2.1 Basis of preparation and presentation
These 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 financial statements.
Accordingly, the Company has prepared these financial statements which comprise the Balance Sheet as at March 31, 2025, the Statement
of Profit and Loss and the Statement of Changes in Equity for the year ended as on that date, and material accounting policies and other
explanatory information (together hereinafter referred to as "financial statements").
The financial statements have been prepared on a historical cost basis, except for certain financial instruments that are measured at fair
values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value
of the consideration given in exchange for goods and services.
The financial statements are presented in INR and all values are rounded to the nearest Lakhs ('00,,000) up to two decimal, except when
otherwise indicated.
(i) Current vs. Non-Current
The Company presents assets and liabilities in the balance sheet based on current / non-current classification. An asset is treated as current
when it is:
• Expected to be realised or intended to be sold or consumed in normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realised within twelve months after the reporting period, or
• Cash or cash equivalent 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.
A liability is current when:
• It is expected to be settled in normal operating cycle
• It is held primarily for the purpose of trading
• It is due to be settled within twelve months after the reporting period, or
• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax asset and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The
Company has identified twelve months as its operating cycle.
(ii) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between 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 financial statements is determined on such a basis, except for leases 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 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.
(iii) Property, plant and equipment
An item of PPE is recognised as an asset, if and only if, it is probable that the future economic benefits associated with the item will flow to
the Company and its cost can be measured reliably. PPE are initially recognised at cost. The initial cost of PPE comprises its purchase price
(including non-refundable duties and taxes but excluding any trade discounts and rebates), and any directly attributable cost of bringing the
asset to its working condition and location for its intended use.
Subsequent to initial recognition, PPE are stated at cost less accumulated depreciation and any impairment losses. When significant parts of
PPE are required to be replaced in regular intervals, the Company recognises such parts as separate component of assets. When an item of
PPE is replaced, then its carrying amount is derecognised from the Balance Sheet and cost of the new item of PPE is recognised.
The expenditures that are incurred after the item of PPE has been available for use, such as repairs and maintenance, are normally charged
to the statement of profit and loss in the period in which such costs are incurred. However, in situations where the said expenditure can be
measured reliably, and is probable that future economic benefits associated with it will flow to the Company, it is included in the asset's
carrying value or as a separate asset, as appropriate.
Depreciation is calculated on a Written Down Value basis over the estimated useful lives of the assets as follows:
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 derecognition 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 had elected to consider the carrying value of all its items of property, plant and equipment under the previous GAAP financial
statements and use the same as deemed cost in the opening Ind AS balance sheet as on the transition date.
(iv) Impairment of non-financial assets
The carrying amounts of the Company's non-financial assets are reviewed at each reporting date to determine whether there is any indication
of impairment. If any such indication exists, then the asset's recoverable amount is estimated in order to determine the extent of the
impairment loss, if any.
The recoverable amount of an asset or cash generating unit (as defined below) is the higher of its value in use and its fair value less costs of
disposal. 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 or the cash generating unit for which the
estimates of future cash flows have not been adjusted. For the purpose of impairment testing, assets are grouped together into the smallest
group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of
assets (the "cash-generating unit").
An impairment loss is recognised in the profit or loss if the estimated recoverable amount of an asset or its cash generating unit is lower than
its carrying amount. Impairment losses recognised in respect of cash-generating units are allocated to reduce the carrying amount of the
other assets in the unit on a pro-rata basis.
In respect of other asset, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss
has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
The Company assesses where climate risks could have a significant impact, such as the introduction of emission-reduction legislation that may
increase manufacturing costs. These risks in relation to climate-related matters are included as key assumptions where they materially impact
the measure of recoverable amount. These assumptions have been included in the cash-flow forecasts in assessing value-in-use amounts. At
present, the impact of climate-related matters is not material to the Company's financial statements.
(v) Revenue from contract with customer
Revenue from contracts with customers is recognised when control of the goods or services are 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.
The company has concluded that it is the principle in its revenue arrangement, because it typically controls the services before transferring
them to the customer.
Contract balances
Contract asset
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by
transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised
for the earned consideration that is conditional.
Trade receivables
A receivable represents the Company's right to an amount of consideration that is unconditional (i.e., only the passage of time is required
before payment of the consideration is due).
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an
amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the
customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are
recognised as revenue when the Company performs under the contract.
(vi) 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
to that asset's net carrying amount on initial recognition.
(vii) Taxes
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The
tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive
income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes at the reporting date. Deferred tax assets are recognised for all deductible temporary differences,
the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused
tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re¬
assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred
tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised, or the liability
is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to
items recognised outside statement of profit or loss is recognised outside statement of profit of loss. Deferred tax are recognised in correlation
to the underlying transaction either in other comprehensive income or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to set off corresponding current tax assets against current tax
liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority on the Company.
(viii) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another
entity.
a) Financial assets
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. Purchases or sales of financial assets that require delivery of
assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date,
i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• Financial assets at amortised cost (debt instruments)
• Financial assets at fair value through other comprehensive income (FVTOCI) with recycling of cumulative gains and losses (debt instruments)
• Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity
instruments)
• Financial assets at fair value through profit or loss.
Financial assets at amortised cost (debt instruments)
A 'financial asset' is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the
principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the
EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or
loss.
Financial assets at fair value through OCI (FVTOCI) (debt instruments)
A 'financial asset' is classified as at the FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The asset's contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. For debt
instruments, at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognised in
the profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes
are recognised in OCI. Upon derecognition, the cumulative fair value changes recognised in OCI is reclassified from the equity to profit or
loss.
Financial assets designated at fair value through OCI (equity instruments)
On initial recognition, the Company can elect to classify irrevocably its equity investments as equity instruments designated at fair value
through OCI when they meet the definition of equity under Ind AS 32 Financial Instruments: Presentation and are not held for trading. The
classification is determined on an instrument-by-instrument basis. Equity instruments which are held for trading and contingent
consideration recognised by an acquirer in a business combination to which Ind AS103 applies are classified as at FVTPL.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of
profit and loss when the right of payment has been established, except when the Company benefits from such proceeds as a recovery of
part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI
are not subject to impairment assessment.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value recognised in
the statement of profit and loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) 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 or has assumed an obligation to pay the received cash flows
in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Company has transferred substantially
all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it
evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially
all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to
the extent of the Company's continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset
and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Impairment of financial assets
In accordance with Ind AS 109 Financial Instruments, the Company applies expected credit loss (ECL) model for measurement and
recognition of impairment loss on the Trade receivables or any contractual right to receive cash or another financial asset that result from
transactions that are within the scope of Ind AS 115 Revenue from Contracts with Customers.
b) Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance
of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity
instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised
initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Subsequent measurement
For purposes of subsequent measurement, financial liabilities are classified in two categories:
• Financial liabilities at fair value through profit or loss
• Financial liabilities at amortised cost (loans and borrowings)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon
initial recognition as at fair value through profit or loss.
Financial liabilities at amortised cost (Loans and borrowings)
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains
and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the
EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial
liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognised in the statement of profit and loss.
c) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated balance sheet if there is a currently
enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle
the liabilities simultaneously.
(ix) Borrowing costs
Borrowing costs that are directly attributable to the construction or production of a qualifying asset are capitalised as part of the cost of
that asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that
an entity incurs in connection with the borrowing of funds. Borrowing cost also 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.
|