2.9 Provisions, Contingent Liabilities and Contingent
Assets:
Provisions involving substantial degree of estimation
in measurement are recognised when there is a legal
or constructive obligation as a result of past event and
it is probable that there will be an outflow of resources
and a reliable estimate can be made of the amount of
obligation.
Provisions are not recognised for future operating
losses. 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, taking into account the risks and uncertainties
surrounding the obligation.
Provision for onerous contracts. i.e. contracts where the
expected unavoidable cost of meeting the obligations
under the contract exceed the economic benefits
expected to be received under it, are recognised when
it is probable that an outflow of resources embodying
economic benefits will be required to settle a present
obligation as a result of an obligating event based on a
reliable estimate of such obligation.
Provision is made for costs associated with
dismantling of the property, plant and equipment.
Such dismantling costs are normally incurred at the
end of the estimated useful life of the assets. These
costs are assessed by the management on an annual
basis and are capitalised to the respective block of
assets. A corresponding provision is created for the
said costs.
The capitalised asset is charged to the statement of
profit and loss over the life of the operation through
the depreciation of the asset and the provision is
increased each period via unwinding the discount on
the provision.
Contingent liabilities are not recognised and are
disclosed by way of notes to the financial statements
when there is a possible obligation arising from past
events, the existence of which will be confirmed only
by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control
of the Group or when there is a present obligation that
arises from past events where it is either not probable
that an outflow of resources will be required to settle
the same or a reliable estimate of the amount in this
respect cannot be made.
Contingent assets are not recognised but disclosed in
the Financial Statements by way of notes to accounts
when an inflow of economic benefits is probable.
2.10 Cash and cash equivalents and Cash flow statements:
Cash comprises cash on hand, in bank and demand
deposits with banks. The Company considers all
highly liquid financial instruments, which are readily
convertible into cash and have original maturities of
three months or less from the date of purchase, to be
cash equivalents. Such cash equivalents are subject to
insignificant risk of changes in value.
Cash flows are reported using indirect method, whereby
profit / (loss) after tax is adjusted for the effects of
transaction of non- cash nature and any deferrals or
accruals of past or future cash receipts or payments.
The cash flows from Operating, investing and financing
activities of the Company are segregated based on the
available information.
2.11 Revenue:
Revenue is recognised to the extent that it is highly
probable that the economic benefits will flow to the
Company and the revenue can be reliably measured,
regardless of when the payment is being made.
Revenue towards satisfaction of a performance
obligation is measured at the amount of transaction
price (net of variable consideration) allocated to
that performance obligation. The transaction price of
goods sold and services rendered is net of variable
consideration on account of various discounts and
schemes offered by the Company as part of the
contract and excluding taxes or duties collected on
behalf of the Government.
The Company recognises revenue for supply of
goods to customers against orders received. The
majority of contracts that Company enters into
relate to sales orders containing single performance
obligations for the delivery of products as per Ind
AS 115. Product revenue is recognised when control
of the goods is passed to the customer. The point at
which control passes is determined based on the
terms and conditions by each customer arrangement,
but generally occurs on delivery to the customer.
Revenue is not recognised until it is highly probable
that a significant reversal in the amount of cumulative
revenue recognised will not occur.
With respect to contracts where revenue is recognised
over time, the Company measures the value of services
for which control is transferred to the customer over
time based on certification of work completed. In cases
where the work performed till the reporting date has
not reached the milestone specified in the contract, the
Company recognises revenue only to the extent that it
is highly probable that the customer will acknowledge
the same.
When it is probable that total contract costs will exceed
total contract revenue, the expected loss is recognised
as an expense in the Statement of Profit and Loss in
the period in which such probability occurs. Due to
the uncertainties attached, the revenue on account
of extra claims are accounted for at the time of
acceptance / settlement by the customers.
Revenue earned but not billed to customers against
erection contracts is reflected as "Contract assets”
under "Other financial assets”. Billings on incomplete
contracts in excess of accrued costs and accrued
profits are included in other current liabilities as
"Contract liabilities”.
Due to the uncertainties attached, the revenue on
account of extra claims are accounted for at the time
of acceptance/ settlement by the customers.
Interest, Dividend and Claims:
Dividend income is recognised when the right to
receive payment is established. Interest has been
accounted using effective interest rate method.
Insurance claims/ other claims are accounted as and
when admitted /settled.
Export Benefits:
Export benefits arising on account of entitlement for
duty-free imports are accounted for through import
of materials. Other export benefits are accounted for
as and when the ultimate realisability of such benefits
are established.
Government grants, subsidies and export incentives:
Grants from the government are recognised at their fair
value where there is a reasonable assurance that the
grant will be received and the Company will comply
with all attached conditions. Government grants
relating to income are deferred and recognised in the
profit or loss over the period necessary to match them
with the costs that they are intended to compensate
and presented within other income. Government
grants relating to the purchase of property, plant and
equipment are included in non-current liabilities as
deferred income and are credited to profit or loss on
a straight-line basis over the expected lives of the
related assets and presented within other income.
Income from sales tax and power incentives are
recognised on accrual basis, when the right to receive
the credit is established and there is no significant
uncertainty regarding the ultimate collection.
2.12 Property, plant and equipment (PPE):
PPE are stated at cost, less accumulated depreciation
and impairment, if any. Costs directly attributable to
the acquisition are capitalised until the PPE are ready
for use, as intended by management.
The Company depreciates PPE over their estimated
useful lives using the straight-line method.
Depreciation methods, useful lives and residual values
are reviewed periodically including at each financial
year-end.
An item of PPE is derecognised upon disposal or when
no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item of
PPE is determined as the difference between the sales
proceeds and the carrying amount of the asset and is
recognised in other income in the statement of profit
or loss.
The cost of a self-constructed item of PPE comprises
the cost of materials, direct labour and any other
costs directly attributable to bringing the item to
its intended working condition and estimated costs
of dismantling, removing and restoring the site on
which it is located, wherever applicable. Borrowing
costs that are directly attributable to the acquisition,
construction or production of a qualifying asset are
included in the cost of that asset. Such borrowing costs
are capitalised as part of the cost of the asset when
it is probable that they will result in future economic
benefits to the entity and the costs can be measured
reliably.
2.13 Depreciation and amortization
Depreciation on PPE except as stated below, is
provided as per Schedule II of the Companies Act, 2013
on straight line method. Depreciation on upgradation
of PPE is provided over the remaining useful life of the
assets. No depreciation is charged on Freehold land.
Depreciation on PPE commences when the assets
are ready for their intended use. Based on above, the
useful lives as estimated for other assets considered
for depreciation are as follows:
Depreciation methods, useful lives, residual values
are reviewed and adjusted as appropriate, at each
reporting date. Assets costing less than Rs. 5,000 each
are fully depreciated in the year of capitalization.
The Company, based on technical assessment made
by technical expert and management estimate,
depreciates certain items of buildings, plant and
machinery, factory equipment (Electrical), office
equipment and computers which are different
from the useful life prescribed in Schedule II to the
Companies Act, 2013. The management believes that
these estimated useful lives are realistic and reflect
fair approximation of the period over which the assets
are likely to be used.
2.14 Investment property
Property that is held for long term rental yields or
for capital appreciation or for both, and that is not
occupied by the Company, is classified as investment
property. Investment properties are initially measured
at cost, including transaction costs. Subsequent to
initial recognition, investment properties are stated at
costless accumulated depreciation and accumulated
impairment loss, if any. When the use of property
changes from owner occupied to investment property,
the property is reclassified as investment property at
it's carrying amount on the date of reclassification.
The useful life of investment property is estimated at
60 yrs based on technical evaluation performed by
management's expert.
Investment properties are derecognised either
when they have been disposed off or when they
are permanently withdrawn from use and no future
economic benefit is expected from their disposal. The
difference between the net disposal proceeds and the
carrying amount of the asset is recognised in profit
and loss in the year of derecognition.
Income received from investment property is
recognised in the Statement of Profit and Loss on a
straight-line basis over the term of the lease.
Depreciation on investment property
The Company depreciates Investment Property over
their estimated useful lives using the straight-line
method. Depreciation methods, useful lives and
residual values are reviewed periodically including at
each financial year-end.
2.15 Intangibles assets
Intangible assets are stated at cost comprising of
purchase price inclusive of duties and taxes less
accumulated amount of amortization and impairment
losses. Such assets are amortised over the useful
life using straight line method and assessed for
impairment whenever there is an indication of the
same.
Cost of computer software packages (ERP and others)
allocated/amortised over a period of 10 years/ 5 years.
License fees, over the duration of license or 10 years
whichever is less.
The Company, based on technical assessment made
by technical expert and management estimate,
amortizes the software packages over estimated
useful lives which are different from the useful life
prescribed in Schedule II to the Companies Act, 2013.
The management believes that these estimated useful
lives are realistic and reflect fair approximation of the
period over which the assets are likely to be used.
Depreciation methods, useful lives and residual values
are reviewed, and adjusted as appropriate, at each
reporting date.
2.16 De-recognition of tangible and intangible assets
An item of PPE is de-recognised upon disposal or
when no future economic benefits are expected to
arise from its use or disposal. Gain or loss arising on the
disposal or retirement of an item of PPE is determined
as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in the
Statement of Profit and Loss.
2.17 Impairment of tangible and intangible assets
Tangible and intangible assets are reviewed at each
balance sheet date for impairment. In case events and
circumstances indicate any impairment, recoverable
amount of assets is determined. An impairment
loss is recognised in the statement of profit and
loss, whenever the carrying amount of assets either
belonging to Cash Generating Unit (CGU) or otherwise
exceeds recoverable amount. The recoverable amount
is the higher of assets' fair value less cost of disposal
and its value in use. In assessing value in use, the
estimated future cash flows from the use of the assets
are discounted to their present value at an appropriate
rate.
Impairment losses recognised earlier may no
longer exist or may have come down. Based on such
assessment at each reporting period the impairment
loss is reversed and recognised in the Statement of
Profit and Loss. In such cases the carrying amount of
the asset is increased to the lower of its recoverable
amount and the carrying amount that has been
determined, net of depreciation, had no impairment
loss been recognised for the asset in prior years.
2.18 Employee benefit plans:
Employee benefits include provided fund,
superannuation fund, employee's state insurance
scheme, gratuity and compensated absences.
Post Employment Obligations:Defined Contribution Plans:
Contributions in respect of Employees Provident Fund
and Pension Fund which are defined contribution
schemes, are made to a fund administered and
managed by the Government of India and are charged
as an expense based on the amount of contribution
required to be made and when service are rendered by
the employees.
Contributions under the superannuation plan, which
is a defined contribution scheme, are made to a fund
administered and managed by the Life Insurance
Corporation of India and are charged as an expense
based on the amount of contribution required to
be made and when services are rendered by the
employees.
Defined benefit plans Gratuity:
The Company accounts for its liability towards Gratuity
based on actuarial valuation made by an independent
actuary as at the balance sheet date using projected
unit credit method. The liability recognised in the
balance sheet in respect of the gratuity plan is the
present value of the defined benefit obligation at the
end of the reporting period less the fair value of the
plan assets.
The present value of the defined benefit obligation
is determined by discounting the estimated future
cash outflows by reference to market yields at the
end of the reporting period on government bonds
that have terms approximating to the terms of the
related obligation. The net interest cost is calculated
by applying the discount rate to the net balance of the
defined obligation and the fair value of plan assets.
This cost is included in the employee benefit expense
in the statement of profit and loss. Remeasurement
gains and losses arising from experience adjustments
and changes in actuarial assumptions are recognised
in the period in which they occur, directly in other
comprehensive income. Changes in the present
value of the defined benefit obligation resulting from
plan amendments or curtailments are recognised
immediately in the statement of profit and loss as past
service cost.
Compensated absences:
The employees of the Company are entitled
to compensated absences. The employees can
carry forward a portion of the unutilised accrued
compensated absence and utilise it in future periods
or receive cash compensation at retirement or
termination of employment for the unutilised accrued
compensated absence. The Company records an
obligation for compensated absences in the period in
which the employee renders the services that increase
this entitlement. The Company measures the expected
cost of compensated absence based on actuarial
valuation made by an independent actuary as at the
balance sheet date on projected unit credit method.
Other short-term employee benefits:
Other Short-term employee benefits, including
performance incentives expected to be paid in
exchange for the services rendered by employees
are recognised during the period when the employee
renders service.
2.19 Financial instruments
Financial assets and financial liabilities are recognized
when the Company becomes a party to the contractual
provisions of the instrument.
Financial assets and financial liabilities are initially
measured at fair value except for trade receivables
that do not contain a significant financing component,
which are measured at transaction price. 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) 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 recognized
immediately in Statement of profit or loss.
For the purposes of subsequent measurement,
financial instruments of the Company are classified
in the following categories: non-derivative financial
assets comprising amortised cost, debt instruments
at fair value through other Comprehensive Income
(FVTOCI), equity instruments at FVTOCI on fair
value through profit and loss account (FVTPL), non¬
derivative financial liabilities at amortised cost or
FVTPL, and derivative financial instruments (under the
category of financial assets or financial liabilities) at
FVTPL.
The classification of financial instruments depends
on the objective of the business model for which it is
held. Management determines the classification of its
financial instruments at initial recognition.
a. Financial assetsRecognition and initial measurement:
Financial assets include Investments, Trade
receivables, Advances, Security deposits, cash
and cash equivalents, loans etc. Such assets are
initially recognised at fair value or transaction
price, as applicable, when the Company becomes
party to contractual obligations. The transaction
price includes transaction costs unless the asset
is being fair valued through the Statement of
Profit and Loss All other financial instruments
(including regular way purchases and sales of
financial assets) are recognised on the trade
date, which is the date on which the Company
becomes a party to the contractual provisions of
the instrument.
Classification:
Management determines the classification of
an asset at initial recognition depending on the
purpose for which the assets were acquired. The
subsequent measurement of financial assets
depends on such classification.
Financial assets are classified as those measured
at:
(i) amortised cost, where the financial assets
are held solely for collection of cash flows
arising from payments of principal and / or
interest.
(ii) fair value through other comprehensive
income (FVTOCI), where the financial assets
are held not only for collection of cash flows
arising from payments of principal and
interest but also from the sale of such assets.
Such assets are subsequently measured at
fair value, with unrealised gains and losses
arising from changes in the fair value being
recognised in other comprehensive income.
(iii) fair value through profit or loss (FVTPL),
where the assets are managed in accordance
with an approved investment strategy
that triggers purchase and sale decisions
based on the fair value of such assets. Such
assets are subsequently measured at fair
value. Unrealised gains and losses arising
from changes in the fair value, including
interest income and dividend income, if
any, are recognised in 'other income' in the
Statement of Profit and Loss in the period in
which they arise.
Trade Receivables, Advances, Security
Deposits, Cash and Cash equivalents etc.
are classified for measurement at amortised
cost while investments may fall under any of
the aforesaid classes.
Impairment:
The Company assesses at each reporting
date whether a financial asset (or a group of
financial assets) such as investments, trade
receivables, advances and security deposits
held at amortised cost and financial assets
that are measured at fair value through
other comprehensive income are tested
for impairment based on evidence or
information that is available without undue
cost or effort. Expected credit losses are
assessed and loss allowances recognised
if the credit quality of the financial asset
has deteriorated significantly since initial
recognition.
Reclassification:
When and only when the business model is
changed, the Company shall reclassify all
affected financial assets prospectively from
the reclassification date as subsequently
measured at amortised cost, fair value
through other comprehensive income or fair
value through profit or loss without restating
the previously recognised gains, losses or
interest and in terms of the reclassification
principles laid down in the Ind AS relating to
Financial Instruments.
Derecognition:
Financial assets are derecognised when the
right to receive cash flows from the assets
has expired, or has been transferred, and the
Company has transferred substantially all of
the risks and rewards of ownership.
Concomitantly, if the asset is one that is
measured at:
(i) amortised cost, the gain or loss is recognised
in the Statement of Profit and Loss;
(ii) fair value through other comprehensive
income, the cumulative fair value
adjustments previously taken to reserves are
reclassified to the Statement of Profit and
Loss unless the asset represents an equity
investment, in which case the cumulative
fair value adjustments previously taken to
reserves are reclassified within equity.
b. Financial liabilities
Financial liabilities are classified, at initial
recognition, as financial liabilities at fair value
through profit or loss, financial liabilities at
amortised cost. Borrowings, trade payables and
other financial liabilities are initially recognised
at fair value and are subsequently measured
at amortised cost. Any discount or premium on
redemption / settlement is recognised in the
Statement of Profit and Loss as finance cost over
the life of the liability using the effective interest
method and adjusted to the liability figure
disclosed in the Balance Sheet.
Supplier finance arrangements
The Group also classifies financial liabilities from
supplier finance arrangements as trade payables
if they are of the same nature and has terms
comparable to regular trade payables. This applies
when the arrangement is part of the normal
operating cycle and has similar security levels.
The related cash flows are included in operating
activities in the consolidated statement of cash
flows.
Financial liabilities are derecognised when
the liability is extinguished, that is, when the
contractual obligation is discharged, cancelled or
on expiry.
Offsetting Financial Instruments:
Financial assets and liabilities are offset and
the net amount is included in the Balance Sheet
where there is a legally enforceable right to offset
the recognised amounts and there is an intention
to settle on a net basis or realise the asset and
settle the liability simultaneously.
c. Derivative Financial Instruments:
The Company enters into derivative financial
instruments to manage its exposure to foreign
exchange rate risks, including foreign exchange
forward contracts.
Derivatives are initially recognised at fair value
at the date the derivative contracts are entered
into and are subsequently remeasured to their
fair value at the end of each reporting period. The
resulting gain or loss is recognised in profit or loss
immediately unless the derivative is designated
and effective as a hedging instrument, in which
event the timing of the recognition in profit
or loss depends on the nature of the hedging
relationship and the nature of the hedged item.
d. Foreign exchange gains and losses:
• For foreign currency denominated financial
for foreign currency denominated financial
assets measured at amortised cost and
FVTPL, the exchange differences are
recognised in profit or loss except for
those which are designated as hedging
instruments in a hedging relationship.
• Changes in the carrying amount of
investments in equity instruments at FVTOCI
relating to changes in foreign currency rates
are recognised in other comprehensive
income.
• For the purposes of recognizing foreign
exchange gains and losses, FVTOCI debt
instruments are treated as financial assets
measured at amortised cost. Thus, the
exchange differences on the amortised
cost are recognised in profit or loss and
other changes in the fair value of FVTOCI
financial assets are recognised in other
comprehensive income.
• For financial liabilities that are denominated
in a foreign currency and are measured at
amortised cost at the end of each reporting
period, the foreign exchange gains and losses
are determined based on the amortised cost
of the instruments and are recognised in the
statement of profit and loss.
• The fair value of financial liabilities
denominated in a foreign currency is
determined in that foreign currency and
translated at the spot rate at the end of the
reporting period. For financial liabilities that
are measured at FVTPL, the foreign exchange
component forms part of the fair value gains
or losses and is recognised in profit or loss.
e. Non-current Investments:
At each balance sheet date, the Company
assesses whether there is any indication that
an investment may be impaired. If any such
indication exists, the Company estimates the
recoverable amount. If the carrying amount of
the investment exceeds its estimated recoverable
amount, an impairment loss is recognised in the
Statement of Profit and Loss to the extent the
carrying amount exceeds recoverable amount.
The recoverable amount is the higher of an
investment's fair value less costs of disposal and
value in use.
Investment in joint ventures are accounted for
using the 'equity method' less accumulated
impairment, if any. Only share of net profits
/ losses of joint ventures is considered in
Statement of Profit and loss. The carrying amount
of investments in joint ventures adjusted by
share of net profits / losses in the Balance Sheet.
2.20 Critical accounting judgements and key sources of
estimation uncertainty
In the appplication of the Company's accounting
policies the directors of the Company are required to
make judgements, estimates and assumptions about
the carrying amounts of assets and liabilities that are
not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
Critical judgements in applying accounting policies
The following are the critical judgements, apart from those involving estimations, that the directors have been made
in the process of applying the Company's accounting policies and that have the most significant effect on the amounts
recognised in the financial statements.
Revenue recognition
In making their judgement, the management considered the detailed criteria for the recognition of revenue from the
sale of goods set out in Ind AS 115 and, in particular, whether the Company had transferred control over the goods to the
buyer.
Key sources of estimation uncertainty
Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies
that have the most significant effect on the amounts recognised in the financial statements is included in the following
notes:
2.21 Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and
their realisation in cash or cash equivalents, the Company has determined its operating cycle for the purpose of its
assets and liabilities as current and non-current.
2.22 Standards (including amendments) issued but not yet effective
Amendment to Ind AS 1 'Presentation of Financial Statements'- Classification of Liabilities as current or non-current
and non-current liabilities with covenants:
The amendment includes specific provisions that will
take effect for reporting periods beginning on or after
April 1, 2026, retrospectively, as outlined below:
a) Breach of material covenant for long-term loan
arrangement on or before end of reporting period
with effect that liability becomes payable on
demand as on reporting date, then it shall be
classified as current liability, if lender agreed
after reporting period and before approval of
financial statements to not demand payment as
a consequence of breach.
b) Classify as non-current liability, if lender agreed
by end of reporting period to provide grace
period ending at least 12 months after reporting
period within which entity can rectify the breach
provided lender does not demand immediate
repayment.
c) Disclose information about the timing of
settlement to understand the impact of the
liability on the financial statements.
The Company does not expect this amendment
to have an impact on its operations or financial
statements.
Notes:
a) Refer Notes 17 (a) and 17 (c) for details of charge created on assets.
b) The title deeds of all immovable properties are held in the name of the Company except as disclosed in Note 36.
c) Borrowing costs capitalised during the year ended March 31, 2026 amounted to ? 78 Lakhs (March 31, 2025: 451 Lakhs).
These costs are directly attributable to the acquisition and construction of qualifying assets and have been capitalised
in accordance with Ind AS 23 - Borrowing Costs. The capitalisation rate used to determine the amount of borrowing costs
eligible for capitalisation was 9.6% (March 31, 2025: 9.85%). This rate represents the weighted average of the borrowing
costs applicable to the entity's general borrowings that are outstanding during the year (Refer Note 27).
(d) The Company has entered a joint Venture Agreement with Zetwerk Manufacturing Businesses Private Limited and
Others on December 31, 2024, for incorporation of a Joint Venture company, to undertake solar panel manufacturing.
(e) On September 26, 2025, Pennar Industries Limited executed a Share Purchase Agreement (SPA) with M/S Chennamallu
Media Works Private Limited (""Purchaser"") for the sale of its entire equity holding (i.e 51% of the share capital) in one
of the subsidiaries Enertech Pennar Defence and Engineering Systems Private Limited (Subsidiary Company). The sale
of shares comprising 5,100 shares of ?10 each, was concluded on September 26, 2025 for a total consideration of ?120
Lakhs and all rights and ownership were deemed transferred to the purchaser. Accordingly, the Company derecognised
the investment and recorded a net profit of ?119 Lakhs in the standalone financial statements.
(f) The Company has invested in secured, unlisted, and unrated redeemable Non-Convertible Debentures (NCDs) issued by
JV Holding Private Limited ("JVHPL”). Each debenture has a face value of fl0,00,000 and carries a coupon interest rate
of 15.50% per annum, payable on a quarterly basis.
ii. Expected credit loss (ECL):
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. Credit
risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness
of customers to which the Company grants credit in the normal course of business. Before accepting any new customer,
the Company assesses the potential customer's credit quality.
As a practical expedient, the Company uses a provision matrix to determine impairment loss of its trade receivables.
The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and
is adjusted for forward looking estimates. The ECL allowance (or reversal) during the year is recognised in the statement
of profit and loss.
Nature of reserves:
(a) Capital reserve :
Capital Reserve represents the gain on amalgamation. It is the excess of share capital issued and the amount of share
capital of the transferor companies. It is made out of capital profits earned by the company which can be used only for
special purposes and hence it is not freely available to be distributed among shareholders as the dividend.
(b) Securities premium :
Securities premium represents the amount received in excess of the face value of the equity shares. The utilisation of
the securities premium is governed by the Section 52 of the Act.
(c) General reserve :
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes.
As the general reserve is created by a transfer from one component of equity to another and is not an item of other
comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.
(d) Profit on forfeiture of shares :
Profit on forfeiture of shares pertains to profit on redemption of preference shares.
(e) Capital redemption reserve :
Capital redemption reserve has been created pursuant to the requirements of the Act under which the Company is
required to transfer certain amounts on redemption of the preference shares. The Company has redeemed the underlying
preference shares in the earlier years. The capital redemption reserve can be utilised for issue of bonus shares.
(b) Cash Credit and Working capital facilities sanctioned by consortium of bankers comprising State bank of India, Axis
Bank, Yes Bank, HDFC Bank ,Indian Bank, Punjab National Bank and Punjab & sindh Bank are secured by first pari passu
charge on the entire current assets and second charge on fixed assets of the Company along with other working capital
lenders under consortium, and for SBI, exclusive pledge of 15,00,000 shares (March 31, 2025: 15,00,000 shares) of ? 5
each of Pennar Industries Limited held by Pennar Holdings Private Limited (Promoter Company). These facilities are
further secured by personal guarantee from Aditya N Rao (Vice - Chairman and Managing Director). These borrowings
carried interest rate of 9.05% to 9.85% (March 31, 2025: 9.50% to 10.95%)
(d) The Company has used the borrowings for the purposes for which it was taken. The Company has access to financing
facilities of which ? 15,308 Lakhs (March 31, 2025 ? 26,302 Lakhs) were unused at the end of the reporting period.
(e) The returns of current assets for the quarter ended March 2025, June 2025, September 2025 and December 2025, filed
by the Company with banks are in agreement with the books of account. Company is yet to file return for the quarter
ended March 2026.
The Fixed Assets Coverage Ratio must not less than 1.25 times, the Debt to Equity ration must remain greater than or
equal to 2.33 times, the Debt Service Coverage ratio must not less than 1.20 times, the Term Debt to EBITDA must not
exceed 2 times, the Net Debt to Total Net Worth must not exceed 1.0 times, The Company has complied with these
covenants as at reporting date.
(f) The Provident Fund (PF) authorities have attached the Company's cash credit account maintained with Axis Bank, in
relation to a PF demand amounting to ?98.55 Lakhs. (March 31, 2025 ? 98.55 lakhs) Pursuant to this, the cash credit
facility was temporarily restricted to the extent of the demanded amount. The Company has filed a writ petition before
the Hon'ble High Court of Telangana. The Court has granted relief by suspending the prohibitory order, subject to a
lien being marked on the amount of ?98.55 lakhs. Consequently, the Company is permitted to operate the cash credit
account, subject to this lien.
Post Retirement Employee Benefits(a) Post retirement benefit - Defined contribution
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying
employees towards provident fund and employee state insurance which are defined contribution plans. The Company
has no obligations other than to make the specified contributions. The contributions are charged to the statement of
profit and loss as they accrue. The Company has recognised as an expense aggregating to ? 768 lakhs (2024-25: ? 796
lakhs) in respect of the defined contribution plans.
(b) Post retirement benefit - Defined benefit
The employee's gratuity fund scheme managed by Life Insurance Corporation of India and Birla sun life insurance are
defined benefit plan. The present value of obligation is determined bases on actuarial valuation using the projected
unit credit method, which recognizes each period of services as giving rise to additional unit of employee benefit
entitlement and measures each unit separately to build up the final obligation.
Peformance obligation:
Sale of products: Performance obligation in respect of sale of goods is satisfied when control of the goods is transferred to
the customer, generally on delivery of the goods and payment is generally due as per the terms of contract with customers.
Revenue from contracts: The performance obligation in respect of contracts is satisfied when the contract completed
and certified by the customer. In respect of these contracts, payment is generally due upon completion of contract and
acceptance of the customer.
Sales of services: The performance obligation in respect of services is satisfied when the service completed and accepted
by the customer. In respect of these services, payment is generally due upon completion of service and acceptance of the
customer.
31. Corporate social Responsibility
As per Section 135 of the Companies Act, 2013, a Company, meeting the applicability threshold, needs to spend at least
2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR)
activities. The permitted activities are as per Schedule VII of the Companies Act, 2013, which are specifically identified
and approved by CSR Committee. The funds were utilised through the year on these activities.
The Company contributes towards Corporate Social Responsibility (CSR) activities as per the provisions of per Section
135 of the Companies Act, 2013. The Company constituted committee of Board and approved CSR policy. As per the said
policy, Company has incurred ? 174 lakhs (2024-25 - ? 123 lakhs) during the year. The nature of CSR activities undertaken
by the Company includes promoting education, health care including preventive health care, sanitation, animal welfare,
rural development and sports.
a) Gross amount required to be spent by the Company during the year is ? 174 lakhs (2024-25 : ? 123 lakhs)
b) Amount spent during the year on: Details of expenditure on corporate social responsibility expenditure
The Company's capital management objective is to maximise the total shareholder return by optimising cost of capital
through flexible capital structure that supports growth. Further, the Company ensures optimal credit risk profile to
maintain/enhance credit rating.
The Company determines the amount of capital required on the basis of annual operating plan and long-term strategic
plans. The funding requirements are met through internal accruals and long-term/short-term borrowings. The Company
monitors the capital structure on the basis of Net debt to equity ratio and maturity profile of the overall debt portfolio
of the Company.
For the purpose of capital management, capital includes issued equity capital, securities premium and all other reserves.
Net debt includes all long and short-term borrowings as reduced by cash and cash equivalents and investment in
mutual funds.
The Company's Management reviews the capital structure of the Company on monthly basis. As part of this review, the
Management considers the cost of capital and the risks associated with each class of capital.
The Management assessed that fair value of cash and cash equivalents, trade receivables, other current financial assets,
trade payables, borrowings and other current financial liabilities approximate their carrying amounts largely due to the
short-term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged
in a current transaction between willing parties, other than a forced or a liquidation sale.
Investments in other equity instruments (quoted and unquoted) are measured at cost through initial designation in
accordance with Ind-AS 109 - Financial Instruments.
Investments in mutual funds are mandatorily measured at fair value.
The Board oversees the risk management frame
work, develops and monitors the company's risk
management policies. The risk management policies
are established to ensure timely identification
and evaluation of the risks, setting acceptable risk
thresholds, identifying and mapping controls against
these risks, monitor the risks and their limits, improve
risk awareness and transparency. Risk management
policies and systems are reviewed regularly to reflect
changes in the market conditions and company's
activities to provide reliable information to the
management and the Board to evaluate the adequacy
of the risk management frame work in relation to the
risk faced by the Company.
The Management policies aims to mitigate the
following risks arising from the financial instruments
1. Market Risk
2. Credit Risk
3. Liquidity Risk
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 the market prices. The Company is
exposed in the ordinary course of its business to risk
related to changes in foreign currency exchange rates,
commodity prices and interest rates.
The Company seeks to minimize the effects of these
risks by using derivative financial instruments to
hedge risk exposures. The use of financial derivatives
is governed by the company's policies approved by the
Board of Directors, which provide written principles
on foreign exchange risk, interest rate risk, credit risk,
the use of financial derivatives and non-derivative
financial instruments, and the investment of excess
liquidity. Compliance with policies and exposure
limits is reviewed by the management and the internal
auditors on a continuous basis. The Company does
not enter into or trade financial instruments, including
derivatives for speculative purposes.
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 and investment securities. Credit risk arises
from cash held with banks and financial institutions, as
well as credit exposure to clients, including outstanding
accounts receivable. Credit risk is managed through
credit approvals, establishing credit limits and
continuously monitoring the creditworthiness of
customers to which the Company grants credit terms
in the normal course of business. The Company
establishes an allowance for doubtful debts and
impairment that represents its estimate of incurred
losses in respect of trade and other receivables and
investments.
Liquidity Risk
Liquidity risk is the risk that the Company will not be
able to meet its financial obligations as they become
due. The Company manages its liquidity risk by
ensuring, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due,
under both normal and stressed conditions, without
incurring unacceptable losses or risk to the Company's
reputation.
The Company generates sufficient cash flow for
operations, which together with the available cash
& cash equivalents and short term investments
provide liquidity in the short term and long term. The
Company has established an appropriate liquidity
risk management framework for the management
of the Company's short term, medium and long term
funding and liquidity management requirements.
The Company manages liquidity risk by maintaining
adequate reserves, banking facilities and reserve
borrowing facilities by continuously monitoring
forecast and actual cash flows, and by matching the
maturity profiles of financial assets and liabilities.
Foreign Currency Exchange Risk
The Company's functional currency is Indian National
Rupees (INR). The Company undertakes transactions
denominated in foreign currencies; consequently,
exposure to exchange rate fluctuations arise.
Fluctuation in exchange rates affects the Company's
revenue from export markets and the cost of imports,
primarily in relation to capital goods.
The carrying amounts of the Company's monetary
assets and monetary liabilities at the end of reporting
period as follows:
Sensitivity analysis:
The Company is mainly exposed to fluctuations in US Dollar. The following table details the Company's sensitivity to a
? 1 increase and decrease against the US Dollar. ? 1 is the sensitivity used when reporting foreign currency risk internally
to key management personnel and represents management's assessment of the reasonably possible change in foreign
exchange rates. The sensitivity analysis includes only net outstanding foreign currency denominated monetary items
and adjusts their translation at the period end for a ? 1 change in foreign currency rates. A positive number below
indicates an increase in profit or equity where the Rupee strengthens by ? 1 against the US Dollar. For a ? 1 weakening
against the US Dollar, there would be a comparable impact on the profit or equity.
Commodity price risk
The Company's revenue is exposed to the market risk of price fluctuations related to the purchase of steel products
used as Raw Material in manufacture of Finished Goods. The company manages the risk by forecasting its production
and the manufacturing plan. Raw Material purchases are made based on the evaluation of the steel prices aligned to
such production plans.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Company is exposed to interest rate risk because funds are borrowed at both
fixed and floating interest rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable
interest rate. The borrowings of the Company are principally denominated in rupees with mix of fixed and floating rates
of interest. The Company has exposure to interest rate risk, arising principally on changes in base lending rates. The
Company uses a mix of interest rate sensitive financial instruments to manage the liquidity and fund requirement for
its day to day operations like short term loans. The risk is managed by Company by maintaining an appropriate mix
between fixed and floating rate borrowings, ensuring the most cost-effective strategies are applied.
Liquidity Risk
The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing
facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial
assets and liabilities.
The following tables details the company's remaining contractual maturity for its non derivative financial liabilities with
agreed repayment periods. The table have been drawn up based on the undiscounted cash flows of financial liabilities
based on earliest date on which the Company can be required to pay.
d. Fair value hierarchy
Valuation technique and key inputs
Level 1 - Quoted prices (unadjusted) in an active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within 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 assets or liabilities that are not based on observable market data (unobservable inputs).
The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as
at March 31, 2026.
38. 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 does not have any transactions with companies struck off under section 248 of the Companies Act, 2013
or section 560 of Companies Act, 1956.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies
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 been declared wilful defaulter by any bank or financial institution or government or any
government authority.
(vi) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), 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
(vii) The Company has not received any fund from any person(s) or entity(ies), 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.
(viii) The Company does not have any 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.
(ix) The Company has not revalued it's property plant and equipment including right of use assets and intangible assets
during the year.
41 Subsequent Events
a) Subsequent to the quarter ended March 31, 2026, the Board of directors of the Company, at its meeting held on
April 10, 2026, approved the proposal for the issue of 30,00,000 convertible equity warrants to one of the promoter
of the Company on preferential basis at a price of ? 168 per warrant, aggregating to approximately ? 5,040 lakhs.
This proposal was subsequently approved by the shareholders at the Extraordinary General Meeting held on May
08, 2026. The Company has applied for in principal approval from stock exchanges, which is currently awaited.
b) The Board of directors of the Company at its meeting held on May 26, 2026, approved the proposal for Investment
of ? 580 Lakhs in single tranche in the Paid-up Equity share capital of ZAP91 Solar India Private Limited (Joint
Venture Company).
42 On November 21, 2025, the Government of India notified the four Labour Codes - the Code on Wages, 2019, the Industrial
Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions
Code, 2020 - consolidating 29 existing labour laws. The Ministry of Labour & Employment published draft Central Rules
and FAQs to enable assessment of the financial impact due to changes in regulations. The Company has considered the
impact of the changes, consistent with the Labour Codes, draft rules, FAQs and legal opinion. The Company continues
to monitor the finalisation of Central / State Rules and clarifications from the Government on other aspects of the
Labour Code and would provide appropriate accounting effect on the basis of such developments as needed.
43 In accordance with Ind AS 108 "Operating segments”, segment information has been given in the consolidated financial
statements of Pennar Industries Limited and therefore no separate disclosure on segment information is given in these
financial statements.
44 The erstwhile subsidiary Company Pennar Engineered Building Systems Limited (PEBS) has raised funds through
Initial public offer (IPO) during financial year 2015-16 use of the net proceeds of the IPO is intended for the business
purposes such as repayment / prepayment of certain working capital facilities availed by the Company, financing the
procurement of infrastructure, general corporate purposes and share issue expense. As on March 31, 2026 an amount
of ? 360 lakhs(March 31, 2025: ? 374 Lakhs) are unutilized funds which have been temporarily invested in mutual funds
and fixed deposits.
45 The Company has used three accounting software's for maintaining its books of account which has a feature of recording
audit trail (edit log) facility, except that no audit trail feature was enable at the database level in two of the accounting
software's to log any direct data changes. Further the audit trail (edit log) facility was not enabled at application and
database, both the levels for another accounting software.
Further, to the extent enabled, audit trail feature has operated throughout the year for all relevant transactions recorded
in the accounting software. Also, there are no instances of audit trail feature being tampered during the year with.
Additionally, the audit trail of prior year has been preserved by the Company as per the statutory requirements for
record retention to the extent it was enabled and recorded in previous year.
46 The figures for the previous year have been regrouped / reclassified wherever necessary to confirm to current year
presentation.
47 These financial statements were approved for issue by the Company's Board of Directors on May 26, 2026.
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