1 (B) Material Accounting Policies
(a) Statement of Compliance
These standalone financial statements (hereinafter referred to as "financial statements") are prepared in accordance with the Indian Accounting Standards ("Ind AS") as per the Companies (Indian Accounting Standards) Rules, 2015 and presentation requirements of Division II of Schedule III notified under Section 133 of Companies Act, 2013 ("the Act''), amendments thereto and other relevant provisions of the Act and guidelines issued by the Securities and Exchange Boar of India ("SEBI"), as applicable.
The financial statements were authorised for issue by the Board of Directors of the Company at their meeting held on April 29, 2024.
(b) Basis of Preparation and Presentation:
Basis of Preparation
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities:
(i) Derivative Financial Instruments measured at fair value
(ii) Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments)
(iii) Assets held for Sale - measured at the lower of its carrying amount and fair value less costs on disposal of assets and its value in use.
(iv) Employee's Defined Benefit Plan as per actuarial valuation.
(v) Assets and liabilities acquired under Business Combination measured at fair value; and
(vi) Employee share based payments measured at fair value.
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 under current market conditions, regardless of whether that price is directly observable or estimated using another valuation technique. In determining 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.
Functional and Presentation Currency
(i) The financial statements are presented in Indian Rupees, which is the functional currency of
the Company and the currency of the primary economic environment in which the Company operates.
(ii) Figures less than ' 50,000 have been shown at actual, wherever statutorily required to be disclosed, ail other figures have been rounded off in decimals to the nearest ' in iakhs, unless otherwise stated.
Classification of Assets and Liabilities into Current/Non-Current
The Company has ascertained its operating cycle as twelve months for the purpose of Current / NonCurrent classification of its Assets and Liabilities.
For the purpose of Balance Sheet, an asset is classified as current if:
(i) It is expected to be reaiised, or is intended to be soid or consumed, in the normai operating cycie; or
(ii) It is held primarily for the purpose of trading; or
(iii) It is expected to realise the asset within twelve months after the reporting period; or
(iv) The asset is a cash or cash equivalent unless it is restricted from being exchanged or used to settie a liability for at least twelve months after the reporting period.
Aii other assets are ciassified as non-current.
Similarly, a liability is classified as current if:
(i) It is expected to be settled in the normal operating cycle; or
(ii) It is held primarily for the purpose of trading; or
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) The Company does not have an unconditional right to defer the settlement of the liability for at ieast tweive months after the reporting period. Terms of a liability that couid result in its settlement by the issue of equity instruments at the option of the counterparty does not affect this ciassification.
Aii other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as noncurrent only.
(c) Property, Plant and Equipment (PPE):
The cost of an item of PPE is recognised as an asset if it is probable that future economic benefits associated with the item wiii flow to the company and the cost of the item can be measured reliably.
The initial cost of PPE comprises its purchase price net of any trade discounts and rebates, including import duties and non-refundabie purchase taxes, and any directly attributable costs of bringing an asset to working condition and location for its intended use, including relevant borrowing costs and any expected costs of decommissioning.
Subsequent costs incurred are included in the assets's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item wiii flow to the Company and the cost of the item can be measured reiiabiy. Aii other repairs and maintenance cost are charged to the Statement of Profit and Loss during the period in which they were incurred.
If significant parts of an item of PPE have different usefui iives, then they are accounted for as separate items (major components) of PPE.
Materiai items such as spare parts, stand-by equipment and service equipment are ciassified as PPE when they meet the definition of PPE as specified in Ind AS 16 -Property, Piant and Equipment.
Any gain or ioss on disposai of an item of PPE is recognised in the Statement of Profit and Loss.
PPE except freehoid iand are stated at their cost of acquisition/instaiiation or construction net of accumuiated depreciation, and impairment iosses, if any. Freehoid iand is stated at cost iess impairment iosses, if any.
The Company had opted for deemed cost exemption under Ind AS 101 on transition of Ind AS.
Expenditure during construction period:
Expenditure/ Income during construction period (inciuding financing cost reiated to borrowed funds for construction or acquisition of quaiifying PPE) is inciuded under Capitai Work-in-Progress (CWIP), and the same is aiiocated to the respective PPE on the compietion of their construction. Advances given towards acquisition or construction of PPE outstanding at each reporting date are disciosed as Capitai Advances under "Other Non-Current Assets".
(d) Depreciation:
Depreciation is the systematic aiiocation of the depreciabie amount of PPE over its usefui iife and is provided on a straight-iine basis over the usefui iives as prescribed in Scheduie II to the Act or as per technicai assessment. Freehoid Land with indefinite iife is not depreciated.
Depreciabie amount for PPE is the cost of PPE iess its estimated residuai vaiue. The usefui iife of PPE is the period over which PPE is expected to be avaiiabie for use by the Company, or the number of production or simiiar units expected to be obtained from the asset by the Company.
In case of certain ciasses of PPE, the Company uses different usefui iives than those prescribed in Scheduie II to the Act. The usefui iives have been assessed based on technicai advice, taking into account the nature of the PPE and the estimated usage of the asset on the basis of management's best estimation of obtaining economic benefits from those ciasses of assets.
The estimated usefui iives, residuai vaiues and the depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Depreciation on additions is provided on a pro-rata basis from the month of installation or acquisition and in case of Projects from the date of commencement of commercial production. Depreciation on deductions/ disposals is provided on a pro-rata basis up to the month preceding the month of deduction/disposal.
(e) Intangible Assets and Amortisation:
• Internally generated Intangible Assets:
Expenditure pertaining to research is expensed out as and when incurred. Expenditure incurred on development is capitalised as an asset if it is probable that future economic benefits associated with the item will flow to the company and cost can be measured reliably, otherwise such expenditure is charged to the Statement of Profit and Loss.
Subsequent costs incurred are capitalized, only when it increase the future economic benefits associated with the asset and will flow to the Company whose cost can be measured reliably.
• Intangible Assets acquired separately:
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment loss, if any. Cost comprises the purchase price (net of tax / duty credits availed wherever applicable) and any directly attributable cost of bringing the assets to its working condition for its intended use. The Company determines the amortisation period as the period over which the future economic benefits will flow to the Company after taking into account all relevant facts and circumstances. The estimated useful life and amortisation method are reviewed periodically, with the effect of any changes in estimate being accounted for on a prospective basis.
• Class of intangible assets and their estimated useful lives / basis of amortisation are as under:
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of an item of intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of such item of intangible asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.
(f) Assets (or disposal groups) classified as held for sale:
The Company classifies assets as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset and its sale is highly probable. Such assets or group of assets / liabilities are presented separately in the Balance Sheet, in the line "Assets held for sale" and "Liabilities held for sale" respectively. Once classified as held for sale, intangible assets and PPE are no longer amortised or depreciated.
Such assets or disposal groups held for sale are stated at the lower of carrying amount and fair value less costs to sell.
(g) Impairment of Non-Financial Assets
At the end of each reporting period, the Company reviews the carrying amounts of non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When 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. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cashgenerating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the Statement of Profit and Loss.
(h) Inventories:
Inventories are valued as follows:
• Raw materials, fuel, stores & spares and packing materials:
Valued at lower of cost and net realisable value (NRV). However, these items are considered to be realisable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost. Cost is determined on weighted average basis which includes expenditure incurred for acquiring inventories like purchase price, import duties, taxes (net of tax credit) and other costs incurred in bringing the inventories to their present location and condition.
• Work-in- progress (WIP), finished goods, stock-in-trade and trial run inventories:
Valued at lower of cost and NRV. Cost of Finished goods, WIP and trial run inventories includes cost of raw materials, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of stock-in-trade includes cost of purchase and other costs incurred in bringing the inventories to the present location and condition. Cost of inventories is computed on weighted average basis.
• Waste / Scrap:
Waste / Scrap inventory is valued at NRV.
Net realisable value for inventories 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.
(i) Employee Share based payments:
Equity- settled share-based payments to employees are measured at the fair value of the employee stock options at the grant date using an appropriate valuation model.
The fair value determined at the grant date of the equity-settled share-based payments is amortised over the vesting period, based on the Company's estimate of equity instruments that will eventually vest, with a corresponding increase in equity.
At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in the Statement of Profit and Loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
For Stock Appreciation Rights ("SARs") which are cash-settled share-based payments, the fair value of liability is recognised for the services acquired over the period that the employees unconditionally become entitled tc the payment. At the end of each reporting period until the liability is settled, and at the date of settlement, the liability is re-measured based on the fair value of the SAR's and any changes in fair value of the liability are recognised in the Statement of Profit and Loss.
(j) Treasury Shares:
The Company has formed an Employee Welfare Trust for purchasing the Company's shares to be allotted to eligible employees under Employee Stock Options Scheme, 2018. The Company has considered the said Employee Welfare Trust as its extension and shares held by the Trust is treated as Treasury Shares. As per Ind AS 32, the consideration paid for treasury shares including any directly attributable incremental cost is presented as a deduction from total equity, until they are cancelled, sold or reissued.
(k) Borrowing Costs:
General and specific borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of such asset till such time the asset
is ready for its intended use and borrowing costs are being incurred. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.
Borrowing cost includes interest expense, amortization of discounts, hedge related cost incurred in connection with foreign currency borrowings, ancillary costs incurred in connection with borrowing of funds and exchange difference arising from foreign currency borrowings to the extent they are regarded as an adjustment to the Interest cost.
(l) Government Grants:
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received.
Government grants related to expenses, are recognised in the Statement of Profit and Loss on a systematic basis over the periods in which the Company recognises the related costs for which the grants are intended to compensate.
Government grants related to income under State Investment Promotion Scheme linked with Value Added Tax (VAT) / Goods & Services Tax (GST) payment, are recognised in the Statement of Profit and Loss on the event they become receivable.
Where the grant relates to an asset, it is recognised as income on a systematic basis over the expected useful life of the related asset.
The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates and is being recognised in the Statement of Profit and Loss.
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