2.11 Provisions, contingent assets and contingent
liabilities

(a) 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. The amount recognised as a provision
is the best estimate of the consideration required

to settle the present obligation at the end of
the reporting period, considering the risk and
uncertainties surrounding the obligation.

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.

(b) Contingent liabilities

A disclosure for a contingent liability is made when
there is a possible obligation or a present obligation
that may, but probably will not require an outflow
of resources embodying economic benefits or the
amount of such obligation cannot be measured
reliably. When there is a possible obligation or a
present obligation in respect of which likelihood
of outflow of resources embodying economic
benefits is remote, no provision or disclosure is
made.

These are reviewed at each financial reporting date
and adjusted to reflect the current best estimates.

(c) Contingent assets

Contingent assets are not recognised though are
disclosed, where an inflow of economic benefits is
probable.

2.12 Employee Benefits

(a) Short-term obligations

Employee benefits such as salaries and other
benefits along with any other non-monetary
benefits falling due wholly within twelve months of
rendering the service are classified as short-term
employee benefits and undiscounted amount
of such benefits are expensed in the Statement
of Profit and Loss in in the period in which the
employee renders the related services.

(b) Other long-term employee benefit obligations :
Post Employment Benefits

(i) Defined contribution plan

Provident Fund: The Company’s contributions
to statutory provident fund in accordance
with the Employees Provident Fund and
Miscellaneous Provisions Act, 1952 which
is a defined contribution plan, are charged to
the Statement of Profit and Loss in the period
of accrual. The Company has no obligation,
other than the contribution payable to the
provident fund.

(ii) Defined benefit plans

The Company provides for gratuity, a
defined benefit retirement plan covering
eligible employees of HP Adhesives Limited.
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 employees’ salary and the tenure
of employment with the Company. The
Company contributes gratuity liabilities
directly to HDFC Trust Group through HP
Adhesives Limited Employees Group Gratuity
Trust. Trustees administer contributions
made to the Trusts and contributions are
invested in a scheme with the HDFC Group
as permitted by Indian Law.

The calculation is performed by a qualified
Actuary using the projected unit credit
method. When the calculation results in a
liability to the Company, the present value
of liability is recognised as provision for
employee benefit. Any actuarial gains or
losses in respect of gratuity are recognised
in OCI in the period in which they arise.

The Company’s net obligation is measured
at the present value of the estimated future
cash flows using a discount rate based on
the market yield on government securities of
a maturity period equivalent to the weighted
average maturity profile of the defined benefit
obligations at each reporting date.

Re-measurement, comprising actuarial
gains and losses, is recognised in other
comprehensive income and is reflected in
retained earnings and the same is not eligible
to be reclassified to Statement of Profit and
Loss.

The Company recognises the net obligation
of a defined plan in its Balance Sheet. Defined
benefit costs comprising current service cost,
past service cost, interest cost and gains or
losses on settlements are recognised in the
Statement of Profit and Loss as employee
benefits expense. Gains or losses on
settlement of any defined benefit plan are
recognised when the settlement occurs. Past
service cost is recognised as expense at the
earlier of the plan amendment or curtailment
and when the Company recognises related
restructuring costs or termination benefits.

(iii) Other employee benefits

Compensated absences, if any, which
accrue to employees and which can be
carried to future periods but are expected
to be encashed/ availed within twelve
months immediately following the year end
are reported as expenses during the year
in which employees perform the services
that the benefit covers and the liabilities are
reported at the undiscounted amount of the
benefits. Where the availment or encashment
is otherwise not expected to wholly occur
within the next twelve months, the liability
on account of the benefit is actuarially
determined using the projected unit credit
method.

2.13 Financial Instruments

Financial assets and financial liabilities are recognised
when a Company becomes a party to the contractual
provisions of the instruments.

Initial Recognition

Financial assets and financial liabilities are initially
measured at fair value, plus in the case of Financial
assets not recorded at fair value through Profit or Loss
(FVTPL), transaction costs that are directly attributable
to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss
and ancillary costs related to borrowings) are added to
or deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition
of financial assets or financial liabilities at fair value
through profit or loss are recognised immediately in
Statement of Profit and Loss. However, those financial
assets & liabilities that do not contain significant
financial component are measured at transaction price.

Classification and Subsequent Measurement:
Financial Assets

The Company classifies financial assets as
subsequently measured at amortised cost, fair value
through other comprehensive income ("FVOCI") or fair
value through profit or loss ("FVTPL") on the basis of
following:

(i) the entity’s business model for managing the
financial assets and

(ii) the contractual cash flow characteristics of the
financial asset.

Amortised Cost

A financial asset shall be classified and measured at
amortised cost if both of the following conditions are
met:

(i) the financial asset is held within a business model
whose objective is to hold financial assets in order
to collect contractual cash flows and

(ii) 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.

In case of financial asset classified and measured at
amortised cost, any interest income, foreign exchange
gains/losses and impairment are recognised in the
Statement of Profit and Loss.

Fair Value through OCI

A financial asset shall be classified and measured at
fair value through OCI if both of the following conditions
are met:

(i) the financial asset is held within a business model
whose objective is achieved by both collecting
contractual cash flows and selling financial assets
and

(ii) 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.

Where the Company has elected to present the fair value
gain on equity instruments in other comprehensive
income, there is no subsequent classification of fair
value gain or losses to profit and loss account. Dividend
from such instruments is recognised in profit and loss
account as other income where right to receive is
established.

Fair Value through Profit or Loss

A financial asset shall be classified and measured at
fair value through profit or loss unless it is measured
at amortised cost or at fair value through OCI. All
recognised financial assets are subsequently measured
in their entirety at either amortised cost or fair value,
depending on the classification of the financial assets.
For financial assets at fair value through profit or loss,
net gain or losses, including any interest or dividend
income are recognised in the Statement of Profit and
Loss.

Equity Investments in subsidiaries

Equity investments in Subsidiaries are carried at
Cost, in accordance with option available in Ind AS 27
"Separate Financial Statements". Investment carried at
cost are subject to impairment test as per Ind AS 36
when indication of potential impairment exists.

Classification and Subsequent Measurement:
Financial Liabilities

Financial liabilities are classified as either financial
liabilities at FVTPL or 'other financial liabilities’.

Financial Liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the
financial liability is held for trading or are designated
upon initial recognition as FVTPL. Gains or Losses
on liabilities held for trading are recognised in the
Statement of Profit and Loss.

Other Financial Liabilities

Other financial liabilities (including borrowings and
trade and other payables) are subsequently measured
at amortised cost using the effective interest method.
Interest expense (based on effective interest method),
foreign exchange gains and losses and any gain or
loss on derecognition is recognised in the Statement
of Profit and Loss.

Impairment of financial assets

In accordance with Ind AS 109, Financial Instruments,
the Company applies Expected credit loss (ECL) model
for measurement and recognition of impairment loss
on financial assets.

For recognition of impairment loss on financial assets
and risk exposure, the Company determines that
whether there has been a significant increase in the
credit risk since initial recognition. If credit risk has not
increased significantly, no impairment is recognised.
However, if credit risk has increased significantly,
lifetime ECL is used. If in subsequent period, the credit
quality of the instrument improves then the entity
reverts to recognising impairment loss allowance
based on 12 month ECL.

Life time ECLs are the expected credit losses resulting
from all possible default events over the expected life of
a financial instrument.

ECL is the difference between all contractual cash
flows that are due to the Company in accordance
with the contract and all the cash flows that the entity

expects to receive (i.e. all shortfalls), discounted at the
original EIR. When estimating the cash flows, an entity
is required to consider all contractual terms of the
financial instrument (including prepayment, extension
etc.) over the expected life of the financial instrument.
However, in rare cases when the expected life of the
financial instrument cannot be estimated reliably, then
the entity is required to use the remaining contractual
term of the financial instrument.

ECL impairment loss allowance (or reversal) recognised
during the year is recognised as income/expense in
the statement of profit and loss. In balance sheet ECL
for financial assets measured at amortised cost is
presented as an allowance, i.e. as an integral part of the
measurement of those assets in the balance sheet. The
allowance reduces the net carrying amount. Until the
asset meets write off criteria, the Company does not
reduce impairment allowance from the gross carrying
amount. Company measures the loss allowance at
an amount equal to lifetime expected credit losses for
Trade receivables (i.e. 'simplified approach’).

Financial assets, other than those at FVTPL, are
assessed for indicators of impairment at the end of
each reporting period. The Company recognises a loss
allowance for expected credit losses on financial asset.
In case of trade receivables, the Company follows
the simplified approach permitted by Ind AS 109 -
Financial Instruments for recognition of impairment
loss allowance. The application of simplified approach
does not require the Company to track changes in
credit risk. The Company calculates the expected credit
losses on trade receivables using a provision matrix on
the basis of its historical credit loss experience.

(iv) Derecognition of financial assets

The Company derecognises a financial asset
when the contractual rights to the cash flows from
the asset expire, or when it transfers the financial
asset and substantially all the risks and rewards
of the asset or if, the Company has neither
transferred nor retained substantially all risk and
reward of the asset, but has transferred control of
the asset to another party.

On derecognition of a financial asset, other than
investments classified as FVOCI, in its entirety, the
difference between the asset’s carrying amount
and the sum of the consideration received and
receivable and the cumulative gain or loss that had
been recognised in other comprehensive income
and accumulated in equity is recognised in profit
or loss if such gain or loss would have otherwise

been recognised in profit or loss on disposal of
that financial asset.

On derecognition of equity investments classified
as FVOCI, accumulated gains or loss recognised
in OCI is transferred to retained earnings.

(b) Financial liabilities and equity instruments:
Classification as debt or equity

Debt and equity instruments issued by the
Company are classified as either financial liabilities
or as equity in accordance with the substance of
the contractual arrangements and the definitions
of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that
evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity
instruments issued by a Company are recognised
at the proceeds received.

(c) Reclassification of financial assets and liabilities

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.

(d) Offsetting financial instrument

Financial assets and liabilities are offset and
the net amount is reported in the balance sheet
where there is a legally enforceable right to offset
the recognised amounts and there is an intention
to settle financial asset and liability on a net
basis or realise the asset and settle the liability
simultaneously. The legally enforceable right must
not be contingent on future events and must be
enforceable in the normal course of business and
in the event of default, insolvency or bankruptcy of
the Company or the counterparty.

2.14 Cash & cash equivalents

Cash and cash equivalent in the Balance Sheet
comprises Cash at Banks, Cash on Hand and Short¬
Term Deposits with an original maturity of three
months or less, which are subject to insignificant risk
of change in value.

For the purpose of the Statement of cash flows, cash
and cash equivalents consist of unrestricted cash

and short-term deposits, as defined above as they are
considered an integral part of the Company’s cash
management.

2.15 Segment reporting

The business of the Company falls within a single line of
business i.e. business of Adhesives & Solvent products.
All other activities of the Company revolve around its
main business. Hence no separate reportable primary
segment

Operating segments are reported in a manner
consistent with the internal reporting provided to the
management. Management assesses the financial
performance and position of the Company and makes
strategic decisions.

2.16 Statement of cash flows

Statement of cash flows is made using the indirect
method, whereby profit before tax is adjusted for the
effects of transactions of non-cash nature, any deferral
accruals of past or future cash receipts or payments
and item of income or expense associated with
investing or financing of cash flows. The cash flows
from operating, financing and investing activities of the
Company are segregated.

2.17 Corporate Social Responsibility (“CSR") expenditure

CSR expenditure incurred by the Company is charged
to the Statement of the Profit and Loss.

2.18 Share capital

Ordinary shares are classified as equity. Incremental
costs directly attributable to the issuance of new
ordinary shares and share options and buyback of
ordinary shares, if any are recognised as a deduction
from equity, net of any tax effects.

Share issue expense

The share issue expenses incurred by the Company on
account of new shares issued if any are netted off from
securities premium account.

2.19 Earnings per share
Basic earnings per share

Basic earnings per share is computed by dividing
the net profit after tax by weighted average number
of equity shares outstanding during the period. The
weighted average number of equity shares outstanding
during the year, if any, is adjusted for treasury shares,
bonus issue, bonus element in a rights issue to existing
shareholders, share split and reverse share split
(consolidation of shares).

Diluted earnings per share

Diluted earnings per share is computed by dividing the
profit after tax after considering the effect of interest
and other financing costs or income (net of attributable
taxes) associated with dilutive potential equity shares
by the weighted average number of equity shares
considered for deriving basic earnings per share and
also the weighted average number of equity shares
that could have been issued upon conversion of all
dilutive potential equity shares including the treasury
shares held by the Company to satisfy the exercise of
the share options by the employees.

The number of shares and potentially dilutive equity
shares are adjusted retrospectively for all periods for
any share split and bonus share issues including for
changes effected prior to the approval of the standalone
financial statements by the Board of Directors.

2.20 Measurement of EBITDA

During the year under review company has opted NOT
to present earnings before interest (finance cost), tax,
depreciation and Amortisation (EBITDA) as a separate
line item on the face of the Statement of Profit and Loss
for the period, same has been applied for presentation
of previous year’s figures.

2.21 Dividend

The Company recognises a liability to pay dividend to
equity holders of the Company when the distribution
is authorised, and the distribution is no longer at the
discretion of the Company. As per the corporate laws
in India, a distribution is authorised when it is approved
by the shareholders. A corresponding amount is
recognised directly in equity.

3 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES

AND ASSUMPTIONS

The estimates used in the preparation of the Standalone
financial statements of each year presented 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. 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. Although the Company
regularly assesses these estimates, actual results
could differ materially from these estimates - even
if the assumptions underlying such estimates were
reasonable when made, if these results differ from

historical experience or other assumptions do not
turn out to be substantially accurate. The changes in
estimates are recognised in the Standalone financial
statements in the period in which they become
known.

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. Actual results could differ from these
estimates.

3.1 Significant Judgments

Impairment of Trade Receivables

As per Ind AS 109 impairment allowance has been
determined based on expected credit loss method.
Trade receivables do not carry interest and are stated
at their nominal values as reduced by appropriate
allowances for estimated irrecoverable amount are
based on ageing of the receivable balances and
historical experiences. Individual trade receivables are
written off when management deems not be collectible.

Impairment of other financial assets

The impairment provision for financial assets are based
on assumptions about risk of default and expected
loss rates. The Company uses judgment in making
these assumptions and selecting the inputs to the
impairment calculation., based on the Company’s past
history, existing market conditions as well as forward
looking estimates at the end of each reporting period

Contingencies

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 recognised because it is not probable
that an out flow of resources embodying economic
benefits will be required to settle the obligation or the
amount of the obligation cannot be measured with
sufficient reliability.

Taxes

Uncertainties exist with respect to the interpretation
of complex tax regulations, changes in tax laws, and
the amount and timing of future taxable income. Given
the nature of business differences arising between the
actual results and the assumptions made, or future
changes to such assumptions, could necessitate
future adjustments to tax income and expense already
recorded. The Company establishes current tax
payable, based on reasonable estimates. The amount
of such current tax payable is based on various factors,

such as experience of previous tax audits and differing
interpretations of tax regulations by the taxable entity
and the responsible tax authority. Such differences of
interpretation may arise on a wide variety of issues
depending on the conditions prevailing in the respective
domicile of the companies.

Recoverability of deferred taxes

In assessing the recoverability of deferred tax assets,
management considers whether it is probable that
taxable profit will be available against which the losses
can be utilised. The ultimate realisation of deferred
tax assets is dependent upon the generation of future
taxable income during the year in which the temporary
differences become deductible.

Deferred tax assets are recognised for unused tax
losses to the extent that it is probable that taxable
profit will be available against which the losses can be
utilised. Significant management judgment is required
to determine the amount of deferred tax assets that
can be recognised, based upon the likely timing and the
level of future taxable profits together with future tax
planning strategies.

Impairment of non-financial assets

Impairment exists when the carrying value of an
asset or cash generating unit exceeds its recoverable
amount, which is the higher of its fair value less costs
of disposal and its value in use. The fair value less costs
of disposal calculation is based on available data from
binding sales transactions, conducted at arm’s length,
for similar assets or observable market prices less
incremental costs for disposing of the asset. The value
in use calculation is based on a Discounted Cash Flow
('DCF’) model.

3.2 Significant estimates

(a) Defined benefit plans

The costs of post-retirement benefit 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.

(b) Useful lives of property, plant and equipment

As described in the significant accounting policies,
the Company reviews the estimated useful lives
of property, plant and equipment and intangible
assets at the end of each reporting period.
Company has determined useful life assets based

on expert opinion. Useful lives of intangible assets
is determined on the basis of estimated benefits
to be derived from use of such intangible assets.
These reassessments may result in change in
the depreciation /amortisation expense in future
periods.

(c) Leases - Estimating the incremental borrowing
rate

The Company cannot readily determine the
interest rate implicit in the lease, therefore, it uses
its incremental borrowing rate ('IBR’) to measure
lease liabilities. The IBR is the rate of interest that
the Company would have to pay to borrow over a
similar term, and with a similar security, the funds
necessary to obtain an asset of a similar value
to the right-of-use asset in a similar economic
environment.

(d) Fair value measurement of financial instruments

When the fair values of financial assets and
financial liabilities recorded in the standalone
financial statements 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.

(e) Effective interest rate

For the requirement of Ind AS 109 and Ind AS
116, company has used incremental borrowing
rate as the rate for discounting and amortising.
This incremental borrowing rate reflects the
rate of interest that the Company would have to

pay to borrow over a similar term, with a similar
security, the funds necessary to obtain an asset
of a similar nature and value in a similar economic
environment. Determination of the incremental
borrowing rate requires estimation.

4 NEW AND AMENDED STANDARDS

The Company applied for the first-time certain
standards and amendments, which are effective for
annual periods beginning on or after 01^st April, 2024
wherever applicable. The Company has not early
adopted any standard, interpretation or amendment
that has been issued but is not yet effective.

(i) Ind AS 117 Insurance Contracts

The Ministry of corporate Affairs (MCA) notified the
Ind AS 117. Insurance Contracts, vide notification
dated 12^th August, 2024, under the Companies
(Indian Accounting Standards) Amendment Rules,
2024, which is effective from annual reporting
periods beginning on or after 01^st April, 2024.-The
application of Ind AS 117 had no impact on the
Company’s standalone financial statements as
the Company has not entered any contracts in the
nature of insurance contracts covered under ind
AS 117.

(ii) Ind AS 116 Sale & Lease Back Transaction
Amendments

The Ministry of corporate Affairs (MCA) notified
amendment to the Ind AS 116 specifically on
Sale & Lease back Transactions vide notification
dated 09^th September, 2024, under the Companies
(Indian Accounting Standards) Amendment Rules,
2024, which is effective from annual reporting
periods beginning on or after 01^st April, 2024.-
As there is no such transaction, hence the said
amendment has no impact on the Company’s
standalone financial statements