
i) the customer simultaneously receives and consumes the benefits from the services transferred.
ii) the Company has an enforceable right to payment for services transferred.
Other Operational Revenue
Other operational revenue represents income earned from the activities incidental to the business and is recognized
when the right to receive the income is established as per the terms of the contract.
Other Income
Dividend income from investments is recognised when the right to receive payment has been established.
Interest income is recognized when it is probable that the economic benefits will flow to the Company and the amount of
income can be measured reliably. Interest income is accrued on a time basis, by reference to the deposits and at the
interest rate settled with the Banks/Financial Institutions.
1.10 Intangible Assets
Intangible assets are carried at cost and amortized on Straight line method, so as to reflect the pattern in which the
assets economic benefits are consumed.
Intangible Asset under Development
The expenses incurred on development phase are initially recognized as Intangible assets under development until the
development phase is complete, upon which the amount is capitalized as intangible asset.
Other Intangible Assets
i) Development expenditure:
Development expenditure incurred on technical services and other project/product related expenses are amortized
over the estimated period of benefit, not exceeding five years. Amortization commences as and when the asset is
available for use.
ii) Software Expenditure:
The expenditure incurred is amortised over three financial years equally commencing from the year in which the
expenditure is incurred.
1.11 Taxes on Income
Current tax is determined as the amount of tax payable in respect of the taxable income for the year.
Deferred tax is recognised on temporary differences between the carrying amount 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 recognised for all taxable temporary differences. Deferred tax assets are generally recognised 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 utilised.
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 realised, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.
1.12 Financial Instruments
Financial Assets
Initial recognition and measurement
All financial assets and liabilities are initially recognized at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are
adjusted to the fair value on initial recognition.
Subsequent measurement
Financial assets carried at amortised cost (AC)
A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the asset
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. For financial assets
maturing within one year from the balance sheet date, the carrying amounts are approximate to fair value due to the
short maturity of these instruments. T rade receivables that do not contain a significant financing component are measured
at transaction price.
Financial assets at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI if it is held within a business model 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.
Financial assets at fair value through profit or loss (FVTPL)
A financial asset which is not classified in any of the above categories are measured at FVTPL.
Financial liabilities
Initial recognition and measurement
All financial liabilities are recognized at fair value.
Subsequent measurement
Financial liabilities are carried at amortized cost using the effective interest method. For trade and other payables
maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short
maturity of these instruments.
Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset
expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability
(or a part of a financial liability) is derecognized from the Company's Balance Sheet when the obligation specified in the
contract is discharged or cancelled or expires.
1.13 Impairment of Assets
The carrying value of assets at each balance sheet date are reviewed for Impairment. If any indication exists, the
recoverable amount of such assets is estimated and impairment is recognized if the carrying amount of these assets
exceeds their recoverable amount.
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