51 SIGNIFICANT ACCOUNTING POLICIES
i) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
These financial statements consisting of Balance sheet as at 31.3.2025, the Statement of Profit and Loss
including Other Comprehensive Income, Cash Flow Statement and Statement of change in equity for the year
ended 31.03.2025 and a summary of significant accounting policies, notes to the financial statements and other
explanatory information (together hereinafter referred to as '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 (the "Act"), read with Rule 3 of the
Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and other accounting
principles generally accepted in India.
The financial statements have been prepared on accrual and going concern basis. The accounting policies are
applied consistently to all the periods presented in the financial statements.
The financial statements are prepared on the historical cost basis, except for certain financial instruments which
are measured at fair value.
Functional and presentation currency
The management has determined the currency of the primary economic environment in which the company
operates i.e., functional currency, to be Indian Rupee (INR). The financial statements are presented in Indian
Rupee, which is company's functional and presentation currency.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between the market participants at the measurement date, regardless of whether that price is directly observable
or estimated using another valuation technique.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair
value measurement as a whole:
Level 1 — Quoted market prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable
ii) CURRENT VERSUS NON CURRENT CLASSIFICATION
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or intended for sale or consumption in, the company's normal operating
cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within twelve months after the reporting period; or
d) it is cash or cash equivalent unless it resticted 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.
Liabilities
A Liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company's normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within twelve months after the reporting period; or
d) the company does not have an unconditional right to defer settlement of the liability for at least twelve
months after the reporting period. Terms of liability that could, at the option of the counterparty, result in
its settlement by the issue of equity instruments do not affect its classification.
All other liabilities are classified as non current.
Deferred tax liabilities and assets are classified as non current liabilities and assets.
iii) USE OF ESTIMATES
The preparation of financial statements in conformity with Ind AS requires management to make estimates and
assumptions that affect the reported amounts of Revenue, Expenses , Assets and Liabilities and disclosure of
contingent liabilities at the end of the reporting period. Difference between the actual results and estimates are
recognized in the period in which the results are known / materialized.
iv) REVENUE
Effective April 1,2018, the Company has applied Ind AS 115: Revenue from Contracts with Customers which
establishes a comprehensive framework for determining whether, how much and when revenue is to be
recognised. Ind AS 115 replaces Ind AS 18 Revenue. The impact of the adoption of the standard on the financial
statements of the Company is insignificant.
Sale of goods
Revenue is recognised when the significant risk and rewards of the ownership have been transferred to the
buyer,recovery of consideration is probable, the associated cost and possible return of goods can be measured
reliably, there is no continuing effective control/managerial involvement in respect of the goods, and the amount
of revenue can be measured reliably. The timing of the transfer of control varies depending on the individual
terms of the sale.
Revenue from sale of goods in the course of ordinary activities is measured at the Fair Value of the consideration
received or receivable net of returns, trade discount, and taxes and duties on behalf of government. Accumulated
experience is used to estimate the provision for discounts and rebates, if any. Revenue is only recognized to the
extent that it is highly probable a significant reversal will not occur.
Other Income
a) Dividend income is recognised when right to receive dividend is established.
b) Interest and other income are recognised on accrual basis on time proportion basis and measured at
effective interest rate.
v) EXCISE DUTY:
Excise Duty to be accounted on the basis of both payments made in respect of goods cleared and also provision
made for goods lying in factory premises. Cenvat credit is accounted on accrual basis on purchase of materials.
vi) EMPLOYEES BENEFITS:
i) Retirement benefits in the form of Provident fund and Family Pension fund is a defined contribution scheme
and the contributions are charged to the statement of profit and loss account of the year when the
contributions to the respective funds are due. There are no other obligations other than the contribution
payable to the respective funds.
ii) Gratuity is a defined benefit obligation. Gratuity liability is accrued and provided for on the basis of an
actuarial valuation on the projected unit credit method made at the end of the financial year.
iii) Long term compensated balances in the form of leave encashment are provided for based on actuarial
valuation at the end of the financial year. The actuarial valuation is done as per projected unit credit method.
iv) Actuarial gains/losses arising from experience adjustments and changes in acturial assumptions are
recognised in the period in which they occur, directly in other comprehensive income.
vii) PROPERTY, PLANT AND EQUIPMENT
Recognition and measurement
The cost of an item of property, plant and equipment('PPE') is recognized as an asset if, and only if:
1. it is probable that future economic benefits associated with the item will flow to the entity; and
2. the cost of the item can be measured reliably.
Freehold/Leasehold land is carried at cost. Property, Plant and Equipments ('PPE') are measured at cost of
acquisition or construction (which includes capitalised borrowing cost) including any costs directly attributable to
bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended
by management less accumulated depreciation/amortisation (other than Freehold/Leasehold land where no
amortization is made) and cumulative impairment losses & net of recoverable taxes.
The properties/assets, in respect of which beneficial transfer has been affected, even though pending
execution/registration, are capitalised.
In case of PPE acquired out of capital grants/subsidy, the cost is reduced to the extent of capital grant/subsidy.
Subsequent Costs
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the
expenditure will flow to the Company.
An item of PPE is derecognized upon disposal or when no future economic benefits are expected to arise from
continued use of the asset. Any gain or loss arising on the disposal or retirement of property, plant and equipment
is determined as the difference between the sales proceeds and the carrying amount of the assets and is
recognized in profit or loss.
Depreciation / amortization
i) Depreciation on items of PPE is provided on straight line method in accordance with the useful life as
specified in Schedule II to the Companies Act, 2013.
ii) Depreciation on additions to assets or on sale/discard of assets is calculated pro-rata from the date of such
addition or up to the date of such sale/ discardment.
iii) No amounts are written off against Freehold/leasehold land by way of amortization.
iv) Assets residual values and useful lives are reviewed and adjusted, if appropriate, at the end of each
reporting period.
Intangible Assets
Recognition and measurement
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the
assets will flow to the Company and the cost of the asset can be measured reliably. Intangible assets are
recorded at the consideration paid for acquisition and are amortized over a period of five years from the date of
aquisition.
Subsequent Costs
Subsequent cost is capitalised only when it increases the future economic benefits emboided in the specific
asset to which it relates. All other expenditure when incurred is recognised in statement of profit and loss.
Intangible assets acquired separately are measured on initial recognition at cost. Subsequently intangible
assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.
Gains or losses arising from de-recognition 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 de-recognized.
Capital Work in Progress
The cost incurred on assets, which are not yet ready to use and capital inventory are disclosed under capital
work-in-progress.
Expenditure incurred during the period of construction including all direct expenses (including finance cost)
attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the
manner intended by management is carried forward. On completion, the costs are allocable to the respective
fixed assets. All costs attributable to respective assets are capitalized to the assets. Other expenses are
capitalized to Plant and Machinery in proportion of the value of the assets.
viii) FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity
a Financial Asset
Initial Recognition and measurement
A financial asset is recognised in the balance sheet when the Company becomes party to the contractual
provisions of the instrument. At initial recognition, the Company measures a financial asset (which are not
measured at fair value through profit or loss) at its fair value plus or minus transaction costs that are directly
attributable to the acquisition or issue of the financial asset.
Subsequent measurement
For purpose of subsequent measurement, financial assets are classified into:
1. Financial assets measured at amortised cost;
2. Financial assets measured at fair value through profit or loss (FVTPL); and
3. Financial assets measured at fair value through other comprehensive income (FVTOCI).
The Company classifies its financial assets in the above mentioned categories based on:
A. The Company's business model for managing the financial assets, and
B. The contractual cash flows characteristics of the financial asset.
A financial asset is measured at amortised cost if both of the following conditions are met:
A. The financial asset is held within a business model whose objective is to hold financial assets in order to
collect contractual cash flows and
B. The contractual terms of the financial assets give rise on specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the principal amount outstanding.
Financial assets are subsequently measured at amortised cost using the effective interest rate (EIR)
method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or
loss. The losses arising from impairment are recognised in the profit or loss.
A financial asset is measured at fair value through other comprehensive income if both of the following
conditions are met:
A. The financial asset is held within a business model whose objective is achieved by both collecting the
contractual cash flows and selling financial assets and
B. The asset's contractual cash flows represents SPPI.
A financial asset is measured at fair value through profit or loss unless it is measured at amortised cost or at
fair value through other comprehensive income. In addition, the Company may elect to designate a financial
asset, which otherwise meets amortized cost or FVTOCI criteria, as at FVtPl. However, such election is
allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as
‘accounting mismatch').
b Financial Liabilities
Initial Recognition and measurement
All financial liabilities are initially recognised when the Company becomes a party to the contractual
provisions of the instrument. All financial liabilities are initially measured at fair value minus, in the case of
financial liabilities not recorded at fair value through profit or loss, transaction costs that are attributable to the
liability.
Classification and subsequent measurement
Financial liabilities are classified as measured at amortised cost or FVTPL.
A financial liability is classified as FVTPL if it is classified as held-for-trading, or it is a derivative or it is
designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net
gains and losses, including any interest expense, are recognised in the Statement of Profit and Loss.
Financial liabilities other than classified as FVTPL, are subsequently measured at amortised cost using the
effective interest method. Interest expense are recognised in Statement of Profit and Loss. Any gain or loss
on derecognition is also recognised in the Statement of Profit and Loss.
ix) INVESTMENTS
(i) Investments in securities with intention to hold for long term, strategic investments and not held for sale are
measured at FVTOCI and is charged/added to "Other Comprehensive Income". Fair Valuation of unlisted
securities is determined based on recent available financial results and in case of listed securities the same
is determined based on the prevailing market prices.
(ii) Securities other that (i) above are measured at FVTPL and is charged/added to "Statement of Profit & Loss
account".
x) VALUATION OF INVENTORIES
Particulars /Item Type Method of Valuation
1. Raw Material, Packing Material & At Cost
Consumables (including in transit)
2. Finished Goods (including in transit) At Cost ornet realisable value, whichever is lower
3. Stock in process At Cost
4. By Products At net realisable value
5. Loose Tools At cost and charged off when discarded
6. Shares/Securities (Quoted) At fair value
The cost of inventories is determined using the FIFO and includes expenditure incurred in acquiring inventories,
production or conversion and other costs incurred in bringing them to their respective present location and
condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of
manufacturing & related establishment overheads, depreciation etc based on normal operating capacity. The
comparision of cost and realisable value is made on an item by item basis.
Net realisable value is estimated selling price in the ordinary course of business, less estimated cost of
completion and the estimated costs neccasary to make the sale.
All the spares, which are primarily meant to be used for capitalization (except consumables and maintenance
stores), are considered as part of the plant & machinery and shown accordingly.
xi) FOREIGN CURRENCY TRANSACTIONS
Transactions and balances
Foreign Currency transactions during the year are recorded at rates of exchange prevailing on the date of
transaction in the functional currency. Foreign curreny monetory assets and Liabilities are translated at using the
year-end exchange rate. Exchange gains and losses are duly recognised in the Statement of profit and loss.
All monetary assets and liabilities in foreign currency are restated at the end of the accounting period.
The Company uses derivative financial instruments, such as forward currency contracts, interest rate swaps and
forward commodity contracts to hedge its foreign currency risks, interest rate risks and commodity price risks
respectively. Such derivative financial instruments are initially recognised at Fair Value on the date on which a
derivative contract is entered into and are subsequently re-measured at Fair Value. Derivatives are carried as
financial assets when the Fair Value is positive and as financial liabilities when the Fair Value is negative.
xii) TAXATION
Income tax expense comprises of current and deferred tax. Tax is recognised in statement of profit and loss,
except to the extent that it relates to items recognised in the other comprehensive income or in the equity. In such
cases, the tax is also recognised in the other comprehensive income or in equity.
(i) Current Tax
Provision for current Income Tax is made on the basis of estimated taxable income after taking into
consideration, estimates of benefits admissible under the provisions of Income Tax, 1961.
Current tax assets and liabilities are offset only if, the company:
a) has a legally enforceable right to set off the recognised amounts; and
b) intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously
ii) Deferred Tax
The company provides for deferred tax liability (after netting off deferred tax assets), based on the tax effect
of temporary difference resulting from the recognition of items in the financial statements.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets (after,
netting of deferred tax liabilities), are generally not recognized unless there exist strong circumstances for its
adjustment/realization in near future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when
the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
iii) Minimum Alternate Tax (MAT)
MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the
company will pay normal income tax during the specified period. In the year in which MAT credit becomes
eligible to be recognised as an asset in accordance with the recommendations contained in Guidance Note
issued by the Institute of Chartered Accountants of India , the said asset is created by way of a credit to the
statement of profit and loss and shown as MAT Credit Entitlement. The company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that company will pay normal Income Tax during the specified
period.
xiii) FINANCE LEASE
Where the Company is the Lessee:
Leases of Property, Plant and Equipment where the Company, as lessee, has substantially transferred all the
risks and rewards of the ownership are classified as finance leases. Finance lease payments are capitalised at
the lower of lease's inception at the Fair Value of the lease property and the present value of minimum lease
payments. The corresponding rental obligations, if any, net of finance charges are included in borrowings or
other financial liabilities as appropiate. Each lease payment is allocated between the liability and the finance
cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic
rate of Interest on the remianing balance of liability for each period.
Depreciation on assets taken on lease is charged at the rate applicable to similar type of Property, Plant and
Equipment as per accounting policy of the company for depreciation as above. If the leased assets are
returnable to lessor on the expiry of the period, depreciation is charged over its useful life or lease period
whichever is shorter.
Lease payments are apportioned between the finance charge and the reduction of the outstanding liability in
respect of assets taken on lease. Sub-lease payments received/ recoverable are recognized as other income.
xiv) OPERATING LEASES
Where the Company is the Lessee:
Short term leases and Leases of Low-Value assets
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased
assets are classified as operating leases. Associated operating lease payments are recognized as an expense in
the Statement of Profit and Loss on a straight-line basis over the period of lease except where another
systematic basis is more representative of time pattern in which economic benefits from the leased assets are
consumed.
Other Leases:
As a lessee, the Company recognizes a Right-of-Use (ROU) Asset and a corresponding Lease Liability in the
Balance Sheet in accordance with Ind AS 116. The ROU asset is presented under non-current assets, as a
separate line item. The lease liability is split into two parts: the current portion, which is disclosed under current
liabilities, and the non-current portion, which is classified under non-current liabilities.
In the Statement of Profit and Loss, the depreciation on the ROU asset is recorded under depreciation and
amortization expense, while the interest on lease liability is shown under finance costs.
In the Statement of Cash Flows, the principal portion & interest portion of lease payments is classified under
financing activities.
Where the Company is the Lessor:
Assets subject to operating leases are included in Property, Plant and Equipments. Lease income is recognized
in the statement of profit and loss on a straight-line basis over the lease term. Costs including depreciation are
recognized as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage
costs, etc. are recognized immediately in the statement of profit and loss.
xv) EARNINGS PER SHARE :
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity
shareholders by the weighted average number of equity shares outstanding during the year. The weighted
average number of equity shares outstanding during the year is adjusted for the events of bonus issue and share
split.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity
shareholders and the weighted average number of shares outstanding during the year are adjusted for the
effects of all dilutive potential equity shares.
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