II. Significant Accounting Policies followed by the Company
(a) Basis of Preparation
i) Compliance with Ind AS
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter
referred to as the 'Ind AS') as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act,
2013 ('Act') read with of the Companies (Indian Accounting Standards) Rules,2015 as amended and other relevant
provisions of the Act.
The accounting policies are applied consistently to all the periods presented in the financial statements.
ii) Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the following which have been
measured at fair value :
1. Certain financial assets and liabilities are measured at fair value;
2. Defined benefit plans;
3. Equity settled Share Based Payments
iii) Current & non current classification
All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle
(twelve months) and other criteria set out in the Schedule III to the Act
iv) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the
requirement of Schedule 111, unless otherwise stated.
(b) Use of estimates and judgments
The estimates and judgments used in the preparation of the financial statements are continuously evaluated by the
Company and are based on historical experience and various other assumptions and factors (including expectations of
future events) that the Company believes to be reasonable under the existing circumstances. Differences between actual
results and estimates are recognised in the period in which the results are known/materialised.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date
but provide additional evidence about conditions existing as at the reporting date.
(c ) Property, plant and equipment
Property, plant, and equipment (PPE) is recognized when it is probable that future economic benefits associated with the
item will flow to the Company and the cost can be measured reliably. PPE includes tangible assets such as freehold land,
factory buildings, plant and machinery, moulds, furniture, office equipment, vehicles, computers, and right-of-use (ROU)
assets acquired under leases.
PPE is initially measured at cost, which includes:
- Purchase price, including non-refundable taxes and duties, net of discounts and rebates;
- Directly attributable costs of bringing the asset to its location and condition for intended use (e.g., transport,
installation, professional fees);
- Estimated costs of dismantling and removing the asset or restoring the site, if applicable;
- For in-house manufactured or constructed assets (e.g., moulds, machinery), the cost of raw materials, direct labor,
and a systematic allocation of production overheads.
Capital work-in-progress comprises the cost of PPE and related expenses not yet ready for their intended use at the
reporting date.
PPE is carried at cost less accumulated depreciation and accumulated impairment losses, if any, using the cost model.
Freehold land is not depreciated. ROU assets are measured at cost less accumulated depreciation and impairment.
Freehold land is carried at cost. All other items of property, plant and equipment are stated at cost less depreciation and
impairment, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Leasehold land is stated at historical cost less amounts written off proportionate to expired lease period.
Depreciation methods, estimated useful lives and residual value
Depreciation is provided using the straight-line method over the estimated useful lives of assets, as specified in Schedule
II of the Companies Act, 2013, unless the Company's management determines a different useful life based on technical
evaluation.
Useful life considered for calculation of depreciation for various assets class are as follows
Category Useful Life
Factory Buildings 30 Years
Office Premises 45 Years
Plant, Machinery & Moulds 7-20 Years
Furniture & Fixture 10 Years
Office Equipment 3-5 Years
Vehicles 8-10 Years
Computers & Software 3 Years
The management believes that the useful life as given above the best represent the period over which the management
expects to use these assets. The Company reviews the useful life and residual value at each reporting date.
Depreciation on assets added/sold or discarded during the year is being provided on pro-rata basis up to the date on
which such assets are added/sold or discarded.
Gain & Losses on disposal are determined by comparing proceeds with carrying amount. Theses are included in the
statement of Profit and Loss
ROU assets are depreciated on a straight-line basis over the shorter of the lease term or the useful life of the asset.
Leasehold improvements are amortized over the lease term.
Where an item of PPE comprises significant components with different useful lives, each component is depreciated
separately based on its specific useful life.
Impairment
PPE is tested for impairment when there is an indication of impairment. Impairment losses are recognized in the
Statement of Profit and Loss when the carrying amount exceeds the recoverable amount (higher of fair value less costs to
sell and value in use).
Derecognition
PPE is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Gains or
losses on derecognition are calculated as the difference between net disposal proceeds and the carrying amount and are
recognized in the Statement of Profit and Loss.
(d) Intangible Assets
Intangible assets, including computer software are recognized when it is probable that future economic benefits
attributable to the asset will flow to the Company and the cost can be measured reliably.
Computer software
Computer software are stated at cost,less accumulated amortization and impairments, if any.
Amortization method and useful life
The company amortizes computer software using straight-line method over the period of 3 years .
Gain & Losses on disposal are determined by comparing proceeds with carrying amount. Theses are included in the
statement of Profit and Loss
(e) Lease
The Company, as a lessee, applies Ind AS 116 to its leasing arrangements. A contract is classified as a lease if it conveys the
right to control the use of an identified asset for a period in exchange for consideration. Control is established when the
Company has both the right to obtain substantially all economic benefits from the use of the identified asset and the right
to direct its use.
Right-of-Use Asset
The Company recognizes a right-of-use (ROU) asset at the lease commencement date. The ROU asset is initially measured
at cost, comprising:
• The initial amount of the lease liability;
• Lease payments made at or before the commencement date, less any lease incentives received;
• Initial direct costs incurred; and
• Estimated costs to dismantle, remove, or restore the leased asset, if applicable, as required by the lease agreement.
Subsequently, the ROU asset is measured at cost less accumulated depreciation and accumulated impairment losses, if
any, and adjusted for any remeasurement of the lease liability. The ROU asset is depreciated using the straight-line
method over the shorter of the lease term or the useful life of the asset.
Lease Liability
The lease liability is initially measured at the present value of lease payments not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if not readily determinable, the Company's incremental
borrowing rate. Lease payments include fixed payments (including in-substance fixed payments), variable payments
based on an index or rate, amounts expected to be paid under residual value guarantees, and payments related to options
reasonably certain to be exercised.
Subsequently, the lease liability is measured by:
• Accreting interest using the effective interest method;
• Reducing the carrying amount for lease payments made; and
• Remeasuring the liability to reflect changes in lease terms, lease payments, or reassessments of options.
Short-term and Low-value Leases
For short-term leases (lease term of 12 months or less) and leases of low-value assets, the Company elects to recognize
lease payments as an operating expense on a straight-line basis over the lease term, unless another systematic basis is
more representative of the pattern of benefits.
Variable Lease Payments
Variable lease payments not based on an index or rate are recognized as an expense in the period in which the event or
condition triggering the payment occurs.
(f) Cash & Cash Equivalents
Cash and cash equivalents comprise cash on hand, Cheque in hand, demand deposits with banks, and other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of
cash and subject to an insignificant risk of changes in value.
(g) Inventories
Inventories which comprise Raw Materials, Work-in-Progress, Stores and spares, Finished Goods and Stock-in-trade are
recognized as assets when the Company obtains control of the goods, and it is probable that the future economic benefits
associated with the inventories will flow to the Company, and the cost can be measured reliably.
Inventories are valued at the lower of cost and net realizable value (NRV), except for Goods-in-Transit, which are valued at
cost. NRV is the estimated selling price in the ordinary course of business, less the estimated costs of completion and costs
necessary to make the sale.
Cost comprises
1. Cost of Purchase: Which includes purchase price, import duties, non-refundable taxes, transport, handling, and other
costs directly attributable to acquiring the inventories, less trade discounts and rebates.
2. Cost of Conversion: Which includes direct labor, direct materials, and a systematic allocation of fixed and variable
production overheads incurred in converting materials into Work-in-Progress or Finished Goods.
3. Other Costs: Which includes costs incurred to bring inventories to their present location and condition, such as freight
and insurance for Goods-in-Transit.
The cost of inventories is determined using the following methods, as applicable. First-in-First-out (FIFO) or Weighted
Average Cost for Raw Materials, Work-in-Progress, Finished Goods, and Stock-in-Trade or 'Specific identification', as
applicable.
(h) Investment in subsidiaries and Joint ventures
Investments in subsidiaries and joint ventures are recognized when the Company obtains control (for subsidiaries) or joint
control (for joint ventures) over the investee. Control is achieved when the Company has power over the investee,
exposure or rights to variable returns, and the ability to affect those returns through its power. Joint control exists when
decisions about relevant activities require the unanimous consent of the partiesFind parties sharing control.
Investments in subsidiaries and joint ventures are accounted for at cost in the Company's separate financial statements,
as permitted by Ind AS 27. Cost comprises the fair value of the consideration paid at the acquisition date plus any directly
attributable transaction costs. If an investment is classified as held for sale under Ind AS 105 (Non-current Assets Held for
Sale and Discontinued Operations), it is measured at the lower of its carrying amount and fair value less costs to sell.
Investments carried at cost are reviewed for impairment in accordance with Ind AS 36 (Impairment of Assets). An
impairment loss is recognized in profit or loss when the recoverable amount of the investment is less than its carrying
amount. The recoverable amount is the higher of the investment's fair value less costs to sell and its value in use.
Impairment losses are reversed if there is a subsequent increase in the recoverable amount, to the extent that the
carrying amount does not exceed the original cost.
Dividends received from subsidiaries or joint ventures are recognized in profit or loss when the Company's right to receive
payment is established, provided it further distribution is not considered a recovery of the investment cost.
(i) Financial Instruments
A financial instrument is any contract the gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
Recognition
A financial asset or financial liability is recognized when the Company becomes a party to the contractual provisions of the
instrument. Financial instruments are initially recognized at fair value, adjusted for transaction costs directly attributable
to the acquisition or issue of the financial asset or liability, except for those classified as fair value through profit or loss
(FVTPL), where transaction costs are expensed immediately in the Statement of Profit and Loss.
Classification and Measurement
Financial Assets
The Company classifies financial assets based on its business model for managing the assets and the contractual cash flow
characteristics of the assets, as follows:
Amortized Cost: Assets held within a business model to collect contractual cash flows that are solely payments of principal
and interest (SPPI) are measured at amortized cost using the effective interest rate (EIR) method. Interest income is
included in other income in the Statement of Profit and Loss.
Fair Value Through Other Comprehensive Income (FVOCI): Debt instruments held within a business model to collect
contractual cash flows and sell, where cash flows meet the SPPI test, are measured at FVOCI. Interest income is
recognized using the EIR method, and fair value changes are recognized in other comprehensive income (OCI), with
amounts reclassified to profit or loss upon derecognition.
Fair Value Through Profit or Loss (FVTPL): Assets that do not meet the criteria for amortized cost or FVOCI are measured
at FVTPL, with changes in fair value recognized in the Statement of Profit and Loss. Interest income is included in other
income.
Equity instruments, other than investments in subsidiaries, joint ventures, and associates, are measured at FVTPL, with
changes in fair value recognized in the Statement of Profit and Loss. The Company may make an irrevocable election at
initial recognition to measure specific equity investments at FVOCI, with fair value changes recognized in OCI and no
recycling to profit or loss upon derecognition. No such election has been made.
Financial Liabilities
Financial liabilities are classified as either:
Amortized Cost: Measured using the EIR method, with interest expense recognized in the Statement of Profit and Loss.
FVTPL: Liabilities designated as FVTPL or held for trading, with changes in fair value recognized in the Statement of Profit
and Loss.
Derivative Financial Instruments
Derivative financial instruments, such as forward foreign exchange contracts used to hedge foreign currency risks, are
initially recognized at fair value on the date the contract is entered into and subsequently remeasured at fair value.
Changes in fair value are recognized in the Statement of Profit and Loss.
Impairment of Financial Assets
The Company applies the expected credit loss (ECL) model to financial assets measured at amortized cost, FVOCI (debt
instruments), trade receivables, and lease receivables. ECL is measured based on historical trends, industry practices, and
the business environment, considering whether there has been a significant increase in credit risk since initial recognition.
For trade receivables, the Company may apply the simplified approach, recognizing lifetime ECL. Impairment losses or
reversals are recognized in the Statement of Profit and Loss.
Derecognition
A financial asset is derecognized when the contractual rights to the cash flows expire or the Company transfers
substantially all the risks and rewards of ownership. A financial liability is derecognized when the obligation is discharged,
cancelled, or expires. Gains or losses on derecognition are recognized in the Statement of Profit and Loss, except for
FVOCI debt instruments, where accumulated OCI amounts are reclassified to profit or loss.
Offsetting
Financial assets and financial liabilities are offset, and the net amount is presented in the balance sheet, when the
Company has a legally enforceable right to offset and intends to settle on a net basis or realize the asset and settle the
liability simultaneously.
Impairment of Non-Financial Assets
The Company applies Ind AS 36 (Impairment of Assets) to assess the impairment of non-financial assets, such as property,
plant, and equipment, intangible assets, and cash-generating units (CGUs).
Assessment
At each reporting date, the Company assesses whether there is an indication that a non-financial asset or CGU may be
impaired. If such an indication exists, the recoverable amount is estimated. The recoverable amount is the higher of the
asset's or CGU's fair value less costs to sell and its value in use.
Impairment Loss
An impairment loss is recognized in the Statement of Profit and Loss when the carrying amount of an asset or CGU
exceeds its recoverable amount. The loss is calculated as the difference between the carrying amount and recoverable
amount. For CGUs, impairment losses are allocated first to reduce the carrying amount of any goodwill, then to other
assets pro-rata.
Write-off and Reversal
If there are no realistic prospects of recovery, the asset is written off. If the recoverable amount subsequently increases
due to an objective event occurring after the impairment, the impairment loss is reversed, provided the carrying amount
does not exceed the amount that would have been determined had no impairment been recognized. Reversals are
recognized in the Statement of Profit and Loss.
(j) Segment Reporting:
Operating segments are identified based on the internal reporting structure provided to the chief operating decision
maker (CODM), who is responsible for allocating resources and assessing the performance of the Company's operating
segments. An operating segment is a component of the Company that engages in business activities from which it earns
revenues and incurs expenses, whose operating results are regularly reviewed by the CODM, and for which discrete
financial information is available.
The amounts reported for each operating segment are consistent with the internal financial information provided to the
CODM. Segment revenue, results, assets, and liabilities are measured based on the same accounting policies as those
used in the Company's financial statements, unless otherwise specified in the internal reporting framework. Inter¬
segment transactions, if any, are recorded at the amounts used for internal reporting purposes.
(k) Borrowing Costs
Borrowing costs are interest and other costs incurred in connection with the borrowing of funds. These include interest
expense calculated using the effective interest rate method, finance charges on lease liabilities, and exchange differences
arising from foreign currency borrowings to the extent they are regarded as an adjustment to interest costs, limited to the
amount that would have been incurred had the borrowing been in the functional currency.
Borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset are capitalized as
part of the cost of that asset. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its
intended use or sale.
Capitalization of borrowing costs begins when expenditures for the qualifying asset are being incurred; borrowing costs
are being incurred; and activities necessary to prepare the asset for its intended use or sale are in progress.
Capitalization is suspended during extended periods when active development of the qualifying asset is interrupted,
unless the interruption is part of the necessary preparation process. Capitalization ceases when substantially all activities
necessary to prepare the qualifying asset for its intended use or sale are complete.
Capitalized borrowing costs are included in the cost of the qualifying asset in the balance sheet, typically under property,
plant, and equipment or other relevant asset categories.
All other borrowing costs are recognized as an expense in the Statement of Profit and Loss in the period in which they are
incurred.
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