(g) Provisions
Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to
settle the obligation and a reliable estimate can be
made of the amount of the obligation. The expense
relating to a provision is presented in the standalone
statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, when appropriate, the risks specific to the
liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a
finance cost.
Warranty
Provisions for warranty related costs are recognized
as and when the product is sold or service provided.
Provision is based on historical experience. The
estimate of such warranty related costs is reviewed
annually. A provision is recognized for expected
warranty claims on products sold, based on past
experience of the level of repairs and returns.
Assumptions used to calculate the provision for
warranties are based on current sales levels and
current information available about returns. The
Company generally offers 12 - 24 months of warranty
for its products.
(h) Contingent liabilities
A contingent liability is a possible obligation that arises
from past events whose existence will be confirmed
by the occurrence or non-occurrence of one or more
uncertain future events beyond the control of the
Company. It includes a present obligation that is not
recognized because it is not probable that an outflow
of resources will be required to settle the obligation.
It also arises in extremely rare cases where there
is a liability that cannot be recognized because it
cannot be measured reliably. The Company does
not recognize a contingent liability but discloses its
existence in the standalone financial statements.
(i) Government grants and subsidies
Government grants are recognised where there is
reasonable assurance that the grant will be received
and all attached conditions will be complied with.
When the grant relates to an expense item, it is
recognised as income on a systematic basis over the
periods that the related costs, for which it is intended
to compensate, are expensed. When the grant relates
to an asset, it is recognised as income in equal
amounts over the expected useful life of the related
asset.
(j) Taxes
Income tax expense comprises of current and deferred
tax
Current Income tax
Current income tax assets and liabilities are measured
at the amount expected to be recovered from or
paid to the taxation authorities. The tax rates and tax
laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting
date in the country where the Company operates and
generates taxable income. Current income tax relating
to items recognised outside profit or loss is recognised
outside standalone statement of profit and loss
(either in other comprehensive income or in equity).
Management periodically evaluates positions taken
in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation
and establishes provisions where appropriate.
Deferred Tax
Deferred tax is recognized in respect of temporary
differences between the tax bases of assets and
liabilities and their carrying amounts for financial
reporting purposes at the reporting date. Deferred
tax liabilities are recognised for all taxable temporary
differences, except when the deferred tax liability
arises from an asset or liability in a transaction that
is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor
taxable profit or loss.
Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax
assets are recognised to the extent that it is probable
that taxable profit will be available against which
the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses
can be utilised, except when the deferred tax asset
relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a
transaction that is not a business combination and,
at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that
it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred
tax asset to be utilised. Unrecognised deferred tax
assets are re-assessed at each reporting date and
are recognised to the extent that it has become
probable that future taxable profits will allow the
deferred tax asset to be recovered. Deferred tax
assets and liabilities are measured at the tax rates that
are expected to apply in the year when the asset is
realised or the liability is settled, based on tax rates
(and tax laws) that have been enacted or substantively
enacted at the reporting date.
Deferred tax relating to items recognised outside profit
or loss is recognised outside profit or loss (either in
other comprehensive income or in equity). Deferred
tax assets and deferred tax liabilities are offset if a
legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred
taxes relate to the same taxable entity and the same
taxation authority.
(k) Cash and cash equivalents
Cash and cash equivalent in the balance sheet
comprise cash at banks and on hand and short-term
deposits with an original maturity of three months
or less, which are subject to an insignificant risk of
changes in value.
(l) Property, plant and equipment
Property, plant and equipment are recognized when
it is probable that the future economic benefits
associated with the asset will flow to the entity and
the cost of the asset can be measured reliably.
Property, plant and equipment held for use in the
production or supply of goods or services, or for
administrative purposes, are stated in the balance
sheet at cost (net of duty / tax credit availed)
less accumulated depreciation and accumulated
impairment losses.
Properties in the course of construction for production,
supply or administrative purposes are carried at
cost, less any recognised impairment loss. Cost of
an item of property, plant and equipment comprises
its purchase price, any directly attributable cost of
bringing the item to its working condition for its
intended use and estimated costs of dismantling and
removing the item and restoring the site. Cost includes
professional fees and, for qualifying assets, borrowing
costs capitalised in accordance with the Company's
accounting policy. Such properties are classified to
the appropriate categories of property, plant and
equipment when completed and ready for intended
use. Advance paid towards the acquisition of property,
plant and equipment are shown under non-current
assets.
Depreciation of these assets, on the same basis as
other property assets, commences when the assets
are ready for their intended use. The cost of property,
plant and equipment not ready for intended use before
such date is disclosed under capital work-in-progress.
Freehold land is carried at historical cost less any
accumulated impairment losses.
When significant parts of plant and equipment are
required to be replaced at intervals, the Company
depreciates them separately based on their specific
useful lives. Likewise, when a major inspection is
performed, its cost is recognised in the carrying
amount of the plant and equipment as a replacement
if the recognition criteria are satisfied and the
same is depreciated based on their specific useful
lives. All other expenses on existing property,
plant and equipment, including day-to-day repair
and maintenance expenditure, are charged to the
standalone statement of profit and loss for the period
during which such expenses are incurred.
An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Gains or losses
arising from derecognition of property, plant and
equipment are measured as the difference between
the net disposal proceeds and the carrying amount
of the asset and are recognized in the standalone
statement of profit and loss when the asset is
derecognized.
The Company identifies and determines cost of asset
significant to the total cost of the asset having useful
life that is materially different from that of the life
of the principal asset. Subsequent expenditure is
capitalised only when it is probable that the future
economic benefits associated with the expenditure
will flow to the Company and the cost of the item can
be measured reliably. Otherwise, such expenditure
is recognised in the statement of profit and loss as
incurred.
Depreciation is provided using the straight line method
as per the useful lives of the assets estimated by
the management, or at the rates prescribed under
Schedule II of the Companies Act, 2013. The useful
life estimate for major classes of assets is as follows:
The Company, based on assessment made by
technical expert and management estimate,
depreciates certain items of building, plant and
machinery over estimated useful lives and residual
value which are different from the useful life and
residual values prescribed in Schedule II to the
Companies Act, 2013. The management believes that
these estimated useful lives and residual values are
realistic and reflect fair approximation of the period
over which the assets are likely to be used.
The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate. The Company has
elected to continue with the carrying value of all of
its property, plant and equipment recognised as of
April 1, 2015 (the transition date) measured as per
the previous GAAP and use such carrying value as its
deemed cost as of the transition date.
Intangible assets
Intangible assets with finite useful lives that are
acquired separately, is capitalised and carried at cost
less accumulated amortisation and accumulated
impairment losses. Amortisation is recognised on a
straight-line basis over their estimated useful lives.
The estimated useful life and amortisation method are
reviewed at the end of each reporting period, with the
effect of any changes in estimate being accounted for
on a prospective basis.
Costs incurred towards purchase of computer software
and licenses are amortised using the straight-line
method over a period based on management's
estimate of useful lives of such computer software and
licenses being 2 / 3 years, or over the license period of
the software, whichever is shorter.
Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied
in the specific asset to which it relates and the cost
of the asset can be measured reliably. All other
expenditure is recognised in profit or loss as incurred.
Derecognition of intangible assets
An intangible asset is derecognised on disposal,
or when no future economic benefits are expected
from use or disposal. Gains or losses arising from
derecognition of an intangible asset, measured as
the difference between the net disposal proceeds
and the carrying amount of the asset is recognised in
standalone statement of profit and loss when the asset
is derecognised.
Impairment of property, plant & equipment and
intangible assets carried at cost
The carrying amounts of assets are reviewed at each
balance sheet date for any indication of impairment
based on internal / external factors. If any indication
exists, or when annual impairment testing for an
asset is required, the Company estimates the asset's
recoverable amount. An impairment loss is recognized
wherever the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount is the
greater of the assets or cash-generating units (CGU)
recoverable value and its value in use. An asset's
recoverable amount is the higher of an asset's or
cash-generating unit's (CGU) fair value less costs of
disposal and its value in use. In assessing value in
use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that
reflects current market assessments of the time value
of money and risks specific to the asset.
After impairment, depreciation is provided on the
revised carrying amount of the asset over its remaining
useful life. A previously recognized impairment loss
is increased or reversed depending only for change
in assumptions or internal/external factors. However,
the carrying value after reversal is not increased
beyond the carrying value that would have prevailed
by charging usual depreciation if there was no
impairment.
(m) Investment property
Investment property is property held either to earn
rental income or for capital appreciation or for both,
but not for sale in the ordinary course of business, use
in the production or supply of goods or services or
for administrative purposes. Upon initial recognition,
an investment property is measured at cost.
Subsequent to initial recognition, investment property
is measured at cost less accumulated depreciation and
accumulated impairment losses, if any.
Investment property is derecognised either when
it has been disposed of or when it is permanently
withdrawn from use and no future economic benefit
is expected from its disposal. Any gain or loss on
disposal of investment property (calculated as the
difference between the net proceeds from disposal
and the carrying amount of the item) is recognised in
profit or loss.
Subsequent expenditure is capitalised only if it is
probable that the future economic benefits associated
with the expenditure will flow to the Company and the
cost of the item can be measured reliably.
Depreciation is provided using the straight line method
as per the useful lives of the assets estimated by
the management, or at the rates prescribed under
Schedule II of the Companies Act, 2013. The useful
life estimate for major classes of assets is as follows:
The Company, based on assessment made by
technical expert and management estimate,
depreciates certain items of building, plant and
machinery over estimated useful lives and residual
value which are different from the useful life and
residual values prescribed in Schedule II to the
Companies Act, 2013. The management believes that
these estimated useful lives and residual values are
realistic and reflect fair approximation of the period
over which the assets are likely to be used.
The residual values, useful lives and methods of
depreciation of investment property are reviewed at
each financial year end and adjusted prospectively, if
appropriate.
Transfers to (or from) investment property are made
only when there is a change in use. Transfers between
investment property, owner-occupied property and
inventories do not change the carrying amount of
the property transferred and they do not change the
cost of that property for measurement or disclosure
purposes.
The fair values of investment property is disclosed in
the notes. Fair values is determined by an independent
valuer who holds a recognised and relevant
professional qualification and has recent experience in
the location and category of the investment property
being valued.
(n) Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use or sale are capitalised as part of the cost
of the asset. All other borrowing costs are expensed
in the period in which they occur. Borrowing costs
consist of interest and other costs that an entity incurs
in connection with the borrowing of funds. It also
includes exchange differences to the extent regarded
as an adjustment to the borrowing costs.
(o) Leases
At inception of a contract, the Company assesses
whether a contract is, or contains, a lease. A contract
is, or contains, a lease if the contract conveys the right
to control the use of an identified asset for a period of
time in exchange for consideration.
At commencement or on modification of a contract
that contains a lease component, the Company
allocates the consideration in the contract to each
lease component on the basis of its relative stand¬
alone prices. However, for the leases of property
the Company has elected not to separate non-lease
components and account for the lease and non-lease
components as a single lease component.
The Company recognises a right-of-use asset and a
lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability
adjusted for any lease payments made at or before
the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle
and remove the underlying asset or to restore the
underlying asset or the site on which it is located, less
any lease incentives received.
The right-of-use asset is subsequently depreciated
using the straight-line method from the
commencement date to the earlier of the end of the
useful life of the right-of-use asset or the end of the
lease term, unless the lease transfers ownership of
the underlying asset to the Company by the end of the
lease term or the cost of the right-of-use asset reflects
that the Company will exercise a purchase option. In
that case the right-of-use asset will be depreciated
over the useful life of the underlying asset, which is
determined on the same basis as those of property
and equipment. In addition, the right-of-use asset
is periodically reduced by impairment losses, if any,
and adjusted for certain remeasurements of the lease
liability.
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the interest
rate implicit in the lease or, if that rate cannot be
readily determined, the Company's incremental
borrowing rate. Generally, the Company uses its
incremental borrowing rate as the discount rate.
The Company determines its incremental borrowing
rate by obtaining interest rates from various external
financing sources and makes certain adjustments to
reflect the terms of the lease and type of the asset
leased.
Lease payments included in the measurement of the
lease liability comprise the following:
• fixed payments, including in-substance fixed
payments;
• variable lease payments that depend on an index
or a rate, initially measured using the index or
rate as at the commencement date;
• amounts expected to be payable under a residual
value guarantee; and
• the exercise price under a purchase option that
the Company is reasonably certain to exercise,
lease payments in an optional renewal period if
the Company is reasonably certain to exercise
an extension option, and penalties for early
termination of a lease unless the Company is
reasonably certain not to terminate early.
The lease liability is measured at amortised cost using
the effective interest method. It is remeasured when
there is a change in future lease payments arising
from a change in an index or rate, if there is a change
in the Company's estimate of the amount expected
to be payable under a residual value guarantee, if the
Company changes its assessment of whether it will
exercise a purchase, extension or termination option or
if there is a revised in-substance fixed lease payment.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in
profit or loss if the carrying amount of the right-of-use
asset has been reduced to zero.
Short-term leases and leases of low-value assets
The Company has elected not to recognise right-of-
use assets and lease liabilities for leases of low-value
assets and short-term leases. The Company recognises
the lease payments associated with these leases as an
expense in profit or loss on a straight-line basis over
the lease term.
(p) Retirement and other employee benefitsi. Defined benefit plan• Provident Fund
Eligible employees of Company received benefits
from a provident fund, which was a defined
contribution benefit plan. Under the plan, both
the eligible employee and the Company made
monthly contributions to the provident fund
plan equal to a specified percentage of the
covered employee's salary. The provident fund
contributions are made to employee provident
fund organisation.
• Gratuity and Pension
In accordance with Indian law, the Company
operates a scheme of gratuity which is a defined
benefit plan. The gratuity plan provides for a lump
sum payment to vested employees at retirement,
death while in employment or on termination of
employment in accordance with the provisions
under the Code on Social Security, 2020. Vesting
occurs upon completion of contractual period
of continuous years of service as defined in
the Code on Social Security, 2020. The level of
benefits provided depends on the member's
length of service and salary at retirement age.
The scheme is funded with Life Insurance
Corporation of India.
The Company also operates a pension plan for
select employees, the eligibility and the terms
and conditions of payment are at the discretion of
the Company. Gratuity and pension liabilities are
defined benefit obligations and are provided for
on the basis of an actuarial valuation done as per
the projected unit credit method as at the end of
each financial year.
Re-measurements, comprising of actuarial
gains and losses, the effect of the asset ceiling,
excluding amounts included in net interest on
the net defined benefit liability and the return
on plan assets (excluding amounts included in
net interest on the net defined benefit liability),
are recognised immediately in the balance sheet
with a corresponding debit or credit to retained
earnings through OCI in the period in which they
occur. Re-measurements are not reclassified to
profit or loss in subsequent periods.
i. Other employment benefits• Compensated absence
Short term compensated absences are provided
for based on estimates. Long term compensated
absences in the nature of defined benefit plan are
provided for based on actuarial valuation at the
year end. The actuarial valuation is done as per
projected unit credit method. Re-measurement
gain or loss is taken to the standalone statement
of profit and loss and are not deferred. Past
service costs are recognised in profit or loss on
the earlier of:
• The date of the plan amendment or curtailment,
and
• The date that the Company recognises related
restructuring costs.
Net interest is calculated by applying the discount
rate to the net defined benefit liability or asset. The
Company recognises the changes in the net defined
benefit obligation as an expense in the standalone
statement of profit and loss as service costs
comprising current service costs, past-service costs,
gains and losses on curtailments and non-routine
settlements and net interest expense or income.
iii. Defined contribution plan.
Defined contribution plan includes contribution to
employee state insurance scheme, employee provident
fund and employee pension scheme. The Company
has no obligation other than the contribution payable
under the above schemes. The Company recognises
the contribution payable to the above schemes as
an expenditure when the employee renders related
service. If the contribution payable to the schemes
for services received before the Balance Sheet date
exceeds the contribution already paid, the deficit
payable to the scheme is recognised as a liability after
deducting the contribution already paid. If on the
other hand the contribution already paid exceeds the
contribution due for the services received before the
Balance Sheet date, then the excess is recognised as
an asset to the extent that the prepayment will lead to
reduction in future payment or cash refund.
iv. Termination benefits - Voluntary retirement
The Company has a scheme of voluntary retirement
applicable to certain employees. The amount payable
under such scheme is recognised earlier of when the
employee accepts the offer or when a restriction of the
entity's ability to accept the offer takes effect.
(q) Financial instrumentsi. 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 provisions of the instrument.
A financial asset (unless it is a trade receivable without
a significant financing component) or financial liability
is initially measured at fair value plus or minus, for
an item not at FVTPL, transaction costs that are
directly attributable to its acquisition or issue. A trade
receivable without a significant financing component
is initially measured at the transaction price.
ii. Classification and subsequent measurement
On initial recognition, a financial asset is classified as
measured at:
- amortised cost;
- FVOCI - debt investment;
- FVOCI - equity investment; or
- FVTPL.
Financial assets are not reclassified subsequent to
their initial recognition unless the Company changes
its business model for managing financial assets, in
which case all affected financial assets are reclassified
on the first day of the first reporting period following
the change in the business model.
A financial asset is measured at amortised cost if
it meets both of the following conditions and is not
designated as at FVTPL:
- it is held within a business model whose
objective is to hold assets to collect contractual
cash flows; and
- its contractual terms 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:
- it is held within a business model whose
objective is achieved by both collecting
contractual cash flows and selling financial
assets; and
- its contractual terms 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. 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 assets - Business model assessment
The Company makes an assessment of the objective of
the business model in which a financial asset is held at
a portfolio level because this best reflects the way the
business is managed and information is provided to
management. The information considered includes:
- the stated policies and objectives for the portfolio
and the operation of those policies in practice.
These include whether management's strategy
focuses on earning contractual interest income,
maintaining a particular interest rate profile,
matching the duration of the financial assets to
the duration of any related liabilities or expected
cash outflows or realising cash flows through the
sale of the assets;
- how the performance of the portfolio is evaluated
and reported to the Company's management;
- the risks that affect the performance of the
business model (and the financial assets held
within that business model) and how those risks
are managed;
- how managers of the business are compensated
- e.g. whether compensation is based on the fair
value of the assets managed or the contractual
cash flows collected; and
- the frequency, volume and timing of sales of
financial assets in prior periods, the reasons for
such sales and expectations about future sales
activity.
Transfers of financial assets to third parties in
transactions that do not qualify for derecognition are
not considered sales for this purpose, consistent with
the Company's continuing recognition of the assets.
Financial assets that are held for trading or are
managed and whose performance is evaluated on a
fair value basis are measured at FVTPL.
Financial assets - Assessment whether contractual
cash flows are solely payments of principal and
interest
For the purposes of this assessment, 'principal' is
defined as the fair value of the financial asset on initial
recognition. 'Interest' is defined as consideration
for the time value of money and for the credit risk
associated with the principal amount outstanding
during a particular period of time and for other
basic lending risks and costs (e.g. liquidity risk and
administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are
solely payments of principal and interest, the Company
considers the contractual terms of the instrument.
This includes assessing whether the financial asset
contains a contractual term that could change the
timing or amount of contractual cash flows such
that it would not meet this condition. In making this
assessment, the Company considers:
- contingent events that would change the amount
or timing of cash flows;
- terms that may adjust the contractual coupon
rate, including variable-rate features;
- prepayment and extension features; and
- terms that limit the Company's claim to cash
flows from specified assets (e.g. non-recourse
features).
A prepayment feature is consistent with the solely
payments of principal and interest criterion if the
prepayment amount substantially represents unpaid
amounts of principal and interest on the principal
amount outstanding, which may include reasonable
compensation for early termination of the contract.
Additionally, for a financial asset acquired at a discount
or premium to its contractual par amount, a feature
that permits or requires prepayment at an amount
that substantially represents the contractual par
amount plus accrued (but unpaid) contractual interest
(which may also include reasonable compensation
for early termination) is treated as consistent with this
criterion if the fair value of the prepayment feature is
insignificant at initial recognition.
Financial assets - Subsequent measurement and
gains and losses
Financial assets at FVTPL - These assets are
subsequently measured at fair value. Net gains and
losses, including any interest or dividend income, are
recognised in profit or loss.
Financial assets at amortised cost - These assets
are subsequently measured at amortised cost using
the effective interest method. The amortised cost
is reduced by impairment losses. Interest income,
foreign exchange gains and losses and impairment
are recognised in profit or loss. Any gain or loss on
derecognition is recognised in profit or loss.
Debt investments at FVOCI - These assets are
subsequently measured at fair value. Interest income
calculated using the effective interest method, foreign
exchange gains and losses and impairment are
recognised in profit or loss. Other net gains and losses
are recognised in OCI. On derecognition, gains and
losses accumulated in OCI are reclassified to profit or
loss.
Equity investments at FVOCI - These assets are
subsequently measured at fair value. Impairment
losses (and reversal of impairment losses) on equity
investments measured at FVOCI are not reported
separately from other changes in fair value. Dividends
are recognised as income in profit or loss unless the
dividend clearly represents a recovery of part of the
cost of the investment. Other net gains and losses are
recognised in OCI and are not reclassified to profit or
loss.
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, 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 profit
or 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 profit or loss. Any gain
or loss on derecognition is also recognised in profit or
loss.
iii. Derecognition
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 either:
• substantially all of the risks and rewards
of ownership of the financial asset are
transferred; or
• the Company neither transfers nor retains
substantially all of the risks and rewards of
ownership and it does not retain control of
the financial asset.
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. In these cases, the
transferred assets are not derecognised.
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 of the modified liability are substantially
different, in which case a new financial liability based
on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference
between the carrying amount extinguished and the
consideration paid (including any non-cash assets
transferred or liabilities assumed) is recognised in
profit or loss.
iv. 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.
(r) Dividend to shareholders
Final dividend distributed to equity shareholders is
recognised in the period in which it is approved by
the members of the Company in the Annual General
Meeting. Interim dividend is recognised when
approved by the Board of Directors at the Board
Meeting. Both final dividend and interim dividend are
recognised in the Standalone Statement of Changes in
Equity.
(s) Earnings Per Share
Basic earnings per share are calculated by dividing
the net profit for the period attributable to equity
shareholders by the weighted average number of
equity shares outstanding during the period.
For the purpose of calculating diluted earnings per
share, the net profit for the period attributable to
equity shareholders and the weighted average number
of shares outstanding during the period are adjusted
for the effects of all dilutive potential equity shares, if
any.
(t) Recent pronouncements
Ministry of Corporate Affairs (“MCA”) notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules
as issued from time to time.
In May 2025, MCA notified amendments to Ind AS 21
- The Effects of Changes in Foreign Exchange Rates,
applicable w.e.f. April 1, 2025.
In August 2025, MCA notified the following
amendments to:
1. Ind AS 1, Presentation of Financial Statements,
applicable w.e.f. April 1, 2025 - The amendment
relates to classification of liabilities as current
or non-current and non-current liabilities with
covenants. In the context of classifying a
liability as current, it removes the requirement
of existence of a right to defer settlement for
at least 12 months after the reporting date and
instead requires that the said right should exist
on the reporting date and have substance.
The amendment also introduces guidance on
classification of liabilities with covenants.
2. Ind AS 7, Statement of Cash Flows and Ind
AS 107, Financial Instruments: Disclosures,
applicable w.e.f. April 1, 2025 - The amendment
in Ind AS 7 requires to inform users of financial
statements of the existence of supplier finance
arrangements and explain the nature of the
arrangements, the carrying amount of liabilities
and the range of payment due dates. Ind AS
107 has been amended to add supplier finance
arrangements as a factor that may cause
concentration of liquidity risk.
3. Ind AS 12, International Tax Reform - Pillar
Two Model Rules applicable immediately - The
amendments provide a temporary mandatory
relief from deferred tax accounting for top-up tax
and disclose that they have applied the relief. This
relief is immediate and applies retrospectively
The Company has reviewed the new pronouncements
and amendments and based on its evaluation has
determined that it does not have any significant impact
in its Standalone financial statements.
Terms / rights attached to equity shares
The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and
share in the Company's residual assets on winding up. The equity shareholders are entitled to receive dividend as declared
from time to time, subject to preferential right of preference shareholders to payment of dividend. The voting rights of an
equity shareholder on a poll (not on show of hands) are in proportion to his/its share of the paid-up equity share capital of
the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable has
not been paid. Failure to pay any amount called up on shares may lead to their forfeiture. On winding up of the Company,
the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all
preferential amounts, in proportion to the number of equity shares held.
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.
Note :
The Government of India has 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 on 21
November 2025, consolidating existing labour laws. The Ministry of Labour and Employment has also published draft Central
Rules and FAQs to facilitate assessment of the financial impact arising from changes in regulations.
The Company has assessed and disclosed the financial implications of these changes as per guidance provided by the
Institute of Chartered Accountants of India & in accordance with IND AS 19. The New Labour Codes has resulted in estimated
one time increase in provision for employee benefits of the Company of INR 793.51 lakhs and considering non-recurring
nature of this impact and regulatory driven, the same has been recognized under “Exceptional item” in the statement of Profit
and Loss for the year ended March 31, 2026.
The Company continues to monitor developments of the Rules to be notified by regulatory authorities, including clarifications
/ additional guidance from authorities and will continue to assess the accounting implications, basis such developments/
guidance.
30 Earnings per share
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the
weighted average number of equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted
average number of equity shares outstanding during the year plus the weighted average number of equity shares that would
be issued on conversion of all the dilutive potential equity shares into equity shares.
31 Significant accounting judgements, estimates and assumptions
The preparation of the Company's standalone financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying
disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Key Judgements estimates and assumptions
In the process of applying the Company's accounting policies, management has made the following key judgements,
estimates and assumptions, which have the most significant effect on the amounts recognised in the standalone financial
statements:
Provision and contingent liability
On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies. For contingent
losses that are considered probable, an estimated loss is recorded as an accrual in standalone financial statements. Loss
contingencies that are considered possible are not provided for but disclosed as contingent liabilities in the standalone
financial statements. Contingencies the likelihood of which is remote are not disclosed in the standalone financial statements.
Gain contingencies are not recognised until the contingency has been resolved and amounts are received or receivable. The
management estimates likely outcome of any pending cases and other contingencies based upon the Company's / expert's
interpretation of applicable tax laws, relevant judicial pronouncements.
Defined benefit plans
The cost of the defined benefit plan and other post-employment benefits and the present value of the obligation are
determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual
developments in the future. These include the determination of the discount rate, future salary increases and mortality rates.
Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to
changes in these assumptions. All assumptions are reviewed at each reporting date.
Further details about defined benefit obligations are given in note 33.
Allowance for inventories
An allowance for inventory is recognised where the realisable value is estimated to be lower than the inventory carrying value.
The inventory allowance is estimated taking into account various factors and losses associated with obsolete / slow-moving /
redundant inventory items. The Company has, based on these assessments, made adequate allowance in the books.
32 Employee Benefits ObligationDefined Benefit PlanGratuity
In accordance with Indian law, the Company operates a scheme of gratuity which is a defined benefit plan. The gratuity
plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of
employment in accordance with the provisions under the Code on Social Security, 2020. Vesting occurs upon completion
of contractual period of continuous years of service as defined in the Code on Social Security, 2020. The level of benefits
provided depends on the member's length of service and salary at retirement age.
Risk exposure and asset liability matching
Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as company take on
uncertain long term obligations to make future benefit payments.
1) Liability risks
i) Asset-Liability Mismatch risk
Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration
with the defined benefit liabilities, the Company is successfully able to neutralize valuation swings caused by
interest rate movements.
ii) Discount Rate Risk
Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice
can have a significant impact on the defined benefit liabilities.
iii) Future Salary Escalation and Inflation Risk
Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising
salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities
especially unexpected salary increases provided at management's discretion may lead to uncertainties in estimating
this increasing risk.
2) Asset risks
All plan assets are maintained in a trust fund managed by LIC of India. LIC has a sovereign guarantee and has been
providing consistent and competitive returns over the years. The company has opted for a traditional fund wherein all
assets are invested primarily in risk averse markets. The company has no control over the management of funds but this
option provides a high level of safety for the total corpus. A single account is maintained for both the investment and
claim settlement and hence 100% liquidity is ensured. Also interest rate and inflation risk are taken care of.
The depreciation charge for right of use assets, interest expenses on lease liabilities, expenses relating to short term leases
and low-value assets and current and non-current classification of lease liability are included in note 24, 23, 25 and 12
respectively. Cash flows on payment of lease liabilities including interest on lease liabilities are disclosed in the standalone
cash flow statements.
B. Leases as lessor
The Company leases out its investment property. All leases are classified as operating leases from a lessor perspective,
because they do not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Note 3.3 sets
out information about the operating leases of investment property.
Rental income recognised by the Company during the year ended March 31, 2026 was INR 85.46 lakhs (March 31, 2025 was
INR 89.36 lakhs).
The following table sets out a maturity analysis of lease payments, showing the undiscounted lease payments to be received
after the reporting date.
The uncertainties and possible reimbursement in respect of the above mentioned contingent liabilities are dependent on the
outcome of various legal proceedings and therefore, cannot be predicted accurately.
The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are
required and disclosed as contingent liabilities where applicable, in these financial statements. Management is of the view
that above matters will not have material adverse effect on the Company's financial position.
Terms and conditions of transactions with related parties
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm's length
transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have
been no guarantees provided or received for any related party receivables or payables.
38 Segment information
The Company primarily operates in the automotive segment. The automotive segment includes all activities related to
development, design and manufacture of products. The board of directors of the Company, which has been identified as
being the chief operating decision maker (CODM), evaluates the Company's performance, allocate resources based on the
analysis of the various performance indicator of the Company as a single unit. Therefore, there is no reportable segment for
the Company as per the requirement of Ind AS 108 “Operating Segments”.
The Company's principal financial liabilities, include trade and other payables. The Company has various financial assets such
as trade receivables and cash and short-term deposits, which arise directly from its operations. The Company also holds
FVTPL investments.
The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees the
management of these risks. The Company's senior management ensures that the company's financial 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. It is the Company's policy that no trading in derivatives for speculative
purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are
summarised below.
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 risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity
price risk. Financial instruments affected by market risk include loans, deposits and FVTPL investments.
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's investments are primarily in fixed rate interest bearing investments. Also, the Company
has no borrowings and hence not exposed to interest rate risk.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in
foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the
Company's operating activities (when revenue or expense is denominated in a foreign currency).
The majority of the Company's revenue and expenses are in Indian Rupees, with the remainder denominated in USD , EURO
. The following table demonstrates the sensitivity to 5% change in USD and EURO exchange rates on foreign currency
exposures as at the year end, with all other variables held constant. The Company's exposure to foreign currency changes for
all other currencies is not material.
Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading
to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its
financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial
instruments.
Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, loans and
advances. None of the financial instruments of the Company result in material concentrations of credit risks. Exposure to
credit risk - The carrying amount of financial assets represents the maximum Credit exposure. The maximum exposure to
Credit risk was INR 317,192.94 lakhs as at March 31, 2026 and INR 263,165.58 lakhs as at March 31, 2025, being the total
of the carrying amount of balances with banks, deposits with banks, trade receivables and other financial assets. As at March
31, 2026, 78% of the total dues was receivable from top 10 customers (as at March 31, 2025 - 80%). These receivables are
from customers whose credit rating is above the average. Credit risk from balances with banks and investment of surplus
funds in mutual funds is managed by the Company's treasury department. The objective is to minimise the concentration of
risks by investing in safer investments of high pedigree.
Liquidity risk
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk
management is to maintain sufficient liquidity and ensure funds are available for use as per requirements. The Company's
prime source of liquidity is cash and cash equivalents and the cash generated from operations. The Company has no
outstanding bank borrowings. The Company invests its surplus funds in bank, fixed deposit and mutual funds, which carry
minimal mark to market risks. The table below summarises the maturity profile of the Company's financial liabilities based on
contractual undiscounted payments.
For the purpose of the Company's capital management, capital includes issued equity capital, share premium and all other
equity reserves attributable to the equity shareholders. The primary objective of the Company's capital management is to
maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions. To maintain
or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders
or issue new shares.
43 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 charges or satisfaction which is yet to be registered with Registrar of Companies beyond
the statutory period.
iii) The Company has not traded or invested in Crypto currency or virtual currency during the financial year.
iv) The Company has not advanced or loaned or invested funds (either from borrowed funds or share premium or any
other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities ('intermediaries') with the
understanding (whether recorded in writing or otherwise) 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.
v) 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 from or on behalf of the Ultimate Beneficiaries.
vi) The Company does not have any 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).
vii) The Company has no transactions with struck off companies during the year.
viii) The Company has not been declared as wilful defaulter by any bank or financial institution or government or any government
authority.
ix) The Company has complied with the number of layers prescribed under the Companies Act, 2013.
x) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous
financial year
xi) The Company has not taken borrowings from banks and financial institutions on the basis of security of current assets.
43A The Company is in the process of identifying and appointing a whole time Company Secretary as required under section
203 respectively of the Companies Act, 2013.
44 Events after the reporting period
There are no material non-adjusting events after the reporting date till the date of issue of these financial statements (i.e May
13,2026) which requires disclosure in this financial statements. Refer note 11.1 for details of proposed final dividend for the
financial year 2025-26 subject to the approval of the members at the ensuing Annual General Meeting.
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