57.B Material Accounting Policies.
1. Basis of Preparation:
The financial statements have been prepared in accordance with Section 133 of Companies Act 2013, i.e., Indian Accounting
Standards ('Ind AS') notified under Companies (Indian Accounting Standards) Rules 2015. The Ind AS financial statements
are prepared on historical cost convention, except in case of certain financial instruments which are recognized at fair value
at the end of the reporting period as rendered in the Accounting Policy No. 3 and on an accrual basis as a going concern.
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 standalone
financial statements is determined on such a basis, except for share-based payment transactions that are within the scope
of Ind AS 102, leasing transactions that are within the scope of Ind AS 116, and measurements that have some similarities
to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the
degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and
other criteria set out in the Part I of Schedule III to the Companies Act, 2013. Based on the nature of products and the
time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has
ascertained its operating cycle as 12 months for the purpose of current - non-current classification of assets and liabilities.
Recent accounting pronouncements with respect to Companies Act, 2013
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. For the year ended March 31, 2025, MCA has notified
Ind AS - 117 Insurance Contracts and amendments to Ind AS 116 - Leases, relating to sale and leaseback transactions,
applicable to the Company w.e.f. April 1, 2024. The Company has reviewed the new pronouncements and based on its
evaluation has determined that it does not have any significant impact in its financial statements.
On May 9, 2025, MCA notifies the amendments to Ind AS 21 - Effects of Changes in Foreign Exchange Rates. These
amendments aim to provide clearer guidance on assessing currency exchangeability and estimating exchange rates when
currencies are not readily exchangeable. The amendments are effective for annual periods beginning on or after April 1,
2025. The Company is currently assessing the probable impact of these amendments on its financial statements.
2. Use of Estimates
The preparation of the Ind AS financial statements in conformity with the generally accepted accounting principles in India
requires management to make estimates and assumptions that affect the reported amount of assets and liabilities as of
the Balance Sheet date, reported amount of revenue and expenses for the year and disclosure of contingent liabilities and
contingent assets as of the date of Balance Sheet. The estimates and assumptions used in these Ind AS financial statements
are based on management's evaluation of the relevant facts and circumstances as of the date of the Ind AS financial
statements. The actual amounts may differ from the estimates used in the preparation of the Ind AS financial statements
and the difference between actual results and the estimates are recognised in the period in which the results are known/
materialize.
3. Fair Value Measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date. 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. The fair value measurement is based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing
the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset
in its highest and best use. The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the
use of unobservable inputs. Information about the valuation techniques and inputs used in determining the fair value of
various assets and liabilities are disclosed in Note 39.
a. Non-derivative financial instruments
(i) Financial assets carried at amortised cost
A financial asset is subsequently 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
A financial asset is subsequently measured at fair value through other comprehensive income 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. The Company has made an irrevocable election for
its investments which are classified as equity instruments to present the subsequent changes in fair value in other
comprehensive income based on its business model. Further, in cases where the Company has made an irrevocable
election based on its business model, for its investments which are classified as equity instruments, the subsequent
changes in fair value are recognized in other comprehensive income.
(iii) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair valued through profit or
loss.
(iv) Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest where the fair value differs
from the Transaction Price. Where the fair value does not differ, materially, from Transaction Price, the financial
liabilities are stated at transaction price only.
b. Derivative financial instruments
The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and
foreign exchange rate risks, including foreign exchange forward contracts and cross currency interest rate swaps.
Further details of derivative financial instruments are disclosed in Note No 39 Derivatives are initially recognised at
fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value
at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the
derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or
loss depends on the nature of the hedging relationship and the nature of the hedged item. The counterparty for these
contracts is generally a bank.
Cash flow hedge
The Company designates certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange
exposure on future foreign currency commitments.
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the
derivative is recognized in other comprehensive income and accumulated in the cash flow hedging reserve. Any ineffective
portion of changes in the fair value of the derivative is recognized immediately in the net profit in the statement of profit and loss.
If the hedging instrument no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively.
If the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument
recognized in cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the
forecasted transaction occurs. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred
to the net profit in the statement of profit and loss upon the occurrence of the related forecasted transaction. If the forecasted
transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified to net profit
in the statement of profit and loss.
Effective Interest Method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income
over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all
fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or
discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount
on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.
Interest income is recognised in profit or loss and is included in the "Other Income" line item.
4. Property, Plant and Equipment
• Property, Plant and Equipment are stated at acquisition cost includes related duties, freight etc., and interest on borrowed
funds if any directly attributable to acquisition/construction of qualifying fixed assets and is net of duty/ tax credit availed
• Subsequent expenditures related to an item of Property, Plant and Equipment are added to its book value only if they
increase the future benefits from the existing asset beyond its previously assessed standard of performance. In all such
cases, the useful life of assets subsequently added to the parent asset are brought at par and depreciated in line with
parent asset.
• Losses arising from the retirement of, and gains or losses arising from disposal of Property, Plant and Equipment
which are carried at cost are recognised in the Statement of Profit and Loss.
• Depreciation is provided straight line method, based on useful lives of assets in accordance with Schedule II of
the Companies Act, 2013. In respect of certain machines extended useful life of 30 years is adopted for claiming
depreciation under Schedule II to Companies Act, 2013 based on technical assessment obtained by the Company.
• Application software, Die and Core and New Product Development are amortized over a period of 3 years. Technical
Knowhow is amortized over a period of 5 years.
• Residual value of 5% is retained in books for all assets other than the assets whose useful life has elapsed as on
01.04.2014 or those assets whose book value has already been reduced below 5% of acquisition cost.
5. Intangibles
The Company has elected to continue with the carrying value of all of its intangible assets 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.
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.
De-recognition
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal.
Gains or losses arising from de-recognition of an intangible asset, measured as the difference between the net disposal
proceeds and the carrying amount of the asset, is recognised in profit or loss when the asset is derecognised.
6. Impairment
All assets other than inventories, investments and deferred tax asset, are reviewed for impairment, wherever events or
changes in circumstances indicate that the carrying amount of those assets may not be fully recoverable, in such cases the
carrying amount of such assets is reduced to its estimated recoverable amount and the amount of such impairment loss is
charged to the Statement of Profit and Loss.
The company would make specific provision against individual balances with reference to the recoverable amount. Such
provision/allowance for credit losses is based on historical experience adjusted to reflect current and estimated future
economic conditions.
If at the Balance Sheet date there is an indication that the previously assessed impairment loss no longer exists, then such
loss is reversed and the asset is restated to that effect.
When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased
to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
7. Investments
All Investments excluding investment in joint venture are carried at fair value. The changes in the fair value of Investments,
which at the inception, have been designated to be held for a long term capital appreciation, are considered through Other
Comprehensive Income. All other investments are valued at fair value and the gains or losses being recognised in Statement
of Profit and Loss.
Impairment of Investments
The Company recognises an impairment loss in respect of its investments if there is lower business performance, economic
slowdown and increased competition. The recoverable amount of the investments is being determined based on value
in use. In assessing value in use, the estimated future cash flows were discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the investee for
which the estimates of future cash flows have not been adjusted.
8. Inventories
• Inventories are valued at cost (as detailed below) or net realisable value, whichever is low. Costs includes cost of
purchase (excluding credit availed under GST scheme), cost of conversion and other costs incurred in bringing the
inventories to their present location and condition.
(b) Provision for Obsolescence
The Company has a policy of providing for obsolescence in inventory. The policy has specific timelines beyond which
the inventory is analysed for its usefulness and any obsolete inventory is provided for.
(c) Customs Duty
Value of stocks at bonded warehouse, includes applicable Customs duty.
9. Foreign currency translation
Initial Recognition: On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency
amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
Subsequent Recognition: As at the reporting date, non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate at the date of the transaction. All monetary assets
and liabilities in foreign currency are restated at the end of the accounting period. Exchange differences on restatement of
all monetary items are recognised in the Statement of Profit and Loss.
10. Revenue recognition
Ind AS 115 Revenue from Contracts with Customers
Ind AS 115 establishes a five-step model to account for revenue arising from contracts with customers and requires that
revenue be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for
transferring goods or services to a customer. Ind AS 115 requires entities to exercise judgement, taking into consideration
all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. It
also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a
contract. The company has adopted the modified retrospective method of applying Ind AS 115 Revenue from Contract with
customers in its initial year of application.
Revenue is measured at the fair value of the consideration received or receivable.
Sale of goods
Revenue from sale of products is recognised at the point in time when control of the asset is transferred to the customer,
generally when the product is despatched to the customer or appropriated in accordance with the terms of Sale and when
the Collectability of the resulting receivable is reasonably assured. With respect to revenue from sale of Rings, Pins and
Orbital cold formed transmission products is based on the terms of the tender and certain export / domestic customers
which are on credit basis. The average credit period is in the range of 21 to 120 days.
The Company receives short-term advances from its customers. Using the practical expedient in Ind AS 115, the Company
does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at
contract inception, that the period between the transfer of the promised good or service to the customer and when the
customer pays for that good or service will be one year or less. Thus, there is no significant financing component.
Other Revenues
Other operating revenues comprise of income from ancillary activities (eg: scrap sales) incidental to the operations of the
Company and is recognised when the right to receive the income is established as per the terms of the contract.
Service income is recognised as and when services are rendered as per the terms of the contract.
Revenue in respect of export benefits is recognised when the certainty of realisation of the benefit is established.
Revenue in excess of invoicing (referred to also as unbilled revenue) are classified as Contract Assets while invoicing in
excess of revenues (referred to also as unearned revenue) are classified as Contract liabilities.
11. Other income
Interest: Interest income is calculated on effective interest rate, but recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
Dividend: Dividend income is recognised when the right to receive dividend is established.
Insurance Claim: Insurance Claims are recognised when the claims are assessed to be receivable.
Rental Income: Rental income from operating leases is accrued based on the terms of the relevant lease.
12. Employee benefits
(I) Post-Employment Benefits
(a) Defined Contribution Plans:
(i) Contribution to Provident Fund
The Company makes monthly Provident Fund contributions at specified percentage of specified salary
in accordance with the provisions of Employees Provident Funds and Miscellaneous Provisions Act 1952
which is charged to the Statement of Profit and Loss.
ii) Contribution to Superannuation Fund
The Company makes annual Superannuation Fund contributions to defined contribution plan, administered
by Life Insurance Corporation of India, for qualifying employees. Under the scheme, the Company is
required to contribute a specified percentage of specified salary to fund the benefits. The contribution is
charged to the Statement of Profit and Loss.
(b) Defined Benefit Plans:
(i) Gratuity
In accordance with The Payment of Gratuity Act 1972, the Company provides for gratuity, a defined benefit
retirement plan covering eligible employees. The plan provides for a payment to vested employees at
retirement, death while in employment or on termination of employment, an amount equivalent to 15
days' salary payable for each year of completed service, subject to maximum amount as may be prescribed.
Vesting occurs upon completion of five years of service, except in case of death while in employment in
which case the legal heirs would receive the gratuity.
The cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial
valuation being carried out at each balance sheet date. The retirement benefit obligation recognized as
expenditure represents the present value of the defined benefit obligation as reduced by the fair value of
scheme assets. The Company makes contribution to Life Insurance Corporation of India to administer the
fund. The changes in the actuarial assumptions are accounted through Other Comprehensive Income.
(ii) Compensated absences:
The Company provides for the encashment of leave or leave with pay subject to the company policy
(The employees are paid in excess of the accumulated leave for the year). The employees are entitled to
accumulate leave subject to certain limits, for future encashment. The liability is provided based on the
number of days of unutilized leave at each balance sheet date on the basis of an independent actuarial
valuation.
(iii) Short Term employee benefits
The undiscounted amount of short-term employee benefits, expected to be paid in exchange for the services
rendered by employees is recognized during the period when the employee renders the services.
13. Current and deferred tax
Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net profit or
loss for the period. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the
taxation laws prevailing in the respective jurisdictions.
Deferred tax is recognised for all the temporary differences, subject to the consideration of prudence in respect of deferred
tax assets. Deferred tax assets are recognised and carried forward only to the extent that there is a convincing evidence that
sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where
the Company has unabsorbed depreciation or carry forward losses or MAT Credit, deferred tax assets are recognised only
if there is a reasonable certainty supported by convincing evidence that they can be realised against future taxable profits.
Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively
enacted by the Balance Sheet date. At each Balance Sheet date, the Company re-assesses unrecognised deferred tax assets,
if any.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised
amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax
liabilities are offset when there is a legally enforceable right to set off assets against liabilities representing current tax
and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing
taxation laws.
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