SIGNIFICANT ACCOUNTING POLICIES
A. STATEMENT OF COMPLIANCE
Standalone Financial Statements have been
prepared in accordance with the accounting
principles generally accepted in India including
Indian Accounting Standards (Ind AS) prescribed
under the section 133 of the Companies Act,
2013 read with rule 3 of the Companies (Indian
Accounting Standards) Rules, 2015 (as amended
from time to time) and presentation requirement
of Division II of Schedule III of the Companies Act
2013, (Ind AS Compliant Schedule III), as applicable
to standalone financial statement.
Accordingly, the Company has prepared these
Standalone Financial Statements which comprise
the Balance Sheet as at 31 March, 2023, the
Statement of Profit and Loss, the Statements of
Cash Flows and the Statement of Changes in Equity
for the year ended 31 March, 2023, and accounting
policies and other explanatory information (together
hereinafter referred to as "Standalone Financial
Statements" or "financial statements").
These financial statements have been approved
by the Board of Directors in the meeting held on
15th May 2023.
B. BASIS OF PREPARATION AND PRESENTATION OF
FINANCIAL STATEMENTS
These financial statements have been prepared in
accordance with the accounting policies, set out
below and were consistently applied to all periods
presented unless otherwise stated.
The financial statements have been prepared
on a going concern basis using historical cost
convention and on an accrual method of accounting,
except for certain financial assets and liabilities
which are measured at fair value as explained in
the accounting policies below.
Company's financial statements are presented
in Indian Rupees ('), which is also its functional
currency.
C. PROPERTY, PLANT AND EQUIPMENT
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.
Expenses incurred relating to project, net of income
earned during the project development stage prior
to its intended use, are considered as pre - operative
expenses and disclosed under Capital Work - in -
Progress.
The gain or loss arising on disposal of an item of
property, plant and equipment is determined as the
difference between sale proceeds and carrying value
of such item, and is recognised in the statement of
profit and loss.
Depreciation on property, plant and equipment is
provided using straight line method based on useful
life of the assets as prescribed in Schedule II to the
Companies Act, 2013
D. INVENTORY
Inventories are stated at the lower of cost and net
realizable value except in case of waste and scrap
which are valued at net realizable value.
Cost of raw material includes cost of purchase and
other costs incurred in bringing the inventories
to their present location and condition. Cost of
finished goods and work in progress include cost
of direct materials and labour and a proportion of
manufacturing overheads based on the normal
operating capacity but excluding borrowing costs.
E. REVENUE RECOGNITION
The Company recognises revenue when control
over the promised goods or services is transferred
to the customer at an amount that reflects the
consideration to which the Company expects to be
entitled in exchange for those goods or services.
Revenue is adjusted for variable consideration
such as discounts, rebates, refunds, credits, price
concessions, incentives, or other similar items
in a contract when they are highly probable to
be provided. The amount of revenue excludes
any amount collected on behalf of third parties.
In contracts where freight is arranged by the
Company and recovered from the customers,
the same is treated as a separate performance
obligation and revenue is recognised when such
freight services are rendered.
Interest income from a financial asset is recognised
when it is probable that the economic benefits will
flow to the Company and the amount of income can
be measured reliably. Interest income is accrued on
a time basis, using effective interest rate.
The Company does not expect to have any contracts
where the period between the transfer of the
promised goods or services to the customer and
payment by the customer exceeds one year. As a
consequence, the Company does not adjust any of
the transaction prices for the time value of money.
F. EMPLOYEES' BENEFITS
Employee benefits include provident fund, employee
state insurance scheme, gratuity, compensated
absences and performance incentives.
Retirement benefit costs and termination benefits
Payments to defined contribution retirement
benefit plans are recognised as an expense when
employees have rendered service entitling them to
the contributions.
A liability for a termination benefit is recognised at
the earlier of when the entity can no longer withdraw
the offer of the termination benefit and when the
entity recognises any related restructuring costs.
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing
to employees in respect of wages and salaries
and annual leave in the year the related service
is rendered at the undiscounted amount of the
benefits expected to be paid in exchange for that
service
Liabilities recognised in respect of short-term
employee benefits are measured at the
undiscounted amount of the benefits expected to
be paid in exchange for the related service
Liabilities recognised in respect of other long-term
employee benefits are measured at the present value
of the estimated future cash outflows expected to
be made by the Company in respect of services
provided by employees up to the reporting date.
The cost of the defined benefit plans and the present
value of the defined benefit obligation (‘DBO') are
based on actuarial valuation using the projected
unit credit method. 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.
G. BORROWING COSTS
Borrowing costs that are attributable to the
acquisition or construction of qualifying assets
are capitalized as part of the cost of such assets.
A qualifying asset is one that necessarily takes
substantial period of time to get ready for its
intended use. All other borrowing costs are charged
to Profit and Loss account.
H. FOREIGN CURRENCY TRANSACTIONS
The functional currency of the Company is
determined on the basis of the primary economic
environment in which it operates. The functional
currency of the Company is Indian Rupee (').
The transactions in currencies other than the
entity's functional currency (foreign currencies)
are recognised at the rates of exchange prevailing
at the dates of the transactions. At the end of each
reporting period, monetary items denominated in
foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items
carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing
at the date when the fair value was determined.
Non-monetary items that are measured in terms
of historical cost in a foreign currency are not
retranslated.
Exchange differences on monetary items are
recognised in Statement of Profit and Loss in the
period in which they arise.
I. FINANCIAL INSTRUMENTS
1. Financial Assets
I. Initial recognition and measurement
All financial assets are initially recognized
at fair value. Transaction costs that are
directly attributable to the acquisition
of financial assets, which are not at fair
value are adjusted through profit or loss
on initial recognition. Purchase and sale
of financial assets are recognised using
trade date accounting.
II. Subsequent measurement
i) Financial assets carried at
amortised cost (AC)
A financial asset is measured at
amortised cost if it is held within a
business model whose objective is
to hold the asset in order to collect
contractual cash flows and the
contractual terms of the financial
asset give rise on specified dates to
cash flows that are solely payments
of principal and interest on the
principal amount outstanding.
ii) Financial assets at fair value
through other comprehensive
income (FVTOCI)
A financial asset is measured at
FVTOCI if it is held within a business
model whose objective is achieved
by both collecting contractual cash
flows and selling financial assets
and the contractual terms of the
financial asset give rise on specified
dates to cash flows that are solely
payments of principal and interest
on the principal amount outstanding.
iii) Financial assets at fair value through
profit or loss (FVTPL)
A financial asset which is not
classified in any of the above
categories are measured at FVTPL.
III. Investment in subsidiaries
The Company has accounted for its
investments in subsidiaries at Fair Value.
IV. Impairment of financial assets
The Company assesses on a forward
looking basis the expected credit
losses associated with its assets
carried at amortised cost and FVOCI
debt instruments. The impairment
methodology applied depends on whether
there has been a significant increase in
credit risk.
2. Financial liabilities
I. Initial recognition and measurement
All financial liabilities are recognized at fair
value and in case of loans, net of directly
attributable cost. Fees of recurring nature
are directly recognised in the Statement
of Profit and Loss as finance cost.
II. Subsequent measurement
Financial liabilities are carried at amortized
cost using the effective interest method.
For trade and other payables maturing
within one year from the balance sheet
date, the carrying amounts approximate
fair value due to the short maturity of
these instruments.
3. Derivative financial instruments
The Company uses various derivative financial
instruments such as interest rate swaps,
currency swaps and forwards contracts to
mitigate the risk of changes in interest rates,
exchange rates. Such derivative financial
instruments are initially recognized at fair
value on the date on which a derivative contract
is entered into and are also subsequently
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.
Any gains or losses arising from changes in
the fair value of derivatives are taken directly
to Statement of Profit and Loss.
4. Derecognition of financial instruments
The Company derecognizes a financial asset
when the contractual rights to the cash flows
from the financial asset expire or it transfers
the financial asset and the transfer qualifies
for derecognition under Ind AS 109. A financial
liability (or a part of a financial liability) is
derecognized from the Company's Balance
Sheet when the obligation specified in the
contract is discharged or cancelled or expires.
J. LITIGATION
The Company is subject to legal proceedings and
claims which have arisen in the ordinary course of
business. The Company's management does not
reasonably expect that these legal actions when
ultimately concluded and determined will have a
material and adverse affect on the Company's result
of operations or financial condition.
K. TAXATION
Income tax expense represents the sum of the tax
currently payable and deferred tax.
Current tax
Current tax is the amount of tax payable based
on the taxable profit for the year as determined in
accordance with the provisions of section 115BAA
of the Income Tax Act, 1961.
Deferred tax
Deferred tax is recognized on temporary differences
between the carrying amounts of assets and
liabilities in the financial statements and the
corresponding tax bases used in the computation
of taxable profit.
The carrying amount of deferred tax assets is
reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at
the tax rates that are expected to apply in the period
in which the liability is settled or the asset realised,
based on tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the
reporting period.
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.
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