2 Significant accounting policies
2.A Basis of preparation
The Statement of Assets and Liabilities of the Company as at March 31, 2024 and the Statement of Profit and Loss, the
Statement of Changes in Equity and the Statement of Cash flows for the year ended March 31,2024 and Other Financial
Information (together referred as ‘Financial Information') has been prepared under Indian Accounting Standards (’Ind AS’)
notified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015 (as
amended).
The financial information are presented in Indian Rupees (INR).
2.B Significant accounting policies
a. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is
treated as current when it is:
(i) Expected to be realized or intended to be sold or consumed in normal operating cycle.
(ii) Held primarily for the purpose of trading.
(iii) Expected to be realized within twelve months after the reporting period, or
(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.
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 settled within twelve months after the reporting period, or
(iv) There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The
Company has identified twelve months as its operating cycle.
b. Property, Plant and Equipment
Under the previous GAAP (Indian GAAP), all assets were carried in the balance sheet at cost, less accumulated depreciation
and accumulated impairment losses, if any. On the date of transition to Ind AS, the Company has applied exemptions of Ind AS
101 to continue the carrying value of all property, plant and equipment as at the date of transition as its deemed cost.
Property, Plant and equipment including capital work in progress are stated at cost, less accumulated depreciation and
accumulated impairment losses, if any. The cost comprises of purchase price, taxes, duties, freight and other incidental
expenses directly attributable and related to acquisition and installation of the concerned assets and are further adjusted by the
amount of CENVAT\GST credit and VAT credit availed wherever applicable. Cost includes borrowing cost for long term
construction projects if recognition criteria are met. When significant parts of plant and equipment are required to be replaced at
intervals, the Company depreciates them separately based on their respective useful lives. Likewise, when a major inspection is
performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria
are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no
future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement
when the asset is derecognized.
The company identifies and determines cost of each component/ part of the asset separately, if the component/ part has a cost
which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset.
Capital work- in- progress includes cost of property, plant and equipment under installation / under development as at the
balance sheet date.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial
year end and adjusted prospectively, if The residual values, useful lives and methods of depreciation of property, plant and
equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
In respect of other assets, depreciation is calculated on a straight-line basis using the rates arrived at based on the useful lives
estimated by the management and in the manner prescribed in Schedule II of the Companies Act 2013. The useful life is as
follows:
Assets Useful lives estimated by the management
Factory building 30
Other building 60
Plant and Equipment 15
Office Equipment 5
Computers & Data Processing Units 3
Furniture and Fixtures 10
Motor Vehicles 8
c. Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangibles,
excluding capitalized development cost, are not capitalized and the related expenditure is reflected in statement of Profit and
Loss in the period in which the expenditure is incurred. Cost comprises the purchase price and any attributable cost of bringing
the asset to its working condition for its intended use.
The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized
over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be
impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least
at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future
economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate and
are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in
the statement of profit and loss in the expense category consistent with the function of the intangible assets.
Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the
cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life
continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from disposal of the intangible assets are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognized in the statement of profit and loss when the assets are disposed off.
d. Impairment of non financial assets
"The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s, recoverable amount.
Intangible assets and property, plant and equipment are evaluated for recoverability whenever events or changes in
circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the
recoverable amount (i.e. the higher of the fair value less cost to sell and the value in- use) is determined on an individual asset
basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the CGU to which the asset belongs. If such assets are considered to be impaired, the
impairment to be recognized in the statement of profit and loss is measured by the amount by which the carrying value of the
After impairment, depreciation is provide on the revised carrying amount of the asset over its remaining economic life.
e. Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of
another entity.
(i) Financial Assets
All financial assets are recognized initially at fair value. Transaction costs that are directly attributable to the acquisition of
financial assets (other than financial assets at fair value through profit or loss) are added to the fair value measured on initial
recognition of financial asset. Purchase and sale of financial assets are accounted for at trade date.
Financial instruments at amortized cost
"A financial instrument is measured at the amortized cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest
(SPPI) on the principal amount outstanding."
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate
method.
Financial instrument at Fair Value through Other Comprehensive Income (OCI)
"A financial instrument is classified and measured at fair value through OCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial
assets, and
b) The asset's contractual cash flows represent solely payments of principal and interest."
Financial instruments included within the OCI category are measured initially as well as at each reporting date at fair value. Fair
value movements are recognized in OCI. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is
reclassified from OCI to statement of profit and loss.
Financial instrument at Fair Value through Profit and Loss
Any financial instrument, which does not meet the criteria for categorization at amortized cost or at fair value through other
comprehensive income, is classified at fair value through profit and loss. Financial instruments included in the fair value through
profit and loss category are measured at fair value with all changes recognized in the statement of profit and loss.
Equity investments
Equity investments in subsidiaries are measured at cost.
Derecognition of financial assets
A financial asset is primarily derecognized when the rights to receive cash flows from the asset have expired, or the Company
has transferred its rights to receive cash flows from the asset.
Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair
valued through profit and loss. For all other financial assets, expected credit losses are measured at an amount equal to the 12-
month ECL, unless there has been a significant increase in credit risk from initial recognition in which case they are measured at
lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date
is recognized in the statement of profit and loss.
(ii) Financial liabilities
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly
attributable transaction costs.
The Company's financial liabilities include trade payables, borrowings including bank overdrafts and other payables.
After initial recognition, financial liabilities are subsequently measured at amortized cost using the effective interest rate (EIR)
method. Gains and losses are recognized in the statement of profit and loss when the liabilities are derecognized as well as
through the EIR amortization process.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
f. Investment in Subsidiaries
The investment in subsidiaries are carried at cost as per Ind AS 27. Investment accounted for at cost is accounted for in
accordance with Ind AS 105 when they are classified as held for sale. Investment carried at cost is tested for impairment as per
Ind AS 36 . An investor, regardless of the nature of its involvement with an entity (the investee), shall determine whether it is a
parent by assessing whether it controls the investee. An investor controls an investee when it is exposed, or has rights, to
variable returns from its involvement with the investee and has the ability to affect those returns through its power over the
investee. Thus, an investor controls an investee if and only if the investor has all the following:
(a) power over the investee;
(b) exposure, or rights, to variable returns from its involvement with the investee and
(c) the ability to use its power over the investee to affect the amount of the investor's returns.
On disposal of investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
g. Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can
be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the
consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties
collected on behalf of the government.
The specific recognition criteria described below must also be met before revenue is recognized.
Sale of goods
Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to
the buyer, usually on delivery of the goods and is measured at fair value of consideration received/receivable, net of returns and
allowances, trade discounts and volume rebates.
Job work income
Revenue from job work is recognised by reference to stage of completion of job work as per terms of agreement. Revenue from
job work is measured at the fair value of the consideration received or receivable, net of allowances, trade discounts and volume
rebates, if any.
Export benefits
Export benefits constituting duty draw back and others are accounted for on accrual basis and are considered as other operating
income.
h. Inventories
Inventories are valued at the lower of cost and net realisable value after providing for obsolescence and other losses, where
considered necessary. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies,
transit insurance and receiving charges. Work-in -progress and finished goods include appropriate proportion of overhead ,
where applicable.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.
i. Government Grants
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 as income on a systematic basis
over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset,
by deducting the grant from the carrying amount of the asset in which case the grant is recognised in profit or loss as a reduction
of depreciation charged.
j. Taxes: Taxes comprises current income tax and deferred tax
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities in accordance with the Income Tax Act, 1961 and the income computation and disclosure standards (ICDS) enacted
in India by using tax rates and tax laws that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other
comprehensive income or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or
directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred income tax assets and liabilities are recognized for all temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related
tax benefit will be realized. Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been
enacted or substantively enacted by the balance sheet date and are expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the year
that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is
probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be
utilized.
GST (Goods and Service tax )/ Sales/ value added taxes paid on acquisition of assets or on incurring expenses
Expenses and assets are recognised net of the amount of sales/ value added taxes paid, except:
"? When the tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case,
the tax paid is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable
? When receivables and payables are stated with the amount of tax included
The net amount of tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
balance sheet.
k. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are
expensed in the period in which they occur.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing
costs also include exchange differences to the extent regarded as an adjustment to the borrowing costs.
l. Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the
inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a
specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified
in an arrangement.
Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks
and rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalized at the commencement of the lease at the inception date at fair value of the leased property or, if
lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and
reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance
charges are recognized in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying
assets, in which case they are capitalized in accordance with the Company’s general policy on the borrowing costs.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will
obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset
and the lease term.
Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the
lease term unless the payment are structured to increase in line with expected general inflation to compensate for the losses in
expected inflationary cost increase.
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