11. Provisions and Contingent Liabilities
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated
reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by
discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation
at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to
the liability. The unwinding of the discount is recognised as finance cost. Expected future operating losses are not provided for.
11. Provisions and Contingent Liabilities (contd.)
Warranties
A provision for warranties is recognised when the underlying products or services are sold. The provision is based on technical
evaluation, historical warranty data and a weighting of all possible outcomes by their associated probabilities.
Restructuring
A provision for restructuring is recognised when the Company has approved a detailed formal restructuring plan, and the restructuring
either has commenced or has been announced publicly.
Onerous contracts
A contract is considered to be onerous when the expected economic benefits to be derived by the Company from the contract are
lower than the unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the
present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.
Before such a provision is made, the Company recognises any impairment loss on the assets associated with that contract.
12. Revenue Recognition
Revenue is recognised upon transfer of control of promised goods to customers in an amount that reflects the consideration which the
Company expects to receive in exchange for those goods. Revenue from the sale of goods is recognised at the point in time when
control is transferred to the customer which is usually on dispatch / delivery.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, rebates, scheme
allowances, price concessions, incentives, and returns, if any, as specified in the contracts with the customers. Revenue excludes taxes
collected from customers on behalf of the government. Accruals for discounts/incentives and returns are estimated (using the most
likely method) based on accumulated experience and underlying schemes and agreements with customers. Due to the short nature of
credit period given to customers, there is no financing component in the contract.
Interest Income
Interest income is recognised using the effective interest method as set out in Ind AS 109 - Financial Instruments: Recognition and
Measurement, when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount
of the revenue can be measured reliably. The effective interest method is a method of calculating the amortised cost of a financial asset
or a financial liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest expense over
the relevant period.
Royalty Income
Royalty income is recognised on an accrual basis in accordance with the substance of the relevant agreement when it is probable that the
economic benefits associated with the transaction will flow to the Company and the amount of the revenue can be measured reliably.
Dividend Income
Dividend income is recognised when right to receive payment is established and it is probable that the economic benefits associated
with the transaction will flow to the Company and the amount of the revenue can be measured reliably.
13. Foreign Currency Transactions
Functional currency is the currency of the primary economic environment in which the Company operates whereas presentation
currency is the currency in which the financial statements are presented. Indian Rupee is the functional as well as presentation currency
for the Company.
A foreign currency transaction is recorded, on initial recognition in the functional currency, by applying to the foreign currency amount
the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.
At the end of each reporting period, foreign currency monetary items are translated using the closing rate whereas non-monetary items
that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction;
and non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when
the fair value was measured.
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at
which they were translated on initial recognition during the period or in previous Financial Statements are recognised in the Standalone
Statement of Profit and Loss in the period in which they arise. When a gain or loss on a non-monetary item is recognised in Other
Comprehensive Income, any exchange component of that gain or loss is recognised in Other Comprehensive Income. Conversely,
when a gain or loss on a non-monetary item is recognised in Standalone Statement of Profit and Loss, any exchange component of
that gain or loss is recognised in Standalone Statement of Profit and Loss.
14. Taxation
Income tax
Income tax comprises current tax and deferred tax expense. It is recognised in Standalone Statement of Profit and Loss except to the
extent that it relates to a business combination or to an item recognised directly in Equity or in Other Comprehensive Income.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax
payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be
paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted
or substantively enacted by the reporting date.
14. Taxation (contd.)
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried
forward tax losses and tax credits. Deferred tax is not recognised for:
a temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss at the time of the transaction;
b taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can
be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, in case
of a history of recent losses, the Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary
differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can
be realised. Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised/reduced to the
extent that it is probable/no longer probable respectively that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled,
based on the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at
the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate
to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current
tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
15. Lease
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low
value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use
the underlying assets.
i) Right-of-use Assets (ROU Assets)
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is
available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives
received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful
lives of the assets, as follows:
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a
purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to
impairment. Refer to the accounting policies in note 20 Impairment of non-financial assets.
ii) Lease Liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments)
less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be
paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain
to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company
exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses
(unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs. In
calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement
date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of
lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments
(e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change
in the assessment of an option to purchase the underlying asset.
Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified
as financing cash flows.
15. Lease (contd.)
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those
leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option).
It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low
value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis
over the lease term.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset
are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial
direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and
recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in
which they are earned.
16. Financial Instruments
(a) Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and
financial liabilities are initially recognised when the Company becomes a party to the contractual terms of the instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at Fair Value through Profit and Loss
(FVTPL), transaction costs that are directly attributable to its acquisition or issue.
(b) Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is measured at
— amortised cost;
— Fair Value through Other Comprehensive Income (FVOCI) - debt investment;
— Fair Value through Other Comprehensive Income - equity investment; or
— FVTPL
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its
business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at
FVTPL:
— the asset is held within a business model whose objective is to hold assets 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.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
— the asset 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.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present
subsequent changes in the investment's fair value in OCI (designated as FVOCI - equity investment). This election is made on
an investment-by-investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This
includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that
otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would otherwise arise.
Financial liabilities: Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is
classified as held for trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are
measured at fair value and net gains and losses, including any interest expense, are recognised in Statement of Profit and Loss.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and
foreign exchange gains and losses are recognised in Standalone Statement of Profit and Loss. Any gain or loss on derecognition
is also recognised in Standalone Statement of Profit and Loss.
(c) Derecognition
Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or
it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of
ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks
and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or
substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are
substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference
between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised
in Standalone Statement of Profit and Loss.
(d) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the
Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to
realise the asset and settle the liability simultaneously.
(e) Derivative Financial Instruments
The Company uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency risk. Such
derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered and are
subsequently re-measured at fair value. Any changes therein are recognised in the statement of profit and loss.
17. Supplier finance arrangements
The Company has established supplier finance arrangements (Refer Note 26). The Company evaluates whether financial liabilities
covered under such arrangements continue to be classified within trade payables, or they need to be classified as a borrowing or as
part of other financial liabilities/ as a separate line item on the face of the balance sheet. Such evaluation requires exercise of judgment
basis specific terms of the arrangement.
17. Supplier finance arrangements (contd.)
The Company classifies financial liabilities covered under supplier finance arrangement within trade payables in the balance sheet only if
(i) the obligation represents a liability to pay for goods and services, (ii) is invoiced and formally agreed with the supplier, (iii) is part of the
working capital used in its normal operating cycle, (iv) the company is not legally released from its original obligation to the supplier, and
has not assumed a new obligation toward the bank, and another party (iv) there is no substantial modification to the terms of the liability.
If one or more of the above criteria are not met, the Company derecognises its original liability toward the supplier and recognise a new liability
toward the bank which is classified as bank borrowing or other financial liability, depending on factors such as whether the Company (i) has
obligation toward bank, (ii) is getting extended credit period such that obligation is no longer part of its working capital cycle, (iii) is paying
interest directly or indirectly, (iv) has provided guarantee or security, and/ or (v) is recognized as borrower in the bank books.
Cash flows related to liabilities arising from supplier finance arrangements that continue to be classified in trade payables in the
standalone balance sheet are included in operating activities in the standalone statement of cash flows, when the Company finally
settles the liability.
In cases, where the Company has derecognised its original liability toward the supplier and recognise a new liability toward the bank,
the Company has assessed that the bank is acting as its agent in making payment to the supplier. Accordingly, the Company presents
operating cash outflow and financing cash inflow, when bank made payment to the supplier. The payment made by the Company to the
bank toward interest, if any, as well as on settlement is presented as financing cash outflow.
18. Borrowing Cost
The Company capitalises borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset
as part of the cost of that asset. The Company recognises other borrowing costs as an expense in the period in which it incurs them.
Borrowing costs are interest and other costs that the Company incurs in connection with the borrowing of funds including exchange
differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.
A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.
19. Earnings Per Share
Basic earnings per share
The Company calculates basic earnings per share amounts for profit or loss attributable to ordinary equity holders and, if presented,
profit or loss from continuing operations attributable to those equity holders.
Basic earnings per share is calculated by dividing profit or loss attributable to ordinary equity holders (the numerator) by the weighted
average number of ordinary shares outstanding (the denominator) during the period.
The weighted average number of ordinary shares outstanding during the period and for all periods presented shall be adjusted for
events, other than the conversion of potential ordinary shares, that have changed the number of ordinary shares outstanding without a
corresponding change in resources.
Diluted earnings per share
The Company calculates diluted earnings per share amounts for profit or loss attributable to ordinary equity holders and, if presented,
profit or loss from continuing operations attributable to those equity holders.
For the purpose of calculating diluted earnings per share, the Company adjusts profit or loss attributable to ordinary equity holders, and
the weighted average number of shares outstanding, for the effects of all dilutive potential ordinary shares, if any.
For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares calculated for calculating
basic earnings per share and adjusted the weighted average number of ordinary shares that would be issued on the conversion of all
the dilutive potential ordinary shares into ordinary shares. Dilutive potential ordinary shares are deemed to have been converted into
ordinary shares at the beginning of the period or, if later, the date of the issue of the potential ordinary shares.
20. Impairment Loss
Impairment of Financial Assets
The Company recognises loss allowances for expected credit losses on:
— financial assets measured at amortised cost; and
— financial assets measured at FVOCI- debt investments.
At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset
is ‘credit impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset
have occurred.
In accordance with Ind AS 109 - Financial Instruments, the Company follows ‘simplified approach' for recognition of impairment loss
allowance on trade receivables. The application of simplified approach does not require the Company to track changes in credit risk.
Rather, it recognises impairment loss allowance based on lifetime expected credit loss at each reporting date, right from its initial
recognition.
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of
recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that
could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could
still be subject to enforcement activities in order to comply with the Company's procedures for recovery of amounts due.
20. Impairment Loss (contd.)
Impairment of Non Financial Assets
An impairment loss is the amount by which the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount.
The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs of disposal and its value in use.
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. Value in use is based on the estimated future cash flows, discounted to their present value using
a pre-tax discount rate.
The Company assesses at the end of each reporting period whether there is any indication that an asset is impaired. In assessing
whether there is any indication that an asset may be impaired, the Company considers External as well as Internal Source of Information.
If any such indication exists, the Company estimates the recoverable amount for the individual asset. If, and only if, the recoverable
amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An
impairment loss is recognised immediately in profit or loss, unless the asset is carried at revalued amount in accordance with another
Accounting Standards.
If it is not possible to estimate the recoverable amount of the individual asset, the Company determines the recoverable amount of the
cash generating unit to which the asset belongs (the asset's cash-generating unit). A cash-generating unit is the smallest identifiable
group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The
Company recognises impairment loss for a cash-generating unit if, and only if, the recoverable amount of the cash-generating unit is
less than the carrying amount of the cash-generating unit. The Company allocates impairment loss of cash-generating units first to the
carrying amount of goodwill allocated to the cash-generating units, if any, and then, to the other assets of the cash-generating units
pro rata on the basis of the carrying amount of each asset in the cash-generating unit. These reductions in carrying amounts shall be
treated as impairment losses on individual assets and recognised accordingly.
21. Measurement of fair values
A number of the Companies accounting policies and disclosures require the measurement of fair values, for both financial and non¬
financial assets and liabilities.
The Company has an established control framework with respect to the measurement of fair values. This includes a valuation team that
has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the
Chief Financial Officer.
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as
broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third
parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in
which the valuations should be classified.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques
as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the
inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value
measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the
entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change
has occurred.
22. Business Combination
Business combinations arising from transfers or interests in entities that are under the control of the shareholders that controls the
Company are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later,
at the date that common control was established; for this purpose comparatives are revised, The assets and liabilities acquired are
recognised at their carrying amounts. The identity of the reserves is preserved and they appear in the standalone financial statements
of the Company in the same form in which they appeared in the standalone financial statements of the acquired entity. The difference,
if any, between the net assets acquired and cancellation of share capital of the acquired entity is transferred to other equity.
23. Investment in Subsidiaries
A subsidiary is an entity that is controlled by the Company. The Company accounts for the investments in equity shares of subsidiaries
at cost in accordance with Ind AS 27 - Separate Financial Statements.
Fair Value hierarchy
The fair value of investment property has been determined by external independent property valuers, having appropriate recognised
professional qualification and recent experience in the location and category of the property being valued.
The fair value measurement for all of the investment property has been categorised as a level 3 fair value based on the inputs to the
valuation techniques used.
Description of Valuation Technique used:
The Company obtains Independent Valuations of its investment property. The fair value of the investment property have been derived
using the Direct Comparison Method. The direct comparison approach involves a comparison of the investment property to similar
properties that have actually been sold in arms-length distance from investment property or are offered for sale in the same region.
This approach demonstrates what buyers have historically been willing to pay (and sellers willing to accept) for similar properties in an
open and competitive market, and is particularly useful in estimating the value of the land and properties that are typically traded on
a unit basis. This approach leads to a reasonable estimation of the prevailing price. Given that the comparable instances are located
in close proximity to the investment property; these instances have been assessed for their locational comparative advantages and
disadvantages while arriving at the indicative price assessment for investment property.
Capital Reserve
Capital reserve includes profit on re-issue of forfeited shares.
Securities Premium
Securities premium is used to record the premium received on issue of shares. It is utilised in accordance with the
provisions of the Companies Act, 2013.
General Reserve
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified
percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend
distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend
distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the
requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However,
the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of
Companies Act, 2013.
Share based Payment Reserve
This represents the fair value of the stock options granted by the Company under the Restricted Stock Unit Plan
('RSU 2022 Plan') accumulated over the vesting period. The reserve will be utilised on exercise of the options.
Dividend
For the year 2024-2025, the Directors had recommended and Shareholders had approved a final dividend of 375%
(? 3.75 per share) including special dividend of 125% (? 1.25 per share), which has been accounted in current year.
The Board has recommended dividend of 250% (? 2.50 per share) for the financial year ended March 31, 2026 as
compared to total dividend of 375% (? 3.75 per share) including special dividend of 125% (? 1.25 per share), declared
last year.
The dividend proposed by the Directors is subject to approval of Shareholders at the annual general meeting.
The proposed dividend of ? 202.18 Crores (2024-2025 ? 303.14 Crores) have not been recognised as liabilities.
39. Related Party Disclosures
A related party is a person or entity that is related to the entity that is preparing its Financial Statements
(a) A person or a close member of that person's family is related to a reporting entity if that person:
(i) has control or joint control of the reporting entity;
(ii) has significant influence over the reporting entity; or
(iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.
(b) An entity is related to a reporting entity if any of the following conditions applies:
(i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow
subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which
the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related
to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting
entity.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the
entity (or of a parent of the entity).
(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the reporting
entity or to the parent of the reporting entity.
A related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party,
regardless of whether a price is charged.
Related Party Transactions:
Related party transactions were made on terms equivalent to those that prevail in an arm's length transactions. Outstanding balances
at the year-end are unsecured, interest free and will be settled in cash.
includes commission paid for the previous year, Company's contribution to Provident Fund and Superannuation Fund and excludes
perquisites, accrual for commission for the current year and restricted stock units (RSU) granted to KMP's in accordance with the
Kansai Nerolac Paints Limited - Restricted Stock Unit Plan (‘RSU 2022 Plan'), However, such RSU's units would vest after fulfillment
of vesting conditions in accordance with the RSU Plan 2022.
# Employee Benefits to Mr. Anuj Jain includes commission of ? 5.80 Crores for current year and previous year and it exclude retirement
benefits of ? 4.44 Crores towards Gratuity and Leave Encashment.
@ Employee Benefits to Mr. P.D. Pai excludes retirement benefits of ? 2.81 Crores towards Gratuity and Leave Encashment.
**The Company has made provision for impairment with respect to its investment of ? 8.82 crores.
As the future liabilities for gratuity, leave encashment and Director pension along with medical benefits are provided on an actuarial
valuation basis for the Company as a whole, the amount pertaining to individual is not ascertainable and therefore not included above.
The Company has made provision/(reversal) for impairment in subsidiaries with respect to its long-term investment, loan, receivables
and financial guarantees i.e. Kansai Nerolac Paints (Bangladesh) Limited ? 17.26 Crores (2024-2025 ? 151.64 Crores) and Kansai
Paints Lanka (Private) Limited ? (11.50) Crores (2024-2025 ? 34.61 Crores) after taking in to account its past performance, current
changes in economic and market conditions.
Terms and conditions
Sales:
The sales to related parties are made on terms equivalent to those that prevail in arm's length transactions and in the ordinary course
of business. Sales transactions are based on prevailing price lists and memorandum of understanding signed with related parties.
Purchases:
The purchases from related parties are made on terms equivalent to those that prevail in arm's length transactions and in the ordinary
course of business. Purchase transactions are made on normal commercial terms and conditions and market rates.
Guarantees to subsidiaries/joint venture:
Guarantees provided to the lenders of the subsidiaries/joint venture are for availing term loans and working capital facilities from the
lender banks.
The transactions other than mentioned above are also in the ordinary course of business and at arms' length basis.
b. Provident fund (Managed by the Trust set up by the Company)
The Company has contributed ? 1.32 Crores (2024-2025 ? 1.33 Crores) to the Provident Fund Trust. The Company has an
obligation to fund any shortfall on the yield of the trust's investments over the guaranteed interest rates on an annual basis. These
administered rates are determined annually predominantly considering the social rather than economic factors and in most cases
the actual return earned by the Company has been higher in the past years. The actuary has provided a valuation for provident
fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the below provided assumptions there
is no shortfall.
d. Compensated Absences
The increase in provision for compensated absences for the year is ? 13.86 Crores (2024-2025 ? 3.75 Crores).
41. Segment Reporting
The Management Committee of the Company, approved by the Board of Directors and Audit Committee performs the function of
allotment of resources and assessment of performance of the Company. Considering the level of activities performed, frequency
of their meetings and level of finality of their decisions, the Company has identified that Chief Operating Decision Maker function is
being performed by the Management Committee. The financial information presented to the Management Committee in the context
of results and for the purposes of approving the annual operating plan is on a consolidated basis for paints and other related products
of the Company. As the Management Committee monitors the business activity as a single business segment viz. ‘Paints' and the
sales substantially being in the domestic market, the financial statement are reflective of the information required by Ind AS 108
“Operating Segments”.
(B) Financial Risk Management
The Company has exposure to the following risks arising from financial instruments:
— Credit Risk
— Liquidity Risk
— Market Risk
(i) Risk Management Framework
Risk Management Committee oversees the management of these risks. Management is supported by Risk Management
Committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The
Risk Management Committee provides assurance to the management that Company's risk activities are governed by
appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the
Company's policies and risk objectives.
The Company's Risk Management Policies are established to identify and analyses the risks faced by the Company to set
appropriate risk limits and controls and to monitor risks and adherence to limits. Risk Management Policies and Systems are
reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training
and management standards and procedures, aims to maintain a disciplined and constructive control environment in which
all employees understand their roles and obligations.
(ii) Credit Risk
Credit Risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the Company's receivables from customers, loans and investments in
debt securities. The carrying amounts of financial assets represent the maximum credit risk exposure.
Trade Receivables:
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Risk
Management Committee has established a credit policy under which each new customer is analysed individually for
creditworthiness before the Company's standard payment and delivery terms and conditions are offered. The Company's
review includes financial statements, credit agency information, industry information and in some cases bank references.
Sales limits are established for each customer and reviewed constantly. Any sales exceeding those limits require approval
from the management.
The concentration of credit risk is limited due to the fact that the customer base is large. There is no customer representing
more than 5% of the total balance of trade receivables. For trade receivables, as a practical expedient, the Company
computes credit loss allowance based on a provision matrix. The provision matrix is prepared based on historically observed
default rates over the expected life of trade receivables and is adjusted for forward-looking estimates.
Financial Instruments and Cash Deposits
Credit risks from balances with banks and financial institutions is managed by the Company's Treasury Department in
accordance with the Company's policy. Investments of surplus funds are made only with approved counterparties and within
credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore mitigate
financial loss through counterparty's potential failure to make payments.
(iii) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to
ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
Maturities of Financial Liabilities:
The table below analyse the Company’s financial liabilities into relevant maturing grouping based on their
contractual maturities:
(iv) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market price comprises three types of risks: interest rate risk, currency risk and other price risk, such
as equity price risk and commodity price risk. The objective of market risk management is to manage and control market
risk exposures within acceptable parameters, while optimizing the return. In respect of monetary assets and liabilities
denominated in foreign currencies, the Company's policy is to ensure that its net exposure is kept to an acceptable level.
Since the Company does not have any interest bearing borrowings, the exposure to risk of changes in market interest rates
is not applicable. Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market
traded price. Other price risk arises from financial assets such as investments in equity instruments, debentures and bonds.
Since the investments in equity instruments and debentures is not material and bonds being debt instruments, the exposure
to risk of changes in market rates is minimal. The details of such investments in equity instrument and debentures is given
in Note 7 and details of investments in bonds is given in Note 12.
Exposure to Currency Risk:
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign
exchange rates. The Company enters into forward exchange contracts to hedge against its foreign currency exposures
relating to the recognised underlying liabilities and firm commitments. The Company's policy is to hedge its exposures above
predefined thresholds from recognised liabilities and firm commitments that fall due on timely basis. The Company does not
enter into any derivative instruments for trading or speculative purposes. The carrying amounts of the Company's foreign
currency denominated monetary items are as follows:
45. Disclosure of Lease as per Ind AS 116
The following is the summary of practical expedients elected on application:
(i) Applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date.
(ii) Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term on the
date of initial application.
(iii) Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
(iv) Applied the practical expedient to grandfather the assessment of which transactions are leases. Accordingly, Ind AS 116 is applied
only to contracts that were previously identified as leases under Ind AS 17.
The weighted average incremental borrowing rate applied to lease liabilities as at 31st March 2026 is 8.50% (2024-2025 8.50%)
47. Share based payments
The Company has granted share based incentives (Restricted Stock Units (“RSU”)) to certain eligible employees during the year ended
31st March 2026 and 31st March 2025, under Kansai Nerolac Paints Limited - Restricted Stock Unit Plan (‘RSU 2022 Plan') approved
by Nomination and Remuneration Committee (NRC). As per the scheme, the number of shares that will vest is conditional upon certain
performance measures determined by NRC. The performance is measured over vesting period of the options granted which ranges
from 3 to 5 years. The performance measures under this scheme include growth in sales and earnings. The options granted under this
scheme is exercisable by employees till four years from date of its vesting. The Company has granted options at an exercise price of
' 1/-. Option granted will vest equally each year starting from 3 years from date of grant up to 5 years from date of grant.
49. The Board of Directors at their meeting held on 11th August 2025 approved the Scheme of Amalgamation (‘the Scheme') of Nerofix
Private Limited, wholly owned subsidiary of Kansai Nerolac Paints Limited (the Company) with the Company in accordance with the
provisions of the Companies Act, 2013 and other applicable laws with the appointed date of 1st April 2025. The Scheme is subject to
necessary statutory and regulatory approvals, including approval of the Hon'ble National Company Law Tribunal, Mumbai. The Scheme
shall be effective post completion of all necessary formalities and procedures and accordingly, these standalone financial statements
do not reflect the impact on account of the Scheme.
50. Other Statutory Information
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for
holding any Benami property.
(ii) The Company has been no transaction with struck off company during current and previous year.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity, including foreign entities
(Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company has not received any fund from any person or entity, including foreign entities (Funding Party) with the understanding
(whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(vii) The Company has no such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as
income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant
provisions of the Income Tax Act, 1961.
51. Audit Trail
The Company has migrated to upgraded version of the accounting software from legacy accounting software during the year. The
Company has used two accounting software for maintaining its books of account which has a feature of recording audit trail (edit log)
facility and the same has operated throughout the year for all relevant transactions recorded in the software, except that audit
trail feature is not enabled at the database level insofar as it relates to SAP accounting software for direct changes to data when
using certain access rights. Further, no instance of audit trail feature being tampered with was noted in respect of the software to the
extent it was enabled. Additionally, the audit trail of prior years has been preserved by the Company as per the statutory requirements
for record retention to the extent it was enabled and recorded in those respective years except that in case of legacy software, audit
trail for direct changes to data when using certain access rights, if any, in respect of financial year 2024-2025 from 1st November, 2025
to 31st March, 2025 has not been preserved by the Company.
|