2. Significant Accounting Policies
2.1 Basis of Preparation
The financial statements have been prepared with all material aspect with Indian
Accounting Standards (Ind AS) notified under section 133 of the companies Act, 2013 (the
Act) read with the Companies (Indian Accounting standards ) Rules, 2024 and other
relevant provisions of the Act. The Accounting Policies adopted in the preparation of the
financial statements are consistent with those followed in the previous year.
2.2 Historical Cost Convention
The financial statements have been prepared on a historical cost basis.
2.3 Rounding of amounts
The financial statements are presented in INR and all values are rounded to the nearest
rupees.
2.4. Summary of Significant Accounting Policies
The following are the significant accounting policies applied by the Company in preparing
its financial statements consistently to all the periods.
2.5. Current versus non-current classification
The Company presents assets and liabilities in the Balance Sheet based on current/non-
current classification.
An asset is current when it is:
• Expected to be realized or intended to be sold or consumed in the normal operating
cycle;
• Held primarily for the purpose of trading;
• Expected to be realized 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 current when:
• It is expected to be settled in the 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.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating cycle
Operating cycle of the Company is the time between the acquisition of assets for
processing and their realization in cash or cash equivalents. As the Company’s normal
operating cycle is not clearly identifiable, it is assumed to be twelve months.
2.6. Use of estimates and judgments
The estimates and judgments used in the preparation of the financial statements are
continuously evaluated by the Company and are based on historical experience and
various other assumptions and factors (including expectations of future events) that the
Company believes to be reasonable under the existing circumstances. Difference
between actual results and estimates are recognized in the period in which the results are
known / materialized.
The said estimates are based on the facts and events, that existed as at the reporting
date, or that occurred after that date but provide additional evidence about conditions
existing as at the reporting date.
2.7. Foreign currencies
The Company’s financial statements are presented in INR, which is also the Company’s
functional and presentation currency.
Transactions and balances
Transactions in foreign currencies are initially recorded by the Company’s functional
currency spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the
functional currency spot rates of exchange at the reporting date. Differences arising on
settlement of such transaction and on translation of monetary assets and liabilities
denominated in foreign currencies at year end exchange rate are recognized in profit or
loss.
2.8. Impairment of assets
Consideration is given at each Balance Sheet date to determine whether there is any
indication of impairment of the carrying amounts of the Company's assets. If any
indication exists, an asset’s recoverable amount is estimated. An impairment loss is
recognized wherever the carrying amount of an asset exceeds its recoverable amount.
2.9. Property, plant and equipment
Property, plant and equipment are stated at historical cost, net of accumulated
depreciation and accumulated impairment losses, if any. When significant parts of
Property, plant and equipment are required to be replaced at intervals, the Company
recognizes such parts as individual assets with specific useful lives and depreciates them
accordingly. Likewise, when a major inspection is performed, its cost is recognized in the
carrying amount of the plant and equipment as a replacement if the recognition criteria are
satisfied. All other repair and maintenance costs are recognized in profit or loss as
incurred.
Borrowing cost relating to acquisition / construction of fixed assets which take substantial
period of time to get ready for its intended use are also included to the extent they relate
to the period till such assets are ready to be put to use. Useful lives of property, Plant &
Equipments are taken as per useful lives given in Part-C of Schedule II to the Companies
Act, 2013.
Capital work-in-progress comprises cost of fixed assets that are not yet installed and
ready for their intended use at the balance sheet date.
Other Intangible Assets
Intangible assets acquired separately are measured on initial recognition at historical cost.
Intangibles assets have a finite life and are subsequently carried at cost less any
accumulated amortization and accumulated impairment losses if any.
Intangible assets with finite lives are amortized over the useful life and assessed for
impairment whenever there is an indication that the intangible asset may be impaired. The
amortization period and the amortization method for an intangible asset with a finite useful
life are reviewed at least at the end of each reporting period. Changes in the expected
useful life or the expected pattern of consumption of future economic benefits embodied in
the asset are considered to modify the amortization period or method, as appropriate, and
are treated as changes in accounting Estimates. The amortization expense on intangible
assets with finite lives is recognized in the statement of profit and loss unless such
expenditure forms part of carrying value of another asset.
Gains or losses arising from derecognition of an intangible asset are measured as the
difference between the net disposal proceeds and the carrying amount of the asset and
are recognized in the statement of profit or loss when the asset is derecognized.
Derecognition
An item of property, plant and equipment is derecognized upon disposal or when no future
economic benefits are expected from its use or disposal. Any gain or loss arising on DE
recognition of the asset (calculated as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in the Statement ofProfit and Loss when
the asset is derecognized.
Depreciation
Depreciation on property, other than Plant & Machinery is calculated on the basis of
Written down Value Method. In case of Plant & Machinery, depreciation is provided on
Straight Line Method (SLM) basis. The depreciation on Property, Plant and Equipment are
calculated as per Schedule II of Companies Act 2013.
Depreciation on property, Plant and Equipment purchased/sold during a period is
proportionately charged for the period of use.
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.
2.10 Financial assets
Initial recognition and measurement:
All regular way purchases or sales of financial assets are recognized and derecognized
on a trade date basis.
Subsequent measurement:
All recognized financial assets are subsequently measured in their entirety at either
amortized cost or fair value, depending on the classification of the financial assets.
Classification of financial assets:
Financial assets that meet the following conditions are subsequently measured at
amortized cost (except for debt instruments that are designated as at fair value through
profit or loss on initial recognition):
• The asset is held within a business model whose objective is to hold assets in
order to collect contractual cash flows; and
• The contractual terms of the instrument give rise on specified dates to cash
flows that are solely payments of principal and interest.
All other financial asset is subsequently measured at fair value.
Financial assets at cost:
Investments in subsidiaries, associates and joint ventures are accounted for at cost.
In case of investments, the Management assesses whether there is any indication of
permanent impairment in the value of investments. (Refer note 36).
Derecognition of financial assets:
The Company derecognizes a financial asset when the contractual rights to the cash flows
from the asset expire, or when it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another party.
On derecognition of a financial asset in its entirely, the difference between the asset’s
carrying amount and the sum of the consideration received / receivable and the
cumulative gain or loss that had been recognized in other comprehensive income and
accumulated in equity is recognized in profit or loss if such gain or loss would have
otherwise been recognized in profit or loss on disposal of that financial asset.
2.11. Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial
liabilities or as equity in accordance with the substance of the contractual arrangements
and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity instruments issued by the Company are
recognized at the proceeds received, net of direct issue costs.
Trade and other payables are recognized at the transaction cost, which is its fair value,
and subsequently measured at amortized cost.
Derecognition of financial liabilities
The Company derecognizes financial liabilities when, and only when, the Company’s
obligations are discharged, cancelled or have expired. An exchange between with a
lender of debt instruments with substantially different terms is accounted for as an
extinguishment of the original financial liability and the recognition of a new financial
liability. Similarly, a substantial modification of the terms of an existing financial liability is
accounted for as an extinguishment of the original financial liability and the recognition of
a new financial liability. The difference between the carrying amount of the financial
liability derecognized and the consideration paid and payable is recognized in profit or
loss.
2.12. Inventories
Inventories are valued at lower of cost or net realizable value .Cost comprises of cost of
Purchases, cost of conversion and other costs incurred in bringing the inventories to their
present location and condition. Cost is determined on First-in-First-out (FIFO) basis. Net
realizable value is the estimated selling price in the ordinary course of business, less
estimated costs of completion and the estimated costs necessary to make the sale.
2.13. Cash and cash equivalent
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and
short-term deposits with a maturity of three months or less, which are subject to an
insignificant risk of changes in value.
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