2.15 Provisions, contingent liabilities and contingent assets
Provisions are recognised when the Company has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation. The
expense relating to any provision is presented in the statement
of profit and loss net of any reimbursement. If the effect of the
time value of money is material, provisions are determined by
discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money
and, where appropriate, the risks specific to the liability. Where
discounting is used, the increase in the provision due to the
passage of time is recognised as other finance expense.
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond
the control of the Company or a present obligation that is not
recognised because it is not probable that an outflow of resources
will be required to settle the obligation. A contingent liability
also arises in extremely rare cases where there is a liability that
cannot be recognised because it cannot be measures reliably.
The Company does not recognise a contingent liability but
discloses its existence in the standalone financial statements.
A contingent asset is not recognised unless it becomes virtually
certain that an inflow of economic benefits will arise. When an
inflow of economic benefits is probable, contingent assets are
disclosed in the standalone financial statements.
Provisions, Contingent liabilities and contingent assets are
reviewed at each balance sheet date.
2.17 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. The liabilities are presented
as current employee benefit obligations in the balance
sheet.
(ii) Other long-term employee benefit obligations
The liabilities for earned leave are not expected to be
settled wholly within 12 months after the end of the period
in which the employees render the related service. They
are therefore 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 appropriate market yields 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 profit or loss.
The obligations are presented as current liabilities in the
balance sheet if the entity does not have an unconditional
right to defer settlement for at least twelve months after
the reporting period, regardless of when the actual
settlement is expected to occur.
(iii) Post-employment obligations
The company operates the following post-employment
schemes
(a) Defined benefit plans such as gratuity
(b) Defined contribution plans such as provident fund
(c) State plans
(d) Voluntary retirement scheme
(a) Defined benefit plans - Gratuity obligations
The liability or assets recognised in the balance sheet
in respect of defined benefit gratuity plans is the
present value of the defined benefit obligations 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
denominated in INR 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. The benefits which
are denominated in currency other than INR, the cash
flows are discounted using market yields determined
by reference to high-quality corporate bonds that are
denominated in the currency in which the benefits
will be paid, and that have terms approximating to
the terms of the related obligation.
The net interest cost is calculated by applying the
discount rate to the net balance of the defined
benefit obligation and the fair value of plan assets.
This cost is included in employee benefit expense in
the statement of profit and loss.
Remeasurement gains and losses arising from
experience adjustments and change 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.
Changes in the present value of the defined benefit
obligation resulting from plan amendments or
curtailments are recognised immediately in profit or
loss as past service cost.
(b) Defined contribution plans
The Company pays provident fund contributions
to publicly administered funds as per applicable
regulations. The Company has no further payment
obligations once the contributions have been paid.
The contributions are accounted for as defined
contribution plans and the contributions are
recognised as employee benefit expense when they
are due.
(c) State plans
Employer's contribution to Employees' State
Insurance is charged to statement of profit and loss.
(d) Voluntary retirement scheme
Compensation payable under the voluntary
retirement scheme is being charged to the Statement
of Profit and Loss in the year of settlement.
2.18 Dividends
Provision is made for the amount of any dividend declared,
being appropriately authorised and no longer at the discretion
of the entity, on or before the end of the reporting period but
not distributed at the end of the reporting period. Dividend
is recognised as a liability in the period in which the interim
dividends are approved by the Board of Directors, or in respect
of the final dividend when approved by shareholders.
2.19 Research and development expenditure
Revenue expenditure pertaining to research is charged to the
statement of profit and loss. Product development costs are
charged to the statement of profit and loss unless a product's
technological and commercial feasibility has been established,
in which case such expenditure is capitalised.
2.20 Earnings per share
Basic earnings per share are calculated by dividing the net profit
or loss for the period attributable to equity shareholders by the
weighted average number of equity shares outstanding during
the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders
and the weighted average number of shares outstanding during
the period are adjusted for the effects of all dilutive potential
equity shares.
2.21 Investment property
Property that is held for long-term rental yields or for capital
appreciation or both, and that is not used in the production
of goods and services or for the administrative purposes, is
classified as Investment property and is 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.
2.22 Government grants
Government grants relating to income are deferred and
recognised in the profit or loss over the period necessary to
match them with the costs that they are intended to compensate
and presented within other income.
Government grants relating to the purchase of property, plant
and equipment are included in non-current liabilities as deferred
income and are credited to profit or loss on a straight-line basis
over the expected lives of the related assets and presented
within other income.
Export entitlements from government authorities are
recognised in the statement of profit and loss as a reduction
from "Cost of materials consumed" when the right to receive
credit as per the terms of the scheme is established in respect of
the exports made by the group, and where there is no significant
uncertainty regarding the ultimate realisation of the entitlement
2.23 Rounding of amounts
All amounts disclosed in the standalone financial statements
and notes have been rounded off to the nearest lakhs as per the
requirement of Schedule III, unless otherwise stated.
2.24 Recent accounting pronouncements(i) New and amended standards adopted by the Company
The Ministry of Corporate Affairs vide notification dated
May 7, 2025 and August 13, 2025 notified the Companies
(Indian Accounting Standards) Amendment Rules, 2025
and Companies (Indian Accounting Standards) Second
Amendment Rules, 2025, respectively, which amended
certain accounting standards (see below), and are effective
for annual reporting periods beginning on or after April 1,
2025:
(a) Classification of Liabilities as Current or Non¬
current and Non-current Liabilities with Covenants- Amendments to Ind AS 1
As a result of the adoption of the amendments to Ind
AS 1, the Company changed its accounting policy for
the classification of borrowings:
"Borrowings are classified as current liabilities unless,
at the end of the reporting period, the Company has
a right to defer settlement of the liability for at least
12 months after the reporting period. Covenants that
the Company is required to comply with, on or before
the end of the reporting period, are considered in
classifying loan arrangements with covenants as
current or non-current. Covenants that the Company
is required to comply with after the reporting period
do not affect the classification."
This new policy did not result in a change in the
classification of the Company's borrowings. The
Company did not make retrospective adjustments as
a result of adopting the amendments to Ind AS 1.
(b) Supplier Finance Arrangements - Amendments to
Ind AS 7 and Ind AS 107
As a result of the adoption of the amendments to
Ind AS 7 and Ind AS 107, the Company provided
new disclosures for liabilities under supplier finance
arrangements in note 15(e) .
(c) International Tax Reform - Pillar Two Model Rules- Amendments to Ind AS 12
The Company is not within the scope of the OECD
Pillar Two Model Rules, as Pillar Two legislation has
not yet been enacted in any of the jurisdictions in
which the Company operates.
(d) Lack of Exchangeability - Amendments to Ind AS
21
The amended Ind AS 21 have added requirements
to help entities to determine whether a currency is
exchangeable into another currency, and the spot
exchange rate to use where it is not.
These amendments did not have any material impact
on the amounts recognised in prior periods and are
not expected to significantly affect the current or
future periods.
(ii) New standards or amendments not yet adoptedClassification of Liabilities as Current or Non¬
current and Non-current Liabilities with Covenants -
Amendments to Ind
AS 1 - This amendment also includes specific provisions
that will take effect for reporting periods beginning on or
after April 1,2026, as outlined below.
Under the existing Ind AS 1, where there is a breach of a
material provision of a long-term loan arrangement on or
before the end of the reporting period with the effect that
the liability becomes payable on demand on the reporting
date, the entity does not classify the liability as current, if
the lender agreed, after the reporting period and before
the approval of the financial statements for issue, not to
demand payment as a consequence of the breach.
However, the amended requirements stipulate that entities
will no longer be permitted to consider lender waivers
that are granted after the reporting date but before the
financial statements are approved for the purpose of
classification of loans. This amendment is required to be
applied retrospectively in accordance with Ind AS 8. The
Company does not expect this amendment to have an
impact on its operations or financial statements.
(v) Sub-division/Split of Equity share:-
Pursuant to the approval of the shareholders of the company through postal ballot, one equity share of Rs. 10 /- each fully paid up was
subdivided/split into five equity share of Rs. 2/- each with effect from June 21,2024.
Terms and rights attached to equity shares
The company has only one class of equity shares having a par value of Rs.2/- per share. Each holder of equity shares is entitled to one vote
per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend.
Note 25(a):
(i) Defined contribution plans
Employer's contribution to Provident Fund: Contributions are made to provident fund in India for employees at the rate of 12% of basic
salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the
company is limited to the amount contributed and it has no further contractual or any constructive obligation.
Employer's contribution to State Insurance Scheme: Contributions are made to State Insurance Scheme for employees at the specified
rate on gross salary as per regulations. The contributions are made to Employee State Insurance Corporation (ESI) to the respective State
Governments of the Company's location. This Corporation is administered by the Government and the obligation of the company is limited to
the amount contributed and it has no further contractual or any constructive obligation.
(ii) Defined benefits plans
Post-employment obligations - Gratuity
The company provides for gratuity for employees in India as per the payment of Gratuity Act, 1972. Employees who are in continuous service
for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement / termination is the employee's last drawn basic
salary per month computed proportionately for 15 days' salary multiplied for the number of years of service. The gratuity plan is a funded plan
and the company makes contributions to recognized funds in India. The company does not fully fund the liability and maintains a target level
of funding to be maintained over a period of time based on estimations of expected gratuity payments.
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely
to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to
significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit
method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
Defined benefit liability and employer contributions
The company has purchased insurance policy to provide for payment of gratuity to the employees. Every year, the insurance company carries
out a funding valuation based on the latest employee data provided by the company. Any deficit in the assets arising as a result of such
valuation is funded by the company. The company considers that the contribution rate set at the last valuation date is sufficient to eliminate
the deficit over the agreed period and that regular contributions, which are based on service costs, will not increase significantly.
Defined benefit plans are prone to a number of risks, the most significant of which are detailed below:
Interest rate risk: This may arise from volatility in asset values due to market fluctuations and impairment of assets due to credit losses. These
Plans primarily invest in debt instruments such as Government securities and highly rated corporate bonds - the valuation of which is inversely
proportional to the interest rate movements.
Salary cost inflation risk: The present value of the Defined Benefit Plan liability is calculated with reference to the future salaries of participants
under the Plan. Increase in salary due to adverse inflationary pressures might lead to higher liabilities.
Note 29 (c): Reversal of provision for Expected loss on long term contracts
The company made a provision of Rs.500 lakhs in F.Y. 2024-25 towards expected loss on long term contracts which has been reversed in the first
quarter of F.Y. 2025-26 pursuant to reassessment of the expected contract income
Note 29 (d): Exceptional Item - Ex-gratia Compensation
The Company incurred ex-gratia compensation of ?520.00 lakhs towards financial assistance provided to employees affected by the accident
at the manufacturing facility. Owing to its exceptional nature and materiality, the expenditure has been presented as an Exceptional Item in
the Statement of Profit and Loss.
Note 30: Income tax expense
This note provides an analysis of the company's income tax expense, shows amounts that are recognised directly in equity and how the tax
expense is affected by non-assessable and non-deductible items. It also explains significant estimates made in relation to the company's tax
positions.
Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:
Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize
the use of observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair value an
instrument are observable, the instrument is included in Level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. This is the case
with listed instruments where market is not liquid and for unlisted instruments.
Note:
(i) Investments mentioned in note 7 include equity investments in Subsidiaries which are carried at costs and hence are not required to be
disclosed as per Ind AS 107 "Financial Instruments Disclosures". Hence, the same have been excluded from the above table.
(ii) The carrying amounts of trade payables, other financial liabilities, borrowings, cash and cash equivalents, other bank balances, trade
receivables, unbilled receivable and other financial assets are considered to be the same as their fair values due to their short term nature
and recoverability from the parties.
Note 32 : Financial instruments and risk management - Financial risk management
The Company's activities are exposed to Credit risk, Market risk and Liquidity risk. The Company emphasises on risk management and has an
enterprise wide approach to risk management. The Company's risk management and control procedures involve prioritization and continuing
assessment of these risks and devises appropriate controls, evaluating and reviewing the control mechanism.
(A) Credit risk
Credit risk is the risk of financial loss to the Company if a customer to a financial instrument fails to meet its contractual obligations. The
Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including
deposits with banks. Credit risk of the Company is managed at the company level.
The credit risk related to trade receivables is influenced mainly by the individual characteristics of each customer. The Company follows a
'simplified approach' (i.e. based on Life time expected credit losses based on provision matrix) for recognition of impairment loss allowance
on Trade receivables. For the purpose of measuring ECL allowance for trade receivables, the company estimates irrecoverable amounts
based on the ageing of the receivable balances and historical experience. Further, a large number of minor receivables are grouped into
homogeneous groups and assessed for impairment collectively and for major receivable assessed for impairment individually. Individual
trade receivables are written off when management deems them not to be collectible.
Market risk is the risk that the future value of a financial instrument will fluctuate due to movements in the market factors. The most
common types of market risks are interest rate risk and foreign currency risk.
• Interest rate risk
Interest rate risk is the risk that the future cash flows or the fair value of a financial instrument will fluctuate because of changes in market
interest rates. The interest rate risk is towards short term borrowings and term deposits with banks. The Company manages its market
interest rates by fixed rate interest, rate that is linked to marginal cost of lending rate, etc. Hence, the Company is not significantly exposed
to interest rate risks.
• Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange
rates. The company is not significantly exposed to this risk because of natural hedging in the form of imports and exports being at similar
levels.
Foreign currency risk - Sensitivity
The analysis is based on the assumption that the foreign currency increases / (decreases) by 2.5% with all other variables held constant. The
Company manages its market interest rates by fixed rate interest, rate that is linked to marginal cost of lending rate, etc. Hence, the Company
is not significantly exposed to interest rate risks.
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to
maintain sufficient liquidity and ensure that funds are available for use as per requirements.
The Company's objective is to maintain a balance between continuity of funds through the use of bank overdrafts, loan from directors
and other means of borrowings. The company invests its surplus funds in deposits with maturity of 12 months, which carry no / low mark
to market risk.
(b) Loan covenants
Under the terms of major borrowing facilities, the company is required to comply with the following financial covenants:
* Total net worth should be greater than Rs. 220 crores including deferred tax liabilities.
* Total outside liabilities should be less than 1.00 times of the total net worth of the company
* Total debt should be less than 2.00 times of the Earnings before interest, depreciation, taxes and amortisation of the company
* Debt service coverage ratio should be greater than 1.25 throughout the tenor of the loan
The company has complied with these covenants throughout the reporting period.
Note 42: Other Statutory Information
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding
any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed
as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions
of the Income Tax Act, 1961)
(vi) The Company has not been declared as Wilful defaulter by any Banks, Financial institution or Other lenders.
(vii) The Company has not entered into any scheme of arrangements which has an accounting impact on current and previous financial year.
(viii) The Company has complied with the number of layers prescribed under the Companies Act, 2013.
Reasons for Variance:
Debt-Equity Ratio: Change is on account of decrease in debt during the year.
Debt Service Coverage Ratio: Change on account of Increase in earnings available debt service during the year
Trade receivables turnover ratio: Change is on account of increase in Revenue during the year.
Trade Payables Turnover Ratio: Change is on account of Decrease in Raw Material purchases during the year.
Note 44 (i): No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind
of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding,
whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate
Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall
whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or
provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
Note 44 (ii): No funds have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the
understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons
or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee,
security or the like on behalf of the Ultimate Beneficiaries.
Note 45: Events occurring after the reporting period
(i) Proposed dividend
The dividend proposed and recommended by the Board of Directors for the approval of members at the ensuing annual general meeting :
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