i. Corporate Information:
Salzer Electronics Limited, incorporated in
January 1985, for manufacture of Electrical
Installation Products and Components viz., CAM
Operated Rotary switches, Selector Switches,
Wiring Ducts, Voltmeter Switches, copper wires
and cables and allied products addressing
customers in the electrical equipment, power,
medical equipment, automotive as well as
renewable and uninterrupted power system space,
in a single and unified segment. The company is
listed in Bombay Stock Exchange Limited and
National Stock Exchange of India Limited.
ii. General Information and Statement of
Compliance with Ind AS:
These standalone financial statements ('financial
statements') of the Company have been prepared in
accordance with the Indian Accounting Standards
(hereinafter referred to as the 'Ind AS') as notified
by Ministry of Corporate Affairs ('MCA') under
Section 133 of the Companies Act, 2013 ('the Act')
read with the Companies (Indian Accounting
Standards) Rules, 2015, as amended and other
relevant provisions of the Act. The Company has
uniformly applied the accounting policies during the
periods presented. .
These financial statements for the year ended
March 31,2025 were authorized and approved for
issue by the Board of Directors on May 24, 2025
iii. Basis of Preparation:
The financial statements have been prepared on
going concern basis in accordance with accounting
principles generally accepted in India.
The Financial Statements have been prepared and
presented on the historical cost basis except for
certain financial instruments 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 as on the exchange 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, 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 in
to 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 the
basis stated above. In addition, for financial
reporting purposes, fair value measurements are
categorized 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 measurements 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, 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 amounts included in the financial statements
are reported in lakhs of Indian rupees except share
and per share data, unless otherwise stated. Due
to rounding off, the numbers presented throughout
the document may not add up precisely to the
totals and percentages may not precisely reflect
the absolute figures.
iv. Use of Estimates:
The preparation of financial statements is in
conformity with generally accepted accounting
principles which require the management of the
Company to make judgements, estimates and
assumptions that affect the reported amount of
revenues, expenses, assets and liabilities and
disclosure of contingent liabilities at the end of the
reporting period. Although these estimates are
based upon the management's best knowledge of
current events and actions, uncertainty about
these assumptions and estimates could result in
the outcomes requiring a material adjustment to
the carrying amounts of assets or liabilities in
future period. Appropriate changes in estimates
are made as management becomes aware of
changes in circumstances surrounding the
estimates. Application of accounting policies that
require material accounting estimates involving
complex and subjective judgments and the use of
assumptions in these Financial statements have
been disclosed separately under the heading
“material accounting judgements, estimates and
assumption”.
v. Current versus non-current classification
The entity presents assets and liabilities in the
balance sheet based on current/ non-current
classification.
An asset is classified as current, when:
• It is expected to be realised or intended to be
sold or consumed in normal operating cycle
• It is held primarily for the purpose of trading
• It is expected to be realised within twelve
months afterthe reporting period, or
• It is 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 classified as 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 entity classifies all other liabilities as non¬
current.
Deferred tax assets and liabilities are classified as
non-current assets and liabilities.
vi. Foreign currency transactions
Functional and presentation currency
The financial statements are presented in Indian
Rupee which is also the functional and presentation
currency of the Company. All amounts have been
rounded-off to the nearest rupee.
(a) Initial recognition
Foreign currency transactions are recorded in the
functional currency, by applying to the exchange
rate between the functional currency and the
foreign currency at the date of the transaction.
(b) Conversion
Foreign currency monetary items are converted to
functional currency using the closing rate. Non¬
monetary items denominated in a foreign currency
which are carried at historical cost are reported
using the exchange rate at the date of the
transaction; and non-monetary items which are
carried at fair value or any other similar valuation
denominated in a foreign currency are reported
using the exchange rates that existed when the
values were determined.
Exchange differences arising on monetary items on
settlement, or restatement as at reporting date,
at rates different from those at which they were
initially recorded, are recognized in the statement
of profit and loss in the year in which they arise.
(c) Forward Contract
Premium/ Discount in respect of Forward Contract
are amortized as expense/income over the period of
contract. Exchange differences arising on forward
contracts between the exchange rate on the date
of transaction and the exchange rate prevailing at
the year end is recognized in the Statement of
Profit and Loss.
vii. Property, Plant and Equipment:
Property, plant and equipment are stated at cost
net of historical Indirect Taxes, including
appropriate direct and allocated expenses less
accumulated depreciation and impairment losses, if
any. Increase/Decrease in rupee liability in respect
of foreign currency liability related to acquisition of
fixed assets is recognised as expense or income in
the Statement of Profit and Loss. Freehold land is
not depreciated.
Properties in the course of construction for
production, supply or administrative purposes are
carried at cost, less any recognised impairment
loss. Cost includes professional fees and, for
qualifying assets, borrowing costs capitalised in
accordance with the Company's accounting policy.
Such properties are classified to the appropriate
categories of property, plant and equipment when
completed and ready for intended use. Depreciation
of these assets, on the same basis as other
property assets, commences when the assets are
ready for their intended use.
Property, plant and equipment represent a
significant proportion of the asset base of the
Company. The charge in respect of periodic
depreciation is derived after determining an
estimate of an asset's expected useful life and the
expected residual value at the end of its life. The
useful lives and residual values of company's assets
are determined by management at the time the
asset is acquired and reviewed periodically,
including at each financial year end with the effect
of any changes in estimate accounted for on a
prospective basis. The lives are based on historical
experience with similar assets as well as
anticipation of future events, which may impact
their life, such as changes in technology.
Depreciation is recognised so as to write off the
cost of assets (other than freehold land and
properties under construction) less their residual
values over their useful lives, using the straight-line
method.
An item of property ,plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from the
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 profit or loss.
ix. Investment property:
Investment property is a property, being a land or a
building or part of a building or both, held by the
owner or by the lessee under a finance lease, to
earn rentals or for capital appreciation or both,
rather than for use in the production or supply of
goods or services or for administrative purposes;
or sale in the ordinary course of business.
Investment properties (if any), are measured
initially at cost, including transaction costs.
Subsequent to initial recognition, investment
properties are stated at cost less accumulated
depreciation and accumulated impairment loss, if
any The cost includes the cost of replacing parts
and borrowing costs for long-term construction
projects if the recognition criteria are met. When
significant parts of the investment property are
required to be replaced at intervals, the Company
depreciates them separately based on their
specific useful lives. All other repair and
maintenance costs are recognised in profit or loss
as incurred.
x. Intangible assets and amortization:
An intangible asset is an identifiable non-monetary
asset without physical substance.
Intangible assets are recognised only if it is
probable that future economic benefits that are
attributable to the asset will flow to the enterprise
and the cost of the asset can be measured reliably
Computer software licenses are capitalised on the
basis of costs incurred to acquire and bring to use
the specific software. Operating software is
capitalised and amortised along with the related
fixed asset.
The Company has used the following useful lives to
amortise its intangible assets:
xi. Research and Development Expenditure:
Research & Development expenditure is charged to
revenue under the natural heads of account in the
year in which it is incurred. However, expenditure
incurred at development phase, where it is
reasonably certain that outcome of research will be
commercially exploited to yield economic benefits
to the Company, is considered as Property
including Intangible Assets and amortized in
accordance with the policies stated above.
xii. Impairment of Non Financial assets:
The Company periodically assesses whether there
is any indication that an asset or a group of assets
comprising a cash generating unit may be impaired.
If any such indication exists, the Company
estimates the recoverable amount of the asset.
For an asset or group of assets that does not
generate largely independent cash inflows, the
recoverable amount is determined for the cash¬
generating unit to which the asset belongs. If such
recoverable amount of the asset or the recoverable
amount of the cash generating unit to which the
asset belongs to is less than its carrying amount,
the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment
loss and is recognized in the statement of profit
and loss. If at the balance sheet date there is an
indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is
reassessed and the asset is reflected at the
recoverable amount subject to a maximum of
depreciable historical cost. An impairment loss is
reversed only to the extent that the amount of
asset does not exceed the net book value that
would have been determined if no impairment loss
had been recognized.
xiii. Inventories:
Inventories are carried at lower of cost and net
realizable value.
Cost includes all applicable costs incurred in
bringing the inventories to their present location
and condition.
Net realizable value is the estimated selling price in
the ordinary course of business less the estimated
costs of completion and the estimated costs
necessary to make the sale.
Cost of raw materials including consumables and
stores & spares are determined on FIFO (First In
First Out) Basis.
Cost of work-in-progress is valued at cost of
materials and labour together with relevant factory
overheads. The cost of work-in progress is
determined on the basis of weighted average
method.
The finished goods are valued at cost inclusive of
excise duty (or) net realizable value whichever is
less.
xiv. 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.
1. Financial assets
Initial recognition and measurement
All financial assets are recognized 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 recognized 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:
• Debt instruments at amortized cost
• Debt instruments at fair value through other
comprehensive income (FVTOCI);
• Debt instruments and equity instruments at
fairvalue through profit or loss (FVTPL);
• Equity instruments measured at fair value
through other comprehensive income
(FVTOCI).
Debt instruments at amortized cost:
A 'debt instrument' is measured at the amortized
cost if both the following conditions are met:
• The 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 (SPPI) on
the principal amount outstanding.
After initial measurement, such financial assets
are subsequently measured at amortized cost
using the effective interest rate (EIR) method.
Amortized 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
amortization is included in finance income in the
profit or loss. The losses arising from impairment
are recognized in the profit or loss. This category
generally applies to trade and other receivables.
Debt instrument at FVTOCI:
A 'debt instrument' is classified as at the FVTOCI if
both of the following criteria are met:
• The objective of the business model is achieved
both by collecting contractual cash flows and
selling the financial assets, and
• 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. Fair value movements
are recognized in the other comprehensive income
(OCI).
Debt instrument at FVTPL:
FVTPL is a residual category for debt instruments.
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
recognized in the statement of profit and loss.
In addition, the Company may elect to designate a
debt instrument, which otherwise meets
amortized cost or FVTOCI criteria, as at FVTPL.
However, such election is allowed only if doing so
reduces or eliminates a measurement or
recognition inconsistency (referred to as
'accounting mismatch').
Equity investments (other than investments in
subsidiaries and joint ventures):
All equity investments within the scope of Ind AS
109,' Financial Instruments', are measured at fair
value either through statement of profit and loss or
other comprehensive income. The Company makes
an irrevocable election to present in OCI the
subsequent changes in the fair value on an
instrument-by-instrument basis. The classification
is made on initial recognition.
If the Company decides to classify an equity
instrument as at FVOCI, then all fairvalue changes
on the instrument, excluding dividends, impairment
gains or losses and foreign exchange gains and
losses, are recognized in the OCI. Any gains or
losses on de-recognition is recognized in the OCI
and are not recycled to the statement of profit or
loss.
Equity instruments included within the FVTPL
category are measured at fair value with all
changes recognized in the statement of profit and
loss.
Investment in associates are accounted at cost in
accordance with Ind AS 28.Investment in
Subsidiaries are accounted at cost in accordance
with Ind AS 27
De-recognition of Financial Assets:
A financial asset (or, where applicable, a part of a
financial asset or part of a Company of similar
financial assets) is primarily de-recognized 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 -1hrough'
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
recognize the transferred asset to the extent of the
Company's continuing involvement. In that case, the
Company also recognizes 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.
2. Financial Liabilities
Initial recognition and measurement
All financial liabilities are recognized initially at fair
value and transaction cost (if any) that is
attributable to the acquisition of the financial
liabilities is also adjusted.
Subsequent measurement
The measurement of financial liabilities depends on
their classification, as described below:
a. Loans and borrowings
After initial recognition, interest-bearing loans and
borrowings are subsequently measured at
amortized cost using the Effective Interest Rate
(EIR) method. Gains and losses are recognized in
profit or loss when the liabilities are de-recognized
as well as through the EIR amortization process.
Amortized 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
amortization is included as finance costs in the
statement of profit and loss.
b. Trade and other payables
These amounts represent liabilities for goods or
services provided to the Company which are unpaid
at the end of the reporting period. Trade and other
payables are presented as current liabilities when
the payment is due within a period of 12 months
from the end of the reporting period. For all trade
and other payables classified as current, the
carrying amounts approximate fair value due to the
short maturity of these instruments. Other
payables falling due after 12 months from the end
of the reporting period are presented as non¬
current liabilities and are measured at amortized
cost unless designated as fair value through profit
and loss at the inception.
c. Other 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.
Gains or losses on liabilities held for trading are
recognized in the profit or loss.
De-recognition of Financial Liabilities:
A financial liability is de-recognized 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 de¬
recognition of the original liability and the
recognition of a new liability. The difference in the
respective carrying amounts is recognized in the
statement of profit or loss.
3. Offsetting of financial instruments
Financial assets and financial liabilities are offset
and the net amount is reported in the balance
sheet if there is a currently enforceable legal right
to offset the recognized amounts and there is an
intention to settle on a net basis, to realize the
assets and settle the liabilities simultaneously
4. Compound Financial Instruments:
A financial instrument that comprises of both the
liability and equity components are accounted as
compound financial instruments. The fair value of
the liability component is separated from the
compound instrument and is subsequently
measured at amortized cost. The residual value is
recognized as equity component of other financial
instrument and is not re-measured after initial
recognition.
The transaction costs related to compound
instruments are allocated to the liability and equity
components in the proportion to the allocation of
gross proceeds. Transaction costs related to
equity component is recognized directly in equity
and the cost related to liability component is
included in the carrying amount of the liability
component and amortized using effective interest
method.
xv. Impairment of Financial assets:
The Company assesses at each date of balance
sheet whether a financial asset or a group of
financial assets is impaired. Ind AS 109 requires
expected credit losses to be measured through a
loss allowance. The Company recognizes lifetime
expected losses for all contract assets and / or all
trade receivables that do not constitute a financing
transaction. For all other financial assets,
expected credit losses are measured at an amount
equal to the 12-month expected credit losses or at
an amount equal to the life time expected credit
losses, if the credit risk on the financial asset has
increased significantly since initial recognition.
xvi. Fair value measurement:
The Company measures financial instruments 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
ortransferthe 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,
maximizing the use of relevant observable inputs
and minimizing the use of unobservable inputs. All
assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorized within the fair value hierarchy,
described as follows, based on the lowest level
input that is significant to the fair value
measurement as a whole:
• Level 1: Quoted (unadjusted) market prices
in active markets for identical assets or
liabilities;
• Level 2: Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is directly or indirectly
observable, or
• Level 3: Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable.
For assets and liabilities that are recognized in the
financial statements on a recurring basis, the
Company determines whether transfers have
occurred between levels in the hierarchy by re-
assessing categorization (based on the lowest level
Input that is significant to the fair value
measurement as a whole) at the end of each
reporting period.
xvii. Revenue Recognition:
a. Revenue from sale of goods and services:
Revenue is measured at the fair value of the
consideration received or receivable for goods
supplied and services rendered, net of returns and
discounts to customers.
Revenue from sale of goods is recognised when all
the significant risks and rewards of ownership in
the goods are transferred to the buyer, which is
mainly upon delivery, the amount of revenue can be
measured reliably and the recovery of consideration
is probable. Revenue from the sale of goods
includes excise and other duties which the
Company pays as a principal but excludes amounts
collected on behalf of third parties, such as goods
and service tax (GST) and value added tax, as
applicable.
Export Benefits are recognized as revenue when
the right to receive credit as per the terms of the
entitlement is established in respect of exports
made.
Revenue from services is recognised in the periods
in which the services are rendered.
b. Revenue from Projects
Revenue from fixed Price Contracts, where the
performance obligation is satisfied over the period
of time and where there is no un-certainty as to
measurement or collectability of consideration is
recognized as per the percentage of completion
method in accordance with the IND AS 115. Under
the percentage of completion method, revenue is
recognised in proportion that the contract costs
incurred for work performed up to the reporting
date bear to the estimated total contract costs.
The amount recognised is net of goods and service
tax (GST), service tax and other amounts collected
from the customer in the capacity of an agent, as
applicable. In cases where the total project cost is
estimated to exceed the total estimated revenue
from a project, the loss is recognised immediately.
Contract costs include the estimated material
costs, installation costs and other directly
attributable costs of the project.
Contract revenues represent the aggregate
amounts of fair value of sale price for agreements
entered into and are accrued based on the
percentage that the actual construction costs
incurred until the reporting date bears to the total
estimated construction costs to completion.
The estimates for contract costs are reviewed by
the management periodically and the cumulative
effect of the changes in these estimates, if any, are
recognized in the period in which these changes
may be reliably measured.
c. Dividend:
Income from dividends are recognized when the
Company's right to receive the payment is
established, it is probable that the economic
benefits associated with the dividend will flow to
the Company, and the amount of the dividend can be
measured reliably.
Final dividend on shares are recorded as a liability on
the date of approval by the shareholders at the
annual general meeting and interim dividend are
recorded as a liability on the date of declaration by
the Company's Board of Directors
b. Interest Income:
Interest income, including income arising from
other financial instruments, is recognised using the
effective interest rate (EIR) method. EIR is the rate
that exactly discounts the estimated future cash
payments or receipts over the expected life of the
financial instrument or a shorter period, where
appropriate, to the gross carrying amount of the
financial asset or to the amortized cost of a
financial asset. When calculating the effective
interest rate, the company estimates the expected
cash flows by considering all the contractual terms
of the financial instrument but does not consider
the expected credit losses. Interest income is
included in finance income in the statement of profit
and loss. The expected cash flows are reassessed
on a yearly basis and changes, if any, are accounted
prospectively
e. Other Operating Revenue:
Other Operating revenue comprises income from
ancillary activities incidental to the operations of
the company and are recognized when the right to
receive the income is established as per the terms
of the contract.
Xviii. Leases as a Lessee:
The Company assesses at contract inception,
whether the contract is, or contains, 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 period of time in exchange for
consideration. To assess whether a contract
conveys the right to control the use of an identified
asset, the Company assesses whether:
(I) the contract involves the use of an identified asset
(Ii) the Company has substantially all of the economic
benefits from use of the asset through the period of
the lease and
(Iii) the Company has the right to direct the use of the
asset.
The Company applies a single recognition and
measurement approach for all leases, except for
short-term leases and leases of low-value assets.
a) Right-of-Use Assets:
The Company recognizes right-of-use assets at the
commencement date of the lease (I.e. the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any
accumulated depreciation and impairment losses,
and adjusted for any remeasurement of lease
liabilities. The cost of right-of-use assets Includes:
(I) The amount of lease liabilities recognized
(Ii) Initial Direct Costs incurred and
(Iii) Lease payment made at or before the
commencement date less any lease incentives
received
Right-of-Use Assets are depreciated on a
straight-line basis over the shorter of the lease
term and the estimated useful lives of the
underlying assets.
If ownership of the leased asset transfers to the
Company at the end of the lease term or the cost
reflects the exercise of a purchase option,
depreciation is calculated using the estimated
useful life of the asset. The right-of-use assets are
also subject to Impairment.
The Company determines the lease term as the
non-cancellable term of the lease, together with
any periods covered by an option to extend the
lease if it is reasonably certain to be exercised, or
any periods covered by an option to terminate the
lease, if it is reasonably certain not to be exercised.
b) Lease Liabilities:
At the commencement date of the lease, the
Company recognizes lease liabilities measured at
the present value of lease payments to be made
over the lease term. The lease payments include:
(I) Fixed Payments (including any in-substance fixed
payments) less any lease incentives receivable,
(Ii) Variable lease payments that depend on an index or
a rate,
(Iii) Amounts expected to be paid under residual value
guarantees,
(Iv) The Exercise Price of a Purchase Option, if the
Company is reasonably certain to exercise that
option and
(V) Payment of Penalties for terminating the lease, if
the lease term reflects the lessee exercising an
option to terminate the lease
Variable lease payments that do not depend on an
index or a rate are recognized as expenses in the
period in which the event or condition that triggers
the payment Occurs.
In calculating the present value of lease payments,
the Company uses 'the interest rate implicit in the
lease', if that rate can be readily determined or, if
that rate cannot be readily determined, the
lessee's incremental borrowing rate.
After the commencement date, the amount of
lease liabilities is increased to reflect the interest
on lease liabilities and reduced to reflect the lease
payments made.
In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in
the lease term, a change in the lease payments or a
change in the assessment of an option to purchase
the underlying asset.
C) Short-term Leases and Leases of Low-Value
Assets:
The Company applies the exemption applicable to
Short-term Leases (i.e. Leases that, at the
commencement date, have a lease term of 12
months or less without a purchase option) and to
Leases of Low-Value Assets. Lease Payments on
Short-term Leases and Leases of Low-Value
Assets are recognized as an expense on a straight¬
line basis over the lease term.
Leases as a Lessor:
The Company classifies each of its leases as either
an operating lease or a finance Lease.
A) Finance Lease:
A lease is classified as a finance lease if it transfers
substantially all the risks and rewards incidental to
ownership of an underlying asset.
At the Commencement Date, the Company
recognizes assets held under a finance lease as a
Receivable at an amount equal to the 'Net
Investment in the Lease'.
The Company recognizes finance income over the
lease term, based on a pattern reflecting a
constant periodic rate of return on the Company's
'Net Investment in the Lease'.
B) Operating Lease:
A lease is classified as an operating lease if it does
not transfer substantially all the risks and rewards
incidental to ownership of an underlying asset.
The Company recognizes lease payments from
operating leases as income on a straight-line basis
over the lease term. .
xix. Employee benefits
1. Short Term and other long term employee
benefits:
A liability is recognized for benefits accruing to
employees in respect of wages and salaries, annual
leave and sick leave in the period the related service
is rendered at the undiscounted amount of the
benefits expected to be paid in exchange for that
service.
Liabilities recognized in respect of short-term
employee benefits are measured at the
undiscounted amount of the benefits expected to
be paid in exchange for the related service.
Liabilities recognized in respect of other long-term
employee benefits are measured at the present
value of the estimated future cash outflows
expected to be made by the Company in respect of
services provided by employees up to the reporting
date.
Compensated leave absences are encashed by
employees at year end and no carry forward of leave
is permitted as per the leave policy.
2. Post-Employment Benefits
a. Defined Contribution Plans
A defined contribution plan is a post¬
employment benefit plan under which the
Company pays specified contributions to a
separate entity. The Company makes specified
monthly contributions towards Provident Fund
and Superannuation Fund. The Company's
contribution is recognized as an expense in the
Statement of Profit and Loss during the period
in which the employee renders the related
service.
b. Defined Benefit Plans
For defined benefit retirement plans, the cost
of providing benefits is determined using the
projected unit credit method, with actuarial
valuations being carried out at the end of each
annual reporting period. Re-measurement,
comprising actuarial gains and losses, the
effect of the changes to the asset ceiling (if
applicable) and the return on plan assets
(excluding interest), is reflected immediately in
the statement of financial position with a
charge or credit recognized in OCI in the period
in which they occur. Re-measurement
recognized in other comprehensive income is
reflected immediately in retained earnings and
will not be reclassified to profit or loss. Past
service cost is recognized in profit or loss in
the period of a plan amendment.
xx. Share Based Payments Arrangements
Equity-settled share based payments to employees
and others providing similar services are measured
at the fair value of the equity instruments at the
grant date.
xxi. Borrowing costs:
Borrowing costs directly attributable to
acquisition/ construction of qualifying assets are
capitalized until the time all substantial activities
necessary to prepare the qualifying assets for their
intended use are complete. A qualifying asset is one
that necessarily takes substantial period of time to
get ready for its intended use/ sale. All other
borrowing costs are charged to statement of profit
and loss.
xxii. Provisions:
A provision is recognized when an enterprise has a
present obligation (legal or constructive) as result
of past event and it is probable that an outflow of
embodying economic benefits of resources will be
required to settle a reliably assessable obligation.
Provisions are determined based on best estimate
required to settle each obligation at each balance
sheet date. If the effect of the time value of money
is material, provisions are discounted using a
current pre-tax rate that reflects, when
appropriate, the risks specific to the liability. When
discounting is used, the increase in the provision
due to the passage of time is recognized as a
finance cost.
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