2. MATERIAL ACCOUNTING POLICIES
(i) Statement of Compliance
These standalone financial statements of the
Company have been prepared in accordance
with Indian Accounting Standard (Ind AS) under
the historical cost convention on the accrual
basis except for certain financial instruments
which are measured at fair values, the provisions
of the Companies Act, 2013 ('the Act'). The Ind
AS are prescribed under Section 133 of the Act
read with the Companies (Indian Accounting
Standards) Rules, 2015 and relevant amendment
rules issued thereafter.
The Company has consistently applied
accounting policies to all years. Comparative
Financial information has been regrouped,
wherever necessary, to correspond to the
figures of the current year. The impact of such
reclassifications/ regroupings is not material to
these standalone financial statements.
(ii) Basis of preparation and presentation
The standalone financial statements have been
prepared on accrual basis under the historical
cost convention except for the certain financial
instruments that are measured at fair values as
required by relevant Ind AS:
a) Certain financial assets and liabilities
(including derivative instruments)
b) Defined employee benefit plans - plan assets
are measured at fair value
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.
The Standalone financial statements of Kalyan
Jewellers India Limited for the year ended
31 March 2025 were approved and authorised for
issue by the board of directors on 8 May 2025.
The revision to financial statements is permitted
by Board of Directors after obtaining necessary
approvals or at the instance of regulatory
authorities as per provisions of the Act.
(iii) Use of estimates and judgement
The preparation of standalone financial
statements in conformity with Ind AS requires
management to make judgements, estimates
and assumptions that affect the application of
accounting policies and the reported amount
of assets and liabilities, revenues and expenses
and disclosure of contingent liabilities. Such
estimates and assumptions are based on
management's evaluation of relevant facts and
circumstances as on the date of standalone
financial statements. The actual outcome may
diverge from these estimates.
The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the
period in which the estimate is revised if the
revision affects only that period, or in the period
of the revision and future periods if the revision
affects both current and future periods.
a) Useful lives of property, plant and equipment:
The Company reviews the useful life of
property, plant and equipment at the end of
each reporting period. This re-assessment
may result in change in depreciation expense
in future periods.
b) Fair value of financial assets and liabilities
and investments:
The Company measures certain financial
assets and liabilities on fair value basis at
each balance sheet date or at the time they
are assessed for impairment. Fair value
measurement that are based on significant
unobservable inputs (Level 3) requires
estimates of operating margin, discount
rate, future growth rate, terminal values,
etc. based on management's best estimate
about future developments.
c) Recoverability of receivables
At each balance sheet date, based on
historical default rates observed
over expected life, the management
assesses the expected credit loss on
outstanding receivables
d) Defined benefit obligation (DBO)
Management's estimate of the DBO is based
on several critical underlying assumptions
such as standard rates of inflation, medical
cost trends, mortality, discount rate and
anticipation of future salary increases.
Variation in these assumptions may
significantly impact the DBO amount and
the annual defined benefit expenses.
e) Evaluation of indicators for impairment
of assets
Management assesses at each reporting
date whether there is any indicators of
impairment of investments. The evaluation
requires assessment of several external
and internal factors which could result in
deterioration of recoverable amount of the
investments. Estimation uncertainty relates
to assumptions about future operating
results and the determination of a suitable
discount rate etc.
f) Provisions and contingencies
A provision is recognised when the
Company has a present obligation as a
result of past events and it is probable that
an outflow of resources will be required to
settle the obligation, in respect of which a
reliable estimate can be made. The amount
recognised as a provision is the best estimate
of the consideration required to settle the
present obligation at the end of the reporting
period, taking into account the risks and
uncertainties surrounding the obligation.
Contingent liabilities are not recognised but
are disclosed in notes to accounts.
g) Classification of leases
The Company enters into leasing
arrangements for immovable property. The
Company has determined, based on an
evaluation of the terms and conditions of the
arrangements, such as the lease term not
constituting a major part of the economic
life of the land and premises and the fair
value of the asset, that it does not retain
significant risks and rewards of ownership of
the land and the premises and accounts for
the contracts as operating leases.
h) Recognition of deferred tax assets
The extent to which deferred tax assets can
be recognised is based on an assessment
of the probability that future taxable
income will be available against which the
deductible temporary differences and tax
loss carry forward can be utilised. In addition,
significant judgement is required in assessing
the impact of any legal or economic limits or
uncertainties in various tax jurisdictions.
(iv) Functional and presentation currency
Items included in the standalone financial
statements of the Company are measured
using the currency of the primary economic
environment in which the Company operates
(i.e. the “functional currency”). The standalone
financial statements are presented in Indian
Rupee, the national currency of India, which is
the functional currency of the Company.
(v) Revenue Recognition
Revenue is recognised upon transfer of control
of promised goods or services to customers in
an amount that reflects the consideration the
Company expects to receive in exchange for
those goods or services.
a) Sale of goods: Revenue from the sale of
products is recognised at the point in time
when control is transferred to the customer.
Revenue is measured based on the
transaction price, which is the consideration,
net of customer incentives, discounts,
variable considerations, payments made
to customers, other similar charges, as
specified in the contract with the customer.
Additionally, revenue excludes taxes collected
from customers, which are subsequently
remitted to governmental authorities.
b) Interest income: 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, by reference to the
principal outstanding and at the effective
interest rate applicable, which is the rate
that exactly discounts estimated future cash
receipts through the expected life of the
financial asset of that asset's net carrying
amount on initial recognition.
Contract assets and contract liabilities
The Company makes use of a simplified
approach in accounting for trade receivables
as well as contract assets and records the
loss allowance as lifetime expected credit
losses. These are the expected shortfalls
in contractual cash flows, considering the
potential for default at any point during the
life of the financial instrument. In calculating,
the Company uses its historical experience
and external indicators.
The Company recognises contract liabilities
for consideration received in respect of
unsatisfied performance obligations and
reports these amounts as other liabilities in
its Standalone balance sheet. Similarly, if the
Company satisfies a performance obligation
before it receives the consideration, the
Company recognises either a contract asset
or a receivable in its Standalone balance
sheet, depending on whether something
other than the passage of time is required
before the consideration is due.
(vi) Leases
The Company assesses at contract inception
whether a contract is, or contains, a lease i.e., if
the contract conveys the right to control the use
of an identified asset for a period in exchange
of consideration.
Company as a lessee
The Company's lease asset classes consist
of leases for buildings. The Company, at the
inception of a contract, assesses whether the
contract is a lease or not lease. A contract is, or
contains, a lease if the contract conveys the right
to control the use of an identified asset for a time
in exchange for a consideration.
The Company recognises a right-of-use asset
and a lease liability at the lease commencement
date. The right-of-use asset is initially measured
at cost, which comprises the initial amount of the
lease liability adjusted for any lease payments
made at or before the commencement date, plus
any initial direct costs incurred and an estimate
of costs to dismantle and remove the underlying
asset or to restore the underlying asset or
the site on which it is located, less any lease
incentives received.
The right-of-use asset is subsequently
depreciated using the straight-line method
from the commencement date to the end of the
lease term.
The lease liability is initially measured at the
present value of the lease payments that are not
paid at the commencement date, discounted
using the Company's incremental borrowing rate.
It is remeasured when there is a change in future
lease payments arising from a change in an index
or rate, if there is a change in the Company's
estimate of the amount expected to be payable
under a residual value guarantee, or if the
Company changes its assessment of whether it
will exercise a purchase, extension or termination
option. When the lease liability is remeasured in
this way, a corresponding adjustment is made to
the carrying amount of the right-of-use asset, or
is recorded in profit or loss if the carrying amount
of the right-of-use asset has been reduced
to zero.
The Company has elected not to recognise right-
of-use assets and lease liabilities for short-term
leases that have a lease term of 12 months or less
and leases of low-value assets. The Company
recognises the lease payments associated with
these leases as an expense over the lease term
on a straight line basis.
Company as a lessor
In case of sub-leasing, where the Company,
being the original lessee and intermediate lessor,
grants a right to use the underlying asset to a
third party, the head lease is recognised as lease
liability and sub-lease is recognised as lease
receivables in the Balance Sheet of the Company.
Interest expense is charged on the lease liability
and interest income is recognised on lease
receivables in the statement of profit or loss.
(vii) Foreign currencies
Transactions in currencies other than the entity's
functional currency (foreign currencies) are
recognised at the rates of exchange prevailing at
the date of the transaction. 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
that are measured in terms of historical cost in a
foreign currency are not retranslated.
Exchange differences on monetary items are
recognised in the statement of profit and loss
in the period in which they arise except for
exchange differences on transactions designated
as fair value hedge, if any.
(viii) Borrowing costs
Borrowing costs directly attributable to the
acquisition, construction or production of
qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for
their intended use or sale are added to the cost
of those assets, until such time the assets are
substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit
or loss in the period in which they are incurred.
(ix) Employee benefits
The Company participates in various employee
benefit plans. Post-employment benefits are
classified as either defined contribution plans
or defined benefit plans. Under a defined
contribution plan, the Company's only obligation
is to pay a fixed amount with no obligation to pay
further contributions if the fund does not hold
sufficient assets to pay all employee benefits.
The related actuarial and investment risks fall
on the employee. The expenditure for defined
contribution plans is recognized as expense
during the period when the employee provides
service. Under a defined benefit plan, it is the
Company's obligation to provide agreed benefits
to the employees. The related actuarial risks
fall on the Company. The present value of the
defined benefit obligations is calculated using
the projected unit credit method.
Short-term employee benefits
All short-term employee benefits such as salaries,
wages, bonus, and other benefits which fall within
12 months of the period in which the employee
renders related services which entitles them
to avail such benefits and non-accumulating
compensated absences are recognised on an
undiscounted basis and charged to the statement
of profit and loss.
A liability is recognised for benefits accruing to
employees in respect of wages and salaries in
the period the related service is rendered at the
undiscounted amount of the benefits expected
to be paid in exchange for that service.
Defined contribution plan
The Company's contribution to provident fund
and employee state insurance scheme are
considered as defined contribution plans and
are charged as an expense based on the amount
of contribution required to be made and when
services are rendered by the employees.
Defined benefit plan
In accordance with the Payment of Gratuity Act,
1972, the Company provides for a lump sum
payment to eligible employees, at retirement or
termination of employment based on the last
drawn salary and years of employment with
the Company. The gratuity fund is unfunded.
The Company's obligation in respect of the
gratuity plan, which is a defined benefit plan, is
provided for based on actuarial valuation using
the projected unit credit method. Actuarial gains
or losses are recognized in other comprehensive
income. Further, the profit or loss does not
include an expected return on plan assets.
Instead net interest recognized in profit or loss is
calculated by applying the discount rate used to
measure the defined benefit obligation to the net
defined benefit liability or asset. The actual return
on the plan assets above or below the discount
rate is recognized as part of re-measurement
of net defined liability or asset through other
comprehensive income.
Remeasurement, comprising actuarial gains and
losses is reflected immediately in the balance
sheet with charge or credit recognised in other
comprehensive income in the period in which
they occur. Remeasurement recognised in other
comprehensive income is reflected in retained
earnings and is not reclassified to the statement
of profit and loss.
(x) Taxation
I ncome tax expense represents the sum of the
tax currently payable and deferred tax.
a) Current tax: Current tax is the amount of
tax payable on the taxable income for the
year as determined in accordance with the
applicable tax rates and the provisions of the
Income Tax Act, 1961 and other applicable
tax laws.
b) Deferred tax: Deferred tax is recognized
using the balance sheet approach. Deferred
tax assets and liabilities are recognised
on temporary differences between the
carrying amounts of assets and liabilities
in the standalone financial statements and
the corresponding tax bases used in the
computation of taxable profit. Deferred tax
liabilities are generally recognised for all
taxable temporary differences.
Deferred tax assets are generally recognised
for all deductible temporary differences to
the extent that it is probable that taxable
profits will be available against which those
deductible temporary differences can
be utilised.
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 utilised.
Deferred tax liabilities and assets 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.
The measurement of deferred tax liabilities
and assets reflects the tax consequences
that would follow from the manner in which
the Company expects, at the end of the
reporting period, to recover or settle the
carrying amount of its assets and liabilities.
(xi) Property, Plant and Equipment
Land and buildings held for use in the production or
supply of goods or services, or for administrative
purposes, are stated at cost less accumulated
depreciation and accumulated impairment
losses. Freehold land is not depreciated.
Property, plant and equipment are carried
at cost less accumulated depreciation and
impairment losses, if any. The cost of property,
plant and equipment comprises its purchase
price/acquisition cost, net of any trade discounts
and rebates, any import duties and other taxes
(other than those subsequently recoverable from
the tax authorities), any directly attributable
expenditure on making the asset ready for its
intended use, other incidental expenses and
interest on borrowings attributable to acquisition
of qualifying property, plant and equipment up
to the date the asset is ready for its intended use.
Machinery spares which can be used only in
connection with an item of Property, plant and
equipment and whose use is expected to be
irregular are capitalised and depreciated over
the useful life of the principal item of the relevant
assets. Subsequent expenditure on property,
plant and equipment after its purchase/
completion is capitalised only if such expenditure
results in an increase in the future benefits
from such asset beyond its previously assessed
standard of performance.
Depreciation on Property, plant and equipment
(other than freehold land) has been provided
on the straightline method as per the useful
life prescribed in Schedule II to the Companies
Act, 2013 except in respect of Aeroplanes/
Helicopters (30 years with an estimated residual
value of 5%), in whose case the life of the assets
has been assessed as under based on technical
advice, taking into account the nature of the
asset, the estimated usage of the asset, the
operating conditions of the asset, past history of
replacement, anticipated technological changes,
manufacturers warranties and maintenance
support, etc.
The estimated useful life of the tangible assets
and the useful life are reviewed at the end of
each financial year and the depreciation period is
revised to reflect the changed pattern, if any.
An item of property, plant and equipment is
derecognised 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 an item
of property, plant and equipment is determined
as the difference between the sales proceeds
and the carrying amount of the asset and is
recognised in the statement of profit and loss.
(xii) Investment Property
Investment properties are properties held to earn
rentals and/or for capital appreciation (including
property under construction for such purposes).
Investment properties are measured initially at
cost, including transaction costs. Subsequent
to initial recognition, investment properties
are measured in accordance with Ind AS 16's
requirements for cost model.
An investment property is derecognised upon
disposal or when the investment property is
permanently withdrawn from use and no future
economic benefits are expected from the disposal.
Any gain or loss arising on derecognition of the
property (calculated as the difference between
the net disposal proceeds and the carrying
amount of the asset) is included in profit or loss in
the period in which the property is derecognised.
(xiii) Intangible Assets
Intangible assets are stated at cost less
accumulated amortisation and impairment.
Intangible assets are amortised over their
respective estimated useful lives on a straightline
basis, from the date that they are available for
use. The estimated useful life of an identifiable
intangible asset is based on a number of
factors including the effects of obsolescence,
demand, competition and other economic
factors (such as the stability of the industry and
known technological advances) and the level of
maintenance expenditures required to obtain the
expected future cash flows from the asset.
Estimated useful lives of the intangible assets
is 5 years. The estimated useful life of the
intangible assets and the amortisation period are
reviewed at the end of each financial year and
the amortisation period is revised to reflect the
changed pattern, if any.
(xiv) Impairment of tangible and intangible assets
At the end of each reporting period, the Company
reviews the carrying amounts of its tangible and
intangible assets to determine whether there is
any indication that those assets have suffered an
impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in
order to determine the extent of the impairment
loss (if any).
Recoverable amount is the higher of fair value less
costs of disposal and value in use. In assessing
value in use, the estimated future cash flows are
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 asset for which the estimates
of future cash flows have not been adjusted.
If the recoverable amount of an asset is
estimated to be less than its carrying amount,
the carrying amount of the asset is reduced to
its recoverable amount. An impairment loss is
recognised immediately in profit or loss. When
an impairment loss subsequently reverses, the
carrying amount of the asset 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 in prior years. A reversal
of an impairment loss is recognised immediately
in profit or loss.
(xv) Inventories
Inventories [other than quantities of gold for
which the price is yet to be determined with the
suppliers (Unfixed gold)] are stated at the lower
of cost and net realisable value. In respect of
gold, cost is determined on first-in-first-out basis,
for silver cost is determined on annual weighted
average basis and in respect of studded jewellery
is determined on specific identification basis.
Unfixed gold is valued at the gold prices prevailing
on the period closing date.
Cost comprises all costs of purchase including
duties and taxes (other than those subsequently
recoverable by the Company), freight inwards
and other expenditure directly attributable to
acquisition. Work-in-progress and finished goods
include appropriate proportion of overheads
and, where applicable, excise duty. Net realisable
value represents the estimated selling price for
inventories less all estimated costs of completion
and costs necessary to make the sale.
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