l. Provisions, Contingent Liabilities and Contingent Assets
Provisions
Provisions are recognised when the Company has a present obligation (Legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some
or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised
as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is
presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a finance cost.
Contingent Liabilities
Contingent liability is a possible obligation arising from past events and whose existence will be confirmed only
by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
entity or a present obligation that arises from past events but is not recognized because;
- it is not probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, or
- the amount of the obligation cannot be measured with sufficient reliability.
The Company does not recognize a contingent liability but discloses its existence and other required disclosures
in notes to the financial statements, unless the possibility of any outflow in settlement is remote.
Contingent Asset
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only
by- the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
entity. The Company does not recognize the contingent asset in its standalone financial statements since this
may result in the recognition of income that may never be realised. Where an inflow of economic benefits is
probable, the Company disclose a brief description of the nature of contingent assets at the end of the reporting
period. However, when the realisation of income is virtually certain, then the related asset is not a contingent
asset and the Company recognize such assets.
Provisions, contingent liabilities and contingent assets are reviewed at each reporting date.
m. Retirement and other employee benefits
Retirement and other employee benefits include gratuity, contribution to provident fund and compensated
absences.
Short term employee benefits:
Short-term employee benefit obligations are recognised at an undiscounted amount in the Statement of Profit
and Loss for the year in which the related services are received. Accumulated leave, which is expected to be
utilized within the next 12 months, is treated as short-term employee benefit. Liabilities for wages and salaries,
including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the
period in which the employees render the related service are recognised in respect of employees' services up to
the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are
settled. The liabilities are presented as employee benefit payable under other financial liabilities in the balance
sheet.
Post employment benefits:
a) Defined Benefit Plans: The Company provides for gratuity, a defined benefit retirement plan ("the Gratuity
Plan") covering eligible Indian employees. The Gratuity Plan provides a lump-sum payment to vested employees
at retirement, death, incapacitation or termination of employment, of an amount based on the respective
employee's salary and the tenure of employment with the Company.
Liabilities with regard to these defined benefit plans are determined by actuarial valuation, performed by an
external actuary, at each Balance Sheet date using the projected unit credit method. These defined benefit plans
expose the Company to actuarial risks, such as longevity risk, interest rate risk and market risk. The gratuity plan
is a non funded plan and the Company makes provision in the books of accounts based on the actuarial report.
Company’s contributions due/ payable during the year towards provident fund is recognized in the statement of
profit and loss.
b) Defined Contribution Plan: Retirement benefit in the form of Provident Fund and National Pension Schemes is a
defined contribution scheme. The Company has no obligation, other than the contribution payable to the
provident fund. The Company recognizes contribution payable to the said funds as an expense, when an
employee renders the related service. The Company makes contributions towards provident fund to the
regulatory authorities in a defined contribution retirement benefit plan for qualifying employees, where the
Company has no further obligations beyond the monthly contributions. Both the employees and the Company
make monthly contributions to the Provident Fund Plan equal to a specified percentage of the covered
employee’s salary.
Other Long-term Employee Benefits
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term
employee benefit for measurement purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the reporting date. Remeasurement
gains/losses are immediately taken to the statement of profit and loss and are not deferred. The obligations are
presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer the
settlement for at least twelve months after the reporting date.
n. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with
an original maturity of three months or less, that are readily convertible to a known amount of cash and subject to
an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term
deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the
Company’s cash management.
o. Earnings/ (loss) per share (EPS)
Basic earnings per share is calculated by dividing the net profit or loss attributable to equity holders of company
(after deducting preference dividends 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 net profit or loss for
the period attributable to equity shareholders of the Company and the weighted average number of shares
outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
p. Events after reporting date
If the Company receives information after the reporting period, but prior to the date of approved for issue, about
conditions that existed at the end of the reporting period, it will assess whether the information affects the
amounts that it recognises in its separate financial statements. The Company will adjust the amounts recognised
in its financial statements to reflect any adjusting events after the reporting period and update the disclosures
that relate to those conditions in light of the new information. For non-adjusting events after the reporting period,
the Company will not change the amounts recognised in its separate financial statements but will disclose the
nature of the non-adjusting event and an estimate of its financial effect, or a statement that such an estimate
cannot be made, if applicable.
q. Exceptional Items
On certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary
activities of the Company is such that its disclosure improves the understanding of the performance of the
Company. Such income or expense is classified as an exceptional item and accordingly disclosed in the financial
statements.
2.3 Changes in accounting policies and disclosures
New and amended standards
(i) Ind AS 117 Insurance Contracts
The Ministry of Corporate Affairs (MCA) notified the Ind AS 117, Insurance Contracts, vide notification dated 12
August 2024, under the Companies (Indian Accounting Standards) Amendment Rules, 2024, which is effective
from annual reporting periods beginning on or after 1 April 2024.
Ind AS 117 Insurance Contracts is a comprehensive new accounting standard for insurance contracts covering
recognition and measurement, presentation and disclosure. Ind AS 117 replaces Ind AS 104 Insurance Contracts.
Ind AS 117 applies to all types of insurance contracts, regardless of the type of entities that issue them as well as
to certain guarantees and financial instruments with discretionary participation features; a few scope exceptions
will apply. Ind AS 117 is based on a general model, supplemented by a specific adaptation for contracts with direct
participation features (the variable fee approach) and a simplified approach (the premium allocation approach)
mainly for short-duration contracts.
The application of Ind AS 117 does not have material impact on the Company’s separate financial statements as
the Company has not entered any contracts in the nature of insurance contracts covered under Ind AS 117.
(ii) Amendments to Ind AS 116 Leases - Lease Liability in a Sale and Leaseback
The MCA notified the Companies (Indian Accounting Standards) Second Amendment Rules, 2024, which amend
Ind AS 116, Leases, with respect to Lease Liability in a Sale and Leaseback. The amendment specifies the
requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction,
to ensure the seller-lessee does not recognise any amount of the gain or loss that relates to the right of use it
retains. The amendment is effective for annual reporting periods beginning on or after 1 April 2024 and must be
applied retrospectively to sale and leaseback transactions entered into after the date of initial application of Ind
AS 116.
The amendments do not have a material impact on the Company’s financial statements.
Standards notified but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of
issuance of the Group’s financial statements are disclosed below. The Group will adopt this new and amended
standard, when it become effective.
Lack of exchangeability - Amendments to Ind AS 21
The Ministry of Corporate Affairs notified amendments to Ind AS 21 The Effects of Changes in Foreign Exchange
Rates to specify how an entity should assess whether a currency is exchangeable and how it should determine a
spot exchange rate when exchangeability is lacking. The amendments also require disclosure of information that
enables users of its financial statements to understand how the currency not being exchangeable into the other
currency affects, or is expected to affect, the entity’s financial performance, financial position and cash flows.
The amendments are effective for annual reporting periods beginning on or after 1 April 2025. When applying the
amendments, an entity cannot restate comparative information.
The amendments are not expected to have a material impact on the company’s financial statements.
3. Significant accounting judgements, estimates and assumptions
The preparation of the Company’s financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the
accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and
estimates could result in outcomes that require a material adjustment to the carrying amount of assets or
liabilities affected in future periods.
Other disclosures relating to the Company’s exposure to risks and uncertainties includes:
• Capital management Note 28
• Financial risk management Note 26
Judgements
In the process of applying the Company’s accounting policies, management has made the following judgements,
which do not have the material effect on the amounts recognised in the Financial statements:
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date,
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year, are described below. The Company based its assumptions and estimates on
parameters available when the Standalone financial statements were prepared. Existing circumstances and
assumptions about future developments, however, may change due to market changes or circumstances arising
that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
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.
The calculation is most sensitive to changes in the discount rate. In determining the appropriate discount rate for
plans operated in India, the management considers the interest rates of government bonds where remaining
maturity of such bond correspond to expected term of defined benefit obligation.
The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at
interval in response to demographic changes. Future salary increases and gratuity increases are based on
expected future inflation rates. Further details about gratuity obligations are given in Note 25.
Useful lives and residual values of property, plant and equipment
The Company reviews the estimated residual values and expected useful lives of assets at least annually. In
particular, the Company considers the impact of health, safety and environmental legislation in its assessment of
expected useful lives and estimated residual values. Furthermore, the Company considers climate-related
matters, including physical and transition risks. Specifically, the Company determines whether climate-related
legislation and regulations might impact either the useful life or residual values, e.g., by banning or restricting the
use of the Company’s fossil fuel-driven machinery and equipment or imposing additional energy efficiency
requirements on the its buildings.
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 judgement is required in establishing fair values. Judgements 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. See Note 26 and 27 for further disclosures.
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