k. Provisions, Contingent Liabilities And Contingent Assets
Provisions are recognized for present obligation (legal or constructive) of uncertain timing or amount
arising as a result of past event where a reliable estimate can be made and it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation.
When it is not probable that an outflow of resources embodying economic benefits will be required or
the amount cannot be estimated reliably the obligation is disclosed as a contingent liability unless the
possibility of outflow of resources embodying economic benefit is remote.
Possible obligations, whose existence will only be confirmed by the occurrence or nonoccurrence of one
or more uncertain future events, not wholly with in the control of entity, are also disclosed as contingent
liabilities.
Contingent assets are not recognized in financial statement. However, when the realization of income is
virtually certain, then the related asset is no longer a contingent asset, but it is recognized as an asset.
Commitments include the amount of purchase order (net of advances) issued to parties for completion of
assets.
Provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet
date.
l. Segment reporting
The Company’s operating segments are established on the basis of those components of the group that are
evaluated regularly by the Board of Directors (the ‘Chief Operating Decision Maker’ as defined in Ind AS
108 - ‘Operating Segments’), in deciding how to allocate resources and in assessing performance. Segment
performance is evaluated based on profit or loss and is measured consistently with the profit or loss in the
financial statements.
The Operating Segments have been identified on the basis of the nature of products/services.
a) Segment revenue includes sales and other income directly identifiable with/allocable to the segment
including intersegment transfers.
b) Expenses that are directly identifiable with/allocable to segments are considered for determining the
segment results. Expenses which relate to the Company as a whole and not allocable to segments are
included under unallocable expenditure.
c) Income which relates to the Company as a whole and not allocable to segments is included in
unallocable income.
Segment assets & liabilities include those directly identifiable with the respective segments. Assets &
liabilities that relate to the Company as a whole and not allocable to any segment on direct and/or are
reasonable basis have been disclosed as unallocable.
m. Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to the
equity shareholders by the weighted average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period and for all periods presented is
adjusted for events, such as bonus issue, bonus element in a rights issue and shares split that have changed
the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating Diluted Earnings per share, the net profit or loss for the period attributable
to the equity shareholders and the weighted average number of shares outstanding during the period is
adjusted for the effects of all dilutive potential equity shares
n. Cash flow statement
Cash flows are reported using the indirect method, whereby profit for the year 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 of the Company are segregated. The Company considers
all highly liquid investments that are readily convertible to known amounts of cash and cash equivalents.
o. Borrowing
Borrowings are initially recognized at net of transaction costs incurred and measured at amortized cost.
Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized
in the Statement of Profit and Loss over the period of the borrowings using the effective interest method.
Preference shares, which are mandatorily redeemable on a specific date are classified as liabilities. The
dividend on these preference shares is recognized in Statement of Profit and Loss as finance costs.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use or sale,
are added to the cost of the assets, until such time as the assets are substantially ready for their intended
use or sale. Borrowing costs consist of interest and other costs that an entity incurs in connection with
the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an
adjustment to the borrowing costs.
All other borrowing costs are recognized in Statement of profit and loss in the period in which they are
incurred.
p. Fair Value Measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
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. The fair value measurement is based on
the presumption that the transaction to sell the asset or transfer the liability takes place either:
a) In the principal market for the asset or liability, or
b) In the absence of a principal market, in most advantageous market for the asset or liability, and
The Company has access to the principal or the most advantageous market.
The fair value of an asset or a liability is measured using the assumptions that market participants would
use when pricing the asset or liability, assuming that market participants act in their economic best
interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another market
participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing
the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorized within the fair value hierarchy, described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable.
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company
determines whether transfers have occurred between levels in the hierarchy by reassessing categorization
(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of
each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets & liabilities on
the basis of the nature, characteristics and the risks of the asset or liability and the level of the fair value
hierarchy as explained above. This note summarizes accounting policy for fair value.
In these financial statements is determined on such a basis as explained above, except for share-based
payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope
of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net
realizable value in Ind AS 2 or value in use in Ind AS 36.
q. 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.
r. Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be
recovered principally through a sale transaction rather than through continuing use. This condition
is regarded as met only when the asset (or disposal group) is available for immediate sale in its present
condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and
its sale is highly probable. Management must be committed to the sale, which should be expected to qualify
for recognition as a completed sale within one year from the date of classification.
The Company treats sale/distribution of the asset or disposal group to be highly probable when:
a) The appropriate level of management is committed to a plan to sell the asset (or disposal group),
b) An active program to locate a buyer and complete the plan has been initiated (if applicable),
c) The assets or disposal group is being actively marketed for sale at a price that is reasonable in relation
to its current fair value,
d) The sale is expected to qualify for recognition as a completed sale within one year from the date of
classification, and
e) Action required completing the plan indicated that is unlikely that significant change to plan will be
made or that the plan will be withdrawn.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their
carrying amount and fair value less costs to sell
s. 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.
o Financial assets
Initial recognition and measurement
All financial assets 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. Trade receivables
that do not contain a significant financing component (determined in accordance with IND AS 115 -
Revenue Recognition) are initially measured at their transaction price and not at fair value.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
a) Financial assets carried at amortized cost (AC)
A financial asset is measured at amortized 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.
b) 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. Interest income for
these financial assets is included in other income using the effective interest rate method.
c) Financial assets at fair value through profit or loss (FVTPL)
A financial asset which is not classified in any of the above categories is measured at FVTPL.
o Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. Where the company decided
to make an irrevocable election to present the fair value gain and loss (excluding dividend) on non¬
current equity investments in other comprehensive income, there is no subsequent reclassification
of fair value gain and loss to profit and loss even on sale of investments. However, the company
may transfer the cumulative gain or loss within equity. The company makes such election on an
instrument-by-instrument basis.
The company elected to measure the investment in subsidiary, associate andjoint venture at cost.
o Impairment of financial assets
The company assesses on a forward-looking basis the expected credit losses (ECL) associated with
the assets carried at amortized cost and FVOCI debt instruments. The impairment methodology
applied depends on whether there has been a significant increase in credit risk. 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 credit risk since initial
recognition, then the entity reverts to recognizing impairment loss allowance based on 12-month
ECL.
For trade receivables, the company applies the simplified approach permitted by Ind AS 109 “Financial
Instruments” which requires expected life time losses to be recognized from initial recognition of
receivables. The Company uses historical default rates to determine impairment loss on the portfolio
of trade receivables. At every reporting date these historical default rates are reviewed and changes
in the forward looking estimates are analyzed.
o Financial liabilities
Initial recognition and measurement
All financial liabilities are recognized at fair value and in case of loans, net of directly attributable
cost.
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.
o 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.
o Reclassification of financial assets
The company determines classification of financial assets and liabilities on initial recognition. After
initial recognition, no reclassification is made for financial assets which are equity instruments
and financial liabilities. For financial assets which are debt instruments, a reclassification is made
only if there is a change in the business model for managing those assets. Changes to the business
model are expected to be infrequent. The company’s senior management determines change in the
business model as a result of external or internal changes which are significant to the company’s
operations. Such changes are evident to external parties. A change in the business model occurs
when the company either begins or ceases to perform an activity that is significant to its operations.
If the company reclassifies financial assets, it applies the reclassification prospectively from the
reclassification date which is the first day of the immediately next reporting period following the
change in business model. The company does not restate any previously recognized gains, losses
(including impairment gains or losses) or interest.
o 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 recognized amounts and there is an
intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
t. Use of estimates
The preparation of the financial statement in conformity with Ind AS requires the Management to
make estimates and assumptions considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the year. The Management believes
that the estimates used in preparation of the financial statements are prudent and reasonable. Future
results could differ due to these estimates and the differences between the actual results and the estimates
are recognized in the periods in which the results are known / materialize.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates are revised and current and / or future periods are
affected.
u. Key Source of estimation uncertainty
Key source of estimation uncertainty at the date of the financial statements, which may cause a material
adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of
impairment of investments, provisions and contingent liabilities.
The areas involving critical estimates are:
Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and other post-employment medical benefits and the present
value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves
making various assumptions that may differ from actual developments in the future. These include the
determination of the discount rate, future salary increases and mortality rates. Due to the complexities
involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes
in these assumptions. All assumptions are reviewed at each reporting date.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be
measured based on quoted prices in active markets, their fair value is measured using valuation techniques
including the DCF model. The inputs to these models are taken from observable markets where possible,
but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments
include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions
about these factors could affect the reported fair value of financial instruments
Useful lives and residual values of property, plant and equipment
Useful life and residual value of property, plant and equipment are based on management’s estimate of the
expected life and residual value of those assets. These estimates are reviewed at the end of each reporting
period. Any reassessment of these may result in change in depreciation expense for future years.
Impairment of Property Plant and Equipment
The recoverable amount of the assets has been determined on the basis of their value in use. For estimating
the value in use, it is necessary to project the future cash flow of assets over its estimated useful life. If the
recoverable amount is less than its carrying amount, the impairment loss is accounted for in statement of
profit or loss.
Valuation of Deferred tax assets
Deferred tax assets are recognized only to the extent it is considered probable that those assets will be
recoverable. This involves an assessment of when those deferred tax assets are likely to reverse and
a judgment as to whether or not there will be sufficient taxable profits available to offset the tax assets
when they do reverse. The Company reviews the carrying amount of deferred tax assets at the end of each
reporting period. Any change in the estimates of future taxable income may impact the recoverability of
deferred tax assets.
Provisions and contingencies
Provisions and liabilities are recognized in the period when it becomes probable that there will be a
future outflow of resources embodying economic benefits resulting from past operations or events and
the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the
liability requires the application of judgement to existing facts and circumstances, which can be subject
to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take
account of changing facts and circumstance.
v. Recent pronouncements
Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended
March 31, 2025, MCA has notified the below amendments:
The following major amendments have been made;
• Insertion of Ind AS 117 - Insurance Contracts by notification dated 12th August 2024:
This is applicable from the date of publication in the official gazette (i.e. 12th August 2024). This is
related to Insurance Companies and is not applicable to the Company.
• Amendment of Ind AS 116- Lease by notification dated 9th September 2024:
This amendment has clarified the Lease Liability in a Sale and Leaseback transactions This
amendment is applicable to Company from the date of publication in the official gazette ( i.e. 9th
September 2024). However, the Company has no sale and leaseback transactions during the period
ended 31st March,2025
• Amendment of Ind AS 104- Insurance Contracts by notification dated 28th September 2024:
This amendment is applicable from the date of publication in the official gazette (i.e. 28th September
2024). This is related to Insurance Companies and is not applicable to the Company.
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