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Company Information

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MAZAGON DOCK SHIPBUILDERS LTD.

20 October 2025 | 03:57

Industry >> Ship - Docks/Breaking/Repairs

Select Another Company

ISIN No INE249Z01020 BSE Code / NSE Code 543237 / MAZDOCK Book Value (Rs.) 180.67 Face Value 5.00
Bookclosure 19/09/2025 52Week High 3775 EPS 59.83 P/E 47.43
Market Cap. 114463.11 Cr. 52Week Low 1918 P/BV / Div Yield (%) 15.71 / 0.61 Market Lot 1.00
Security Type Other

ACCOUNTING POLICY

You can view the entire text of Accounting Policy of the company for the latest year.
Year End :2025-03 

2) Significant accounting policies:

2.1 Basis of preparation:

These financial statements have been prepared in
compliance with Indian Accounting Standards (Ind
AS) notified under the Companies (Indian Accounting
Standards) Rules, 2015.

2.2 Summary of significant accounting policies:
a) Use of estimates:

The preparation of Financial Statements in accordance
with Ind AS requires use of estimates and assumptions
for some items, which might have an effect on
their recognition and measurement in the Balance
Sheet and Statement of Profit and Loss. The actual
amounts realised may differ from these estimates.
Accounting estimates could change from period to
period. Appropriate changes in estimates are made
as the management becomes aware of changes in
circumstances surrounding the estimates. Differences
between the actual results and estimates are
recognised in the period in which the results are known
/ materialized.

Estimates and assumptions are required in particular
for:

i. Determination of the estimated useful life of
tangible assets and the assessment as to which
components of the cost may be capitalized
:

Useful life of tangible assets is based on the
life prescribed in Schedule II of the Companies
Act, 2013. In cases, where the useful life is
different from that prescribed in Schedule II, it
is based on technical advice, taking into account
the nature of the asset, estimated usage and
operating conditions of the asset, past history of
replacement and maintenance support.

ii. Recognition and measurement of defined
benefit obligations:

The obligation arising from the defined benefit
plan is determined on the basis of actuarial

assumptions. Key actuarial assumptions include
discount rate, trends in salary escalation and
vested future benefits and life expectancy.
The discount rate is determined with reference
to market yields at the end of the reporting
period on the government bonds. The period to
maturity of the underlying bonds correspond to
the probable maturity of the post-employment
benefit obligations.

iii. Recognition of deferred tax assets:

A deferred tax asset is recognised for all the
deductible temporary differences and any unused
tax losses to the extent that it is probable that
taxable profit will be available against which the
deductible temporary difference and the unused
tax losses can be utilized. The management
assumes that taxable profits will be available
while recognising deferred tax assets.

iv. Recognition and measurement of other
provisions:

The recognition and measurement of other
provisions are based on the assessment of the
probability of an outflow of resources, and on
past experience and circumstances known at
the balance sheet date. The actual outflow of
resources at a future date may vary.

v. Discounting of long-term financial liabilities

All financial liabilities are measured at fair value
on initial recognition. In case of financial liabilities,
which are required to be subsequently measured
at amortised cost, interest is accrued using the
effective interest method.

vi. Determination of estimated cost to complete the
contract is required for computing revenue as
per Ind AS 115 on ‘Revenue from contracts with
customers’. The estimates are revised periodically.

Current versus non-current classification:

The Company presents assets and liabilities in
the balance sheet based on current / non-current
classification.

i. An asset is treated as current when it is:

i. Expected to be realised or intended to be
sold or consumed in normal operating cycle

ii. Held primarily for the purpose of trading

iii. Expected to be realised within twelve
months after the reporting period, or

iv. Cash or cash equivalents 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.

ii. A liability is treated as current when it is:

i. It is expected to be settled in normal
operating cycle

ii. It is held primarily for the purpose of trading

iii. It is due to be settled within twelve months
after the reporting period, or

iv. There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period.

All other liabilities are treated as non - current.

Deferred tax assets and liabilities are classified as
non - current assets and liabilities.

c) Property, plant and equipment:

i. Property, plant and equipment, including capital
work-in-progress are stated at cost, net of
accumulated depreciation and accumulated
impairment losses, if any. Capital works executed
internally are valued at prime cost plus appropriate
overheads.

• Cost means cost of acquisition, inclusive
of inward freight, duties, taxes and other
incidental expenses incurred in relation to
acquisition of such assets. It also includes
the cost of replacing part of the plant
and equipment and borrowing costs for
long-term construction projects if the
recognition criteria are met. In respect
of major projects involving construction,
related pre-operational expenses form part
of the value of assets capitalised.

• When significant parts of plant and
equipment are required to be replaced at
intervals, the Company depreciates them
separately based on their specific useful
lives.

• When a major inspection is performed, its
cost is recognised in the carrying amount
of the property, plant and equipment as a
replacement if the recognition criteria are
satisfied. All other repair and maintenance
costs are recognised in profit or loss as
incurred.

• Spares purchased along with PPE are
capitalised.

• The present value of the expected cost for
decommissioning of an asset after its use is
included in the cost of the respective asset
if the recognition criteria for a provision are
met.

• Unserviceable tangible assets are valued
at the net realisable value. In case the net
realisable value is not available, the same is
considered at 5% of original cost as scrap
value. For IT hardware assets, i.e. end user
devices such as desktops, laptops, etc.
residual value is considered as nil.

• An item of property, plant and equipment
and any significant part initially recognised
is derecognised 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 of profit
and loss when the asset is derecognised.

The Company has elected to measure all its
Property Plant & Equipment, on the date of
transition i.e. 1st April 2015, at deemed cost being
the carrying value of the assets in accordance
with previous GAAP.

Funds received from customers for acquisition
or construction of property, plant and equipment
from 1st April, 2015, are recognised as deferred
revenue, which is amortised equally over the
useful lives of the assets.

ii. Depreciation:

(a) Depreciation is calculated on a straight-line
basis, based on the useful lives specified
in Schedule II to the Companies Act, 2013
except for the following items, where useful
lives are estimated on technical assessment
by technical experts, past trends and
management estimates:

Asset class

Description

Years

Plant &
Machinery

Wet basin

60

Plant &
Machinery

Goliath crane
(300 ton
capacity)

30

(b) Loose tools costing over T 5000 is written
off evenly over a period of five years
commencing from the year of purchase.

(c) Additions to assets individually costing

T5000 or less are depreciated at 100%.

(d) Spares purchased along-with the main
asset are depreciated over the estimated
useful life of that asset.

(e) In respect of additions / extensions forming

an integral part of the existing assets,
depreciation has been provided over

residual life of the respective assets.

(f) 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.

(g) Depreciation on property, plant and

equipment commences when the assets
are ready for intended use

(h) In respect of assets whose useful life has
been revised, the unamortised depreciable
amount has been charged over the revised
remaining useful life of the assets.

(i) The residual value of all the assets have
been considered at 5% of the original
cost of the respective assets, except for
computer and related hardware assets,
where the residual value is considered to
be nil.

(j) When significant parts of plant and
equipment are required to be replaced at
intervals, the Company depreciates them
separately based on their specific useful
lives.

d) Intangible assets:

Intangible assets are stated at cost of acquisition
less accumulated amortisation and accumulated
impairment, if any. Amortisation is done over their
estimated useful life of five years on straight line basis
from the date they are available for intended use.

e) Impairment of assets:

At each balance sheet date, the Company assesses
whether there is any indication that any property, plant
and equipment and intangible assets may be impaired.
If any such impairment exists, the recoverable amount
of an asset is estimated to determine the extent of

impairment, if any. An asset’s recoverable amount is
the higher of the asset’s or cash-generating unit’s fair
value less cost of disposal and its value in use. Where
it is not possible to estimate the recoverable amount
of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to
which the asset belongs.

f) Investment in associate:

An associate is an entity over which the Company has
significant influence. Significant influence is the power
to participate in the financial and operating policy
decisions of the investee, but it is not control over
those policies.

Company has investment in equity shares of its
associate and it is measured at cost. Provision for
Impairment loss on such investment is made only when
there is a diminution in value of the investment which
is other than temporary.

Exemption availed under Ind AS 101: On transition
to Ind AS, Company has elected to continue with the
carrying value of its investments in its associate as at
April 1, 2015, measured as per previous GAAP and
used that carrying value as the deemed cost of the
same.

g) Foreign currency transactions:

The financial statements are prepared in Indian Rupees
being the functional currency.

• Transactions denominated in foreign currencies
are initially recorded at the exchange rate
prevailing on the date of the transaction.

• Monetary assets and liabilities denominated in
foreign currencies are translated at the functional
currency rates of exchange at the reporting date.

• Non-monetary items that are measured in
terms of historical cost in a foreign currency are
translated using the exchange rates at the dates
of the initial transactions.

• Exchange differences arising on settlement or
translation of monetary items are recognised in
the statement of profit or loss.

h) Borrowing costs:

Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use or sale are capitalised as part of the cost
of the asset. All other borrowing costs are expensed
in the period in which they occur. Borrowing costs

consists of interest and other costs that an entity
incurs in connection with the borrowings of funds and
includes exchange differences to the extent regarded
as an adjustment to the borrowing costs. A qualifying
asset is one that necessarily takes substantial period of
time to get ready for its intended use.

i) Inventory valuation

i. Raw materials and stores and general spares are
valued at weighted average cost.

ii. Equipment for specific projects are valued at
cost.

iii. Stock-in-transit is valued at cost.

iv. Cost of inventories comprises of purchase cost,
conversion and other cost incurred in bringing
them to the present location and condition.

v. Provision for obsolescence will be made for raw
materials, stores and spares not moved for over 3
years. For Project specific material, obsolescence
is provided to the items for which shelf life is
expired.

vi. Scrap is valued at estimated net realizable value.

vii. Work in progress and finished goods other than
construction contracts & ship repair contracts
have been valued at lower of cost and net
realisable value.

j) Revenue recognition

i. Ship construction & repair contracts

Revenue from Ship Construction / repair
Contracts shall be recognised when (or as) the
entity satisfies a performance obligation by
transferring a promised good or service (i.e. an
asset) to a customer. An asset is transferred when
(or as) the customer obtains control of that asset.

The Company transfers control of a good or
service over time and, therefore, satisfies a
performance obligation and recognises revenue
over time, if one of the following criteria is met-

(a) the customer simultaneously receives and
consumes the benefits provided by the
Company’s performance as the Company
performs

(b) the Company’s performance creates or
enhances an asset (for example, work in
progress) that the customer controls as the
asset is created or enhanced or

(c) the Company’s performance does not
create an asset with an alternative use
to the Company and the Company has
an enforceable right to payment for
performance completed to date.

When the control of the produced good and
rendered services is transferred over time to
the customer, revenue is recognised over time
under the percentage of completion method
(PoC). Penalties, if any, will be reduced from the
revenue.

For the application of the overtime method
(PoC method), the measure of the progress
towards complete satisfaction of a performance
obligations is based on inputs (i.e. cost incurred).

Fixed Price Contract:

Revenues from construction contracts with
customers are recognized over time using input
method i.e. by comparing the actual costs
incurred to the total costs anticipated for the
entire contract. These estimates are revised
periodically.

When it is probable that total contract costs will
exceed total contract revenue, the expected loss
is recognized as an expense immediately.

When the outcome of a construction / repair
contract cannot be reliably estimated, contract
revenue is recognized only to the extent of
contract cost incurred that are likely to be
recoverable.

Cost Plus Contract:

In case of Cost plus contracts, contract revenue
is recognized on the basis of cost incurred plus
profit margin applicable on the contract, when
such cost can be estimated reliably. Penalties, if
any will be reduced from the revenue.

Additional revenue, in respect of contracts
completed in earlier years, is accounted for
as contract revenue in the year in which such
revenue materializes.

Contract Asset:

The company’s right to consideration in
exchange for goods or services that the company
has transferred to a customer when that right
is conditioned on something other than the
passage of time (for example, the entity’s future
performance).

Contract Liability:

The company’s obligation to transfer goods or
services to a customer for which the entity has
received consideration (or the amount is due)
from the customer

Revenue from supply of Base & Depot (B&D)
spares:

Revenue from supply of B&D spares is to be
recognised based on satisfaction of performance
obligation satisfied at a point in time based on
proof of receipts of goods from Naval stores.

Revenue for contract is yet to be finalized or
under revision:

Revenue is recognised based on agreed prices
with customer. In certain cases, where the prices
are yet to be agreed upon/ determined /revised
the revenue is recognised on estimation basis.
Upon the agreement with customer, differential
revenue, if any, is recognised on the revision of
contract amount.

Significant financing component:

Stage payments received towards execution of
defence related projects are not considered for
determining significant financing component
since the objective is to protect the interest of
the contracting parties.

In respect of other contracts, the existence of
significant financing component is reviewed on
case to case basis.

ii. Dividend income

Dividend income from investments is recognized
when the Company’s right to receive payment
has been established.

iii. Interest income

For all debt instruments, interest income is
recorded using the effective interest rate (EIR).
Interest income is included in finance income in
the statement of profit and loss.

iv. Insurance claims:

Amounts due against insurance claims are
accounted for on accrual basis; in respect of
claims which are yet to be finally settled at the
end of reporting date by the underwriter, credits
are reckoned, based on the company’s estimate
of the realisable value.

<) 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.

Financial Assets:

i. Classification:

The Company classifies financial assets as
subsequently measured at amortised cost, fair
value through other comprehensive income or
fair value through profit or loss on the basis of its
business model for managing the financial assets
and the contractual cash flows characteristics of
the financial asset.

ii. Initial recognition and measurement:

All financial assets are recognised initially at fair
value plus, in the case of financial assets not
recorded at fair value through profit or loss,
transaction costs that are attributable to the
acquisition of the financial asset.

iii. Financial assets measured at amortised cost:

Financial assets are measured at amortised cost
when asset is held within a business model,
whose objective is to hold assets for collecting
contractual cash flows and contractual terms
of the asset give rise on specified dates to cash
flows that are solely payments of principal and
interest. Such financial assets are subsequently
measured at amortised cost using the effective
interest rate (EIR) method. The losses arising
from impairment are recognised in the Statement
of profit and loss. This category generally applies
to trade and other receivables.

iv. Financial assets measured at fair value through
other comprehensive income (FVTOCI):

Financial assets under this category are measured
initially as well as at each reporting date at fair
value. Fair value movements are recognized in
the other comprehensive income.

v. Financial assets measured at fair value through
profit or loss (FVTPL):

Financial assets under this category are measured
initially as well as at each reporting date at fair
value with all changes recognised in profit or loss.

vi. Investment in equity instruments:

Equity instruments which are held for trading
are classified as at FVTPL. All other equity

instruments are classified as FVTOCI. Fair value
changes on the instrument, excluding dividends,
are recognised in the other comprehensive
income.

vii. Investment in debt instruments:

A debt instrument is measured at amortised
cost or at FVTPL. Any debt instrument, which
does not meet the criteria for categorization as
at amortized cost or as FVTOCI, is classified as
at FVTPL. Debt instruments included within the
FVTPL category are measured at fair value with
all changes recognised in the Statement of profit
and loss.

viii. Impairment of financial asset:

In accordance with Ind AS 109, the Company
applies Expected Credit Loss (ECL) model for
measurement and recognition of impairment loss
of all the financial assets that are debt instrument
and trade receivable.

ix. Derecognition of financial assets:

A financial asset is primarily derecognised when
the rights to receive cash flows from the asset
have expired or the Company has transferred its
rights to receive cash flows from the asset.

Financial liabilities:

Financial liabilities of the Company are contractual
obligation to deliver cash or another financial asset
to another entity or to exchange financial assets or
financial liabilities with another entity under conditions
that are potentially unfavourable to the Company.

The Company’s financial liabilities include loans &
borrowings, trade and other payables.

i. Classification, initial recognition and
measurement

Financial liabilities are recognised initially at fair
value minus transaction costs that are directly
attributable to the issue of financial liabilities.
Financial liabilities are classified as subsequently
measured at amortized cost. 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 effective interest rate
(EIR). Any difference between the proceeds (net
of transaction costs) and the redemption amount
is recognised in the Statement of Profit and Loss
over the period of the borrowings using the
effective rate of interest.

ii. Subsequent measurement

After initial recognition, financial liabilities are
subsequently measured at amortised cost using
the EIR method. In each financial year, the
unwinding of discount pertaining to financial
liabilities is recorded as finance cost in the
statement of profit and loss.

iii. De-recognition of financial liability

A financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expires. The difference between
the carrying amount of a financial liability that
has been extinguished or transferred to another
party and the consideration paid, including any
non-cash assets transferred or liabilities assumed,
is recognised in profit or loss as other income or
finance cost.

iv. Retentions

Retention amount payable / receivable under
the terms of the contracts with the vendors /
customers are retained towards performance
obligation under the normal terms of trade and
do not constitute financial arrangement and
hence are not amortised.

v. Security deposit

Security Deposits obtained from vendors below
7 1 lakh individually are not amortised as the
same is not considered material.

l) Leases

In March 2019 the Ministry of Corporate Affairs
notified the new standard Ind AS 116 which replaces
the Ind AS 17 “Leases”, Appendix A of Ind AS 17
“Operating Leases—Incentives”, Appendix B of Ind AS
17 “Evaluating the Substance of Transactions Involving
the Legal Form of a Lease”. and Appendix C of Ind AS
17 “Determining Whether an Arrangement Contains a
Lease”.

Ind AS 116 introduces a uniform lessee accounting
model. Applying that model, a lessee is required to
recognise a right-of-use asset representing the lessee’s
right to use the underlying asset and a financial liability
representing the lessee’s obligation to make future
lease payments.

There are exemptions for short-term leases and
leases of low-value assets. Lessor accounting remains
comparable to that provided by the existing leases
standard and hence lessors will continue to classify
their leases as operating leases or finance leases.

The Company adopted the new standard Ind AS 116
for accounting period beginning on or after April
1,2019 using retrospective method and therefore the
cumulative effect of adopting Ind AS 116 has been
recognised as an adjustment to the opening balance
of retained earnings with restatement of comparative
information.

Identifying a lease

Under Ind AS 116, the Company assesses whether a
contract is or contains a lease based on the definition of
a lease. A contract is, or contains a lease if the contract
conveys the right to control the use of an identified
asset for a specified period of time in exchange for
consideration.

The previous determination pursuant to Ind AS 17
and Appendix C of Ind AS 17 of Determining Whether
an Arrangement Contains a Lease” is maintained for
existing contracts.

i. As a lessee

As a lessee, the Company previously classified
leases as operating or finance leases based on
assessment of whether the risks and rewards
incidental to ownership of the underlying
asset were transferred. Under Ind AS 116, the
Company recognises right-of-use assets and
lease liabilities for most of its leases. Leases which
were classified as operating lessees under Ind AS
17 are now recognised on the balance sheet.
Lease term includes Non-cancellable period
(which includes the period covered by the option
to terminate the lease, if only a lessor has right to
terminate a lease), periods covered by an option
to extend the lease if the lessee is reasonably
certain to exercise that option, periods covered
by an option to terminate the lease if the lessee
is reasonably certain not to exercise that option.
Lease term begins at the commencement date
and include any rent free period. Termination
options held by the lessor are not considered
when determining the lease term.

Extension and termination options are taken into
account on recognition of the lease liability if the
Company is reasonably certain that these options
will be exercised in the future.

As a general rule, the Company recognizes non¬
lease components such as services separately
from lease payments. Non-lease components are
identified and accounted for separately from the
lease component in accordance with other Ind
AS.

When applying Ind AS 116 for the first time,
the Company has used the following practical
expedients for leases previously classified as
operating leases under Ind AS 17:

- To apply a single discount rate to a
portfolio of leases with reasonably similar
characteristics,

- The right-of-use to the leased asset has
generally been measured at the amount of
the lease liability, using the discount rate
at the commencement of lease. Where
accrued lease liabilities existed, the right-
of-use asset has been adjusted by the
amount of the accrued lease liability under
Ind AS 116. At initial application of Ind AS
116, the measurement of the right-of-use
does not include initial direct costs. In some
cases, the value of right-of-use assets may
differ from the value of the liabilities due
to offsetting against existing provisions or
as a result of valuation allowances. - Initial
direct costs have been excluded from the
measurement of the right-of-use asset for
all leases entered into or changed before
April 1,2018..

- Not to apply the new recognition
requirements to short-term leases and to
leases of low value assets as soon as the
new standard is effective.

- The definition of a lease in accordance with
Ind AS 17 and Appendix C to Ind AS 17 will
continue to be applied to leases entered
or changed before April 1,2018, and as
a result the Company has not reassessed
whether a contract is or contains a lease on
transition.

- Leases with a determined lease term of
less than 12 months remaining from April
1,2018 have been treated as short term.

Availing exemption by the Company

Furthermore, the Company has also elected to
make use of the following exemptions provided
by Ind AS 116:

a) Leases with a determined lease term of 12
months or less from the commencement of
the lease will be treated as short term and
therefore not included in the right-of-use
asset or lease liability. Instead, lease costs
will be recognised on a straight line basis
across the life of the lease.

b) Leases for which the underlying asset is of
low value when new will be exempt from
the requirements to value a right-of-use
asset and lease liability. Instead, lease costs
will be recognised on a straight line basis
across the life of the lease. To apply this
exemption, a threshold of 7 1,00,000/- has
been utilised to define “low value”.

The Company’s operating leases mainly relate to
real estate assets, company cars and equipment.
The most significant impact identified by the
Company relates to its operating leases of real
estate assets (such as land, warehouses, storage
facilities and offices).

For leases that were classified as finance leases
under Ind AS 17, the Company did not change
the carrying amount of the right-of-use asset and
the lease liability as of March 31,2019, measured
under Ind AS 17.

ii. As a lessor

Lease income from operating leases where the
Company is a lessor is recognised in income on
a straight-line basis over the lease term unless
the receipts are structured to increase in line
with expected general inflation to compensate
for the expected inflationary cost increases.
The respective leased assets are included in the
balance sheet based on their nature.

n) Employee benefits

i. Short-term obligations

Liabilities for wages and salaries, including non¬
monetary benefits that are expected to be settled
wholly within 12 months after the end of the
period in which the employees render the related
service are recognised in respect of employees’
services up to the end of the reporting period
and are measured at the amounts expected to be
paid when the liabilities are settled.

ii. Other long-term employee benefit obligations

The liabilities for earned leave and sick leave
that are not expected to be settled wholly
within 12 months are measured as the present
value of expected future payments to be made
in respect of services provided by employees
up to the end of the reporting period using the
projected unit credit method. The benefits are
discounted using the Government Securities
(G-Sec) at the end of the reporting period that
have terms approximating to the terms of the

related obligation. Remeasurements as a result of
experience adjustments and changes in actuarial
assumptions are recognised in the Statement of
Profit and Loss.

iii. Post-employment obligations

The Company operates the following post¬
employment schemes:

(a) defined benefit plans such as gratuity,
Provident Fund and post-retirement
medical scheme for non-executives; and

(b) defined contribution plans such as pension
and post-retirement medical scheme for
executives.

Gratuity

Gratuity Fund, a defined benefit scheme, is administered
through duly constituted independent Trust and yearly
contributions based on actuarial valuation are charged
to revenue. Any additional provision as may be required
is provided for on the basis of actuarial valuation as per
Ind AS 19 on Employee Benefits.

The liability or asset recognised in the balance sheet in
respect of defined benefit gratuity plan is the present
value of the defined benefit obligation at the end of
the reporting period less the fair value of plan assets.
The defined benefit obligation is calculated annually by
actuaries using the projected unit credit method.

The present value of the defined benefit obligation is
determined by discounting the estimated future cash
outflows by reference to market yields at the end of the
reporting period on government bonds that have terms
approximating to the terms of the related obligation.

Remeasurement gains and losses arising from
experience adjustments and changes in actuarial
assumptions are recognised in the period in which they
occur, directly in other comprehensive income. They
are included in retained earnings in the statement of
changes in equity and in the balance sheet.

Post-retirement medical scheme

The post-retirement medical scheme to the non
executives employees is a defined benefit plan and is
determined based on actuarial valuation as per Ind AS
19 on Employee Benefits using Projected Unit Credit
method which recognizes each period of service as
giving rise to additional unit of employee benefit
entitlement and measures each unit separately to build
up the final obligation.

Remeasurement gains and losses arising from
experience adjustments and changes in actuarial

assumptions are recognised in the period in which they
occur, directly in other comprehensive income. They
are included in retained earnings in the statement of
changes in equity and in the balance sheet.

The post-retirement medical scheme liability towards
executives is recognised on accrual basis and charged
to statement of profit and loss, which is a contribution
plan.

Provident fund

The Provident Fund Trust of Company has to declare
interest on the Provident Fund at a rate not less than
notified by the Employee Provident Fund Organization.
Company has obligation to make good the shortfall,
if any, in case trust is not able to meet the interest
liability. Obligation of Company is calculated annually
by actuaries using projected Unit Credit method.

Pension Fund

Defined contribution to Superannuation Pension
Scheme is charged to statement of Profit & Loss at the
applicable contribution rate as per approved Pension
scheme.

n) Dividend to equity shareholders

The final dividend on shares is recorded as a liability on
the date of approval by the shareholders, and interim
dividends are recorded as a liability on the date of
declaration by the company’s Board of Directors.

o) Provision for current & deferred tax

Income tax expense represents the sum of current
tax, deferred tax and adjustments for tax provisions
of previous years. It is recognised in Statement of
Profit and Loss except to the extent that it relates to
a business combination, or items recognised directly in
equity or in other comprehensive income.

Current income tax:

Current tax comprises of the expected tax payable on
the taxable income for the year. It is measured using tax
rates enacted or substantively enacted at the reporting
date.

Current tax assets and liabilities are offset only if, the
Company:

• has a legally enforceable right to set off the
recognised amounts; and

• intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.

Deferred tax:

Deferred tax is provided on temporary differences
between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes at
the reporting date using the tax rates and laws that are
enacted or substantively enacted as on reporting date.
Deferred tax assets are recognized to the extent that it
is probable that future taxable income will be available
against which the deductible temporary differences,
unused tax losses and credits can be utilised. Deferred
tax relating to items recognised in other comprehensive
income and directly in equity is recognised in correlation
to the underlying transaction.

Deferred tax assets and liabilities are offset only if:

• Entity has a legally enforceable right to set off
current tax assets against current tax liabilities;
and

• Deferred tax assets and the deferred tax liabilities
relate to the income taxes levied by the same
taxation authority.

p) Provision for doubtful debts and loans and advances:

Provision is made in the accounts for doubtful debts,
loans and advances in cases where the management
considers the debts, loans and advances to be doubtful
of recovery.

q) Warranty provision:

Provision for warranty related costs are recognised
when the product is sold or services are rendered to the
customer in terms of the contract. Initial recognition is
based on the historical experience and management
estimates. The initial estimate of warranty related costs
are revised periodically.