B. Material Accounting Policies
B.1 Statement of Compliance
These financial statements have been prepared in
accordance with the Indian Accounting Standards
(hereinafter referred to as the ‘Ind AS’) as notified
by Ministry of Corporate Affairs pursuant to Section
133 of the Companies Act, 2013 (‘Act’) read with of
the Companies (Indian Accounting Standards)
(Amendment) Rules, 2015 amended from time to
time and other relevant provisions of the Act.
The financial statements of the Company for the
year ended 31.3.2025 were approved for issue
in accordance with a resolution of the Board of
Directors in its meeting held on 12th May, 2025
B.2 Basis of Preparation and Presentation
The financial statements are prepared in accordance
with the historical cost basis, except for certain
financial instruments that are measured at fair
values, as explained in the accounting policies below.
Historical cost is generally based on the fair
value of the consideration given in exchange for
goods and services.
Fair Value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date, regardless of whether that price
is directly observable or estimated using another
valuation technique. In estimating the fair value of an
asset or a liability, the Company takes into account
the characteristics of the asset or liability if market
participants would take those characteristics into
account when pricing the asset or liability at the
measurement date. Fair value for measurement
and/or disclosure purposes in these financial
statements is determined on such a basis, except
for leasing transactions that are within the scope
of Ind AS 116- Leases, and measurements that have
some similarities to fair value but are not fair value,
such as net realisable value in Ind AS 2 - Inventories
or value in use in Ind AS 36 - Impairment of Assets.
B.3 Critical Accounting Estimates, Assumptions
and Judgments:
The preparation of standalone financial statements
in conformity with the recognition and measurement
principles of Ind AS requires management of the
Company to make estimates and judgements
that affect the reported balances of assets and
liabilities, disclosures of contingent liabilities as at
the date of standalone financial statements and the
reported amounts of income and expenses for the
periods presented.
Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period
in which the estimates are revised and future
periods are affected.
The Company uses the following critical accounting
judgements, estimates and assumptions in
preparation of its standalone financial statements:
(a) Useful Lives of Property, Plant and Equipment
("PPE")
Property, plant and equipment represents a
significant proportion of the asset base of the
Company. The charge in respect of periodic
depreciation is derived after determining an
estimate of an asset’s expected useful life
and the expected residual value at the end
of its life. The useful lives and residual values
of Company’s assets are determined by the
Management at the time the asset is acquired
and reviewed periodically at the end of each
reporting period. This reassessment may
result in change in depreciation expense in
future periods.
(b) Defined Benefit Plans (Gratuity)
A liability in respect of defined benefit plans
is recognised in the balance sheet, and is
measured as the present value of the defined
benefit obligation at the reporting date less the
fair value of the plan’s assets and is 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.
(c) Provisions, Contingent Liabilities and
Contingent Assets
The Company estimates the provisions that have
present obligations as a result of past events
and it is probable that outflow of resources
will be required to settle the obligations. These
provisions are reviewed at the end of each
reporting period and are adjusted to reflect the
current best estimates, including management's
assessment of historical trends. However,
anticipated recoveries are not recognized on a
prudential basis. The Company uses significant
judgements to disclose contingent liabilities.
Contingent liabilities are disclosed 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 Company or 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 obligation
or a reliable estimate of the amount cannot be
made. Contingent assets are neither recognised
nor disclosed in the financial statements.
(d) Provision for Income Tax and Deferred Tax Assets
The Company uses estimates and judgements
based on the relevant rulings in the areas of
revenue, costs, allowances and disallowances
which is exercised while determining the provision
for income tax. A deferred tax asset is recognised
to the extent that it is probable that future taxable
profit will be available against which the deductible
temporary differences and tax losses can be
utilised. Accordingly, the Company exercises its
judgement to reassess the carrying amount of
deferred tax at the end of each reporting period.
(e) Leases
The Company evaluates if an arrangement
qualifies to be a lease as per the requirements
of Ind AS 116. Identification of a lease requires
significant judgement. The Company uses
significant judgement in assessing the lease
term (including anticipated renewals) and the
applicable discount rate.
The Company determines the lease term as the
non-cancellable period of a lease, together with
both periods covered by an option to extend the
lease if the Company is reasonably certain to
exercise that option; and periods covered by an
option to terminate the lease if the Company is
reasonably certain not to exercise that option. In
assessing whether the Company is reasonably
certain to exercise an option to extend a lease, or
not to exercise an option to terminate a lease, it
considers all relevant facts and circumstances that
create an economic incentive for the Company
to exercise the option to extend the lease, or not
to exercise the option to terminate the lease.
The Company revises the lease term if there is a
change in the non-cancellable period of a lease.
The discount rate is generally based on the
incremental borrowing rate specific to the
lease being evaluated.
B.4 Material Accounting Policies
(a) Current and Non-Current Classification
The Company presents assets and liabilities
in the Balance Sheet based on Current/ Non¬
Current classification.
An asset is treated as Current when it is -
- Expected to be realised or intended to be
sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised within twelve
months after the reporting period, or
- Cash or cash equivalent unless restricted
from being exchanged or used to settle a
liability for at least twelve months after the
reporting period.
All other assets are classified as non-current.
A liability is considered as Current, when -
- It is expected to be settled in normal
operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months
after the reporting period, or
- There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified
as non-current assets and liabilities.
(b) Property, Plant and Equipment (PPE)
Property, Plant and Equipment are stated at
cost, net of recoverable taxes, trade discount
and rebates less accumulated depreciation
and impairment losses, if any. Such cost
includes purchase price, borrowing cost and
any cost directly attributable to bringing the
assets to its working condition for its intended
use, net charges on foreign exchange contracts
and adjustments arising from exchange rate
variations attributable to the assets.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will flow
to the entity and the cost can be measured reliably.
Property, Plant and Equipment which are
significant to the total cost of that item of
Property, Plant and Equipment and having
different useful life are accounted separately.
(c) Intangible Assets
Intangible assets are recognised when it is
probable that the future economic benefits
that are attributable to the asset will flow
to the Company and the cost of the asset
can be measured reliably. Intangible assets
are stated at original cost net of tax/duty
credits availed, if any, less accumulated
amortisation and cumulative impairment.
Administrative and other general overhead
expenses that are specifically attributable to
acquisition of intangible assets are allocated
and capitalised as a part of the cost of
intangible assets.
Software
The expendutire incurred is amortised over the
five years equally commencing from the date
of acquisition.
Research and Development
Research costs are expensed as incurred.
Development expenditures on an individual
project are recognised as an intangible asset
when the Company can demonstrate:
* development costs can be measured reliably;
* the product or process is technically and
commercially feasible;
* future economic benefits are probable; and
* the company intends to, and has sufficient resources to
complete development and to use or sell the asset.
Following initial recognition of the development
expenditure as an asset, the asset is carried at
cost less any accumulated amortization and
accumulated impairment losses. Amortisation
of the asset begins when development is
complete and the asset is available for use.
It is amortised over the period of expected
future benefit. Amortisation expense is
recognised in the statement of profit and
loss unless such expenditure forms part of
carrying value of another asset. During the
period of development, the asset is tested for
impairment annually.
(d) Valuation of Inventories
Inventories are valued at Cost or Net Realizable
Value whichever is lower.
Inventories have been valued on the
following basis:
a. Raw Materials, Packing Material, Stores
and Spares Weighted Average cost or net
realisable value, whichever is lower.
b. Work-in-Progress - At cost plus
appropriate allocation of overheads or net
realisable value, whichever is lower.
c. Finished Goods - At cost plus appropriate
allocation of overheads or net realizable
value, whichever is lower.
(e) Cash and Cash Equivalents
For the purpose of presentation in the statement
of cash flows, cash and cash equivalents
include cash on hand, other short-term, highly
liquid investments that are readily convertilbe to
known amounts of cash and which are subject
to an insignificant risk of changes in value.
(f) Revenue Recognition
(i) Revenue from Sale of Goods to customers
is recognised when control of the goods is
transferred to the customer at an amount
that reflects the consideration entitled
in exchange for those goods or services.
Generally, control is transferred upon
shipment of goods to the customer or
when the goods are made available to the
customer, provided transfer of title to the
customer occurs and the Company has not
retained any significant risks of ownership
or future obligations with respect to
the goods shipped. 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
discount and schemes offered by the
company as part of the contract. Revenue
from Sale of Scrap and obsolete stores is
accounted for at the time of disposal.
(ii) Export entitlements are recognized
on realization.
(iii) Revenue in respect of Interest is recognized
on the time proportion method.
(iv) Industrial Promotion Incentive granted
by State Government is recognised when
claim in respect of Entitlement is made
& admitted after close of yearly Sales
Tax Assessment.
(v) Dividend Income is recognised when the
Company’s right to receive the amount
has been established.
(g) Government Grants
(i) Government grants are not recognised
until there is reasonable assurance
that the Company will comply with the
conditions attached to them and that the
grants will be received.
(ii) Government grants are recognised in Profit
and Loss on a systematic basis over the
periods in which the Company recognises
as expenses the related costs for which
the grants are intended to compensate.
Specifically, government grants whose
primary condition is that the Company
should purchase, construct or otherwise
acquire non-current assets are recognised
as deferred revenue in the balance sheet
and transferred to Profit and Loss on a
systematic and rational basis over the
useful lives of the related assets.
(iii) In the unlikely event that a grant
previously recognised is ultimately not
received, it is treated as a change in
estimate and the amount cumulatively
recognised is expensed in the Statement
of Profit and Loss.
(h) Depreciation/Amortization
Depreciation is provided based on useful life of
the assets as prescribed in Schedule II to the
Companies Act, 2013 except in respect of the
following assets, where useful life is different
than those prescribed in Schedule II;
(i) Impairment of Assets
Impairment loss, if any, is provided to the extent,
the carrying amount of assets exceeds their
recoverable amount. Recoverable amount
is higher of net selling price of an asset or its
value in use. Value in use is present value of
estimated future cash flows expected to arise
from the continuing use of an asset and from
its disposal at the end of its useful life.
(j) Foreign Currency Transactions
Foreign currency transactions are accounted
at the rates prevailing on the date of the
transactions. The exchange rate differences
arising out of such transactions are approriately
dealt in the financial statements in accordance
with the applicables accounting standards.
Exchange differences arising on settlement or
translation of monetary items are recognised in
Statement of Profit and Loss.
(k) Leases
The Company assesses whether a contract
is, or contains a lease, at inception of the
contract. 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. To assess
whether a contract conveys the right to control
the use of an identified asset, the Company
assesses whether: (i) the contract involves the
use of an identified asset (ii) the Company has
substantially all of the economic benefits from
use of the asset through the period of the lease
and (iii) the Company has the right to direct the
use of the asset.
At the commencement date of the lease, the
Company recognises a right-of-use asset
and a corresponding lease liability for all lease
arrangements in which it is lessee, except for
short-term leases (leases with a term of twelve
months or less), leases of low value assets and,
for contract where the lessee and lessor has right
to terminate a lease without permission from the
other party with no more than an insignificant
penalty. The lease expense of such short-term
leases, low value assets leases and cancellable
leases, are recognised as an operating expense
on a straight-line basis over the term of the lease.
At commencement date, lease liability is
measured at the present value of the lease
payments to be paid during non-cancellable
period of the contract, discounted using the
incremental borrowing rate. The right-of-use
assets is initially recognised at the amount of
the initial measurement of the corresponding
lease liability, lease payments made at or
before commencement date less any lease
incentives received and any initial direct costs.
Subsequently the right-of-use asset is
measured at cost less accumulated
depreciation and any impairment losses. Lease
liability is subsequently measured by increasing
the carrying amount to reflect interest on the
lease liability (using effective interest rate
method) and reducing the carrying amount to
reflect the lease payments made. The right-of-
use asset and lease liability are also adjusted
to reflect any lease modifications or revised in¬
substance fixed lease payments.
The Company has taken various residential
and office premises under operating lease
or leave and license agreements. These are
cancellable by the Company, having a term
between 11 months and five years and have
no specific obligation for renewal. Payments
are recognised in the Standalone Statement of
Profit and Loss under ‘Rent’ in Note 30.
(l) Finance Costs
Borrowing Costs other than those directly
attributable to Qualifying Assets are recognised
as expenses in profit or loss in the period in
which they are incurred.
Borrowing costs directly attributable to the
acquisition, construction or production of
qualifying assets are capitalised as part of the
cost of the asset.
Interest income earned on the temporary
investment of specific borrowings pending
their expenditure on qualifying assets is
deducted from the borrowing costs eligible for
capitalisation.
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