Accounting Policies of EPACK Durables Ltd. Company

Mar 31, 2025

2. Material accounting policies

2.1 Basis of preparation

The Standalone financial statements (''financial
statements'') of the Company, have been prepared
in accordance with the Indian Accounting Standard
(Ind AS) notified under section 133 of the Companies
Act, 2013 ("the Act") read with relevant rules issued
thereunder and other accounting principles
generally accepted in India.

The financial statements have been prepared on
accrual and going concern basis under historical cost
convention except for certain financial instruments
and plan assets, which are measured at fair values.
The accounting policies are applied consistently to
all the periods presented in the financial statements.

The financial statements are presented in Indian
Rupees (?) in lakh and all values are rounded
to the nearest lakh ('' 00,000), except when
otherwise stated.

The material accounting policies and measurement
bases have been summarised below.

a. Current versus non-current classification

All assets and liabilities have been classified as
current or non-current as per the Company''s
normal operating cycle and as per terms of
agreements wherever applicable. The company
has considered a normal operating cycle of
12 months. Deferred tax assets and liabilities
are classified as non-current assets and
non-current liabilities, as the case may be.

b. Revenue recognition
Sale ofgoods

Sales are recognized, at transaction price as
per terms of agreements with the customers,
net of returns and other variable consideration
on account of discounts, if any, on satisfaction
of performance obligation by transfer of
effective control of the promised goods to
the customers, which generally coincides with
dispatch/ delivery to customers, as applicable.
Sales excludes goods and services tax.

The Company recognises revenue when the
amount of revenue and its related cost can be
reliably measured and it is probable that future
economic benefits will flow to the entity and
degree of managerial involvement associated
with ownership or effective control have been
met for each of the Company''s activities.
The Company bases its estimates on historical
results, taking into consideration the type of
customer, the type of transactions and the
specifics of each arrangement.

Revenue is recognized for domestic and export
sales of goods on satisfaction of performance
obligation by transfer of effective control of the
promised goods to the customers as per terms
of agreements with the customers.

Contract modification:

Contract modification is a change in the
scope or price (or both) of a contract that
is approved by the parties to the contract.
Contract modification are accounted based
on the prospective accounting and cumulative
catch up. The Company accounts for a
modification as a separate contract, if both the
scope increases due to the addition of ''distinct''
goods or services and the price increase
reflects the goods'' or services'' stand-alone
selling prices under the circumstances of the
modified contract.

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.

c. Government grants

Government grants are recognised at their fair
value where there is reasonable assurance
that the grant will be received and all attached
conditions will be complied with.

Government grants relating to income are
deferred and recognised in profit or loss over
the period necessary to match them with
costs that they are intended to compensate
and presented with other income/ other
operating revenue.

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 over the periods
and in the proportions necessary to match then
with the depreciation expense on the related
assets and presented within other income.

d. Inventories

Inventories of raw materials, components,
stores and spares are valued at the lower of
cost and net realisable value. Costs incurred in
bringing each product to its present location
and conditions are accounted for as follows:

â¢ Raw materials and components: cost
includes cost of purchase and other costs
incurred in bringing the inventories to
their present location and condition such
as non-refundable duties, freight etc.
Costs of Raw materials and components
are computed using the weighted
average cost formula.

â¢ Finished goods and work in progress:
cost includes cost of direct materials and
labour and a proportion of manufacturing
overheads based on the normal operating
capacity, but excluding borrowing costs.
Costs of finished goods and work in
progress are computed using the weighted
average cost formula.

Provision for obsolescence and slow-moving
inventory is made based on management''s
best estimates of net realisable value of
such inventories.

Net realisable value is the estimated selling
price in the ordinary course of business,
less estimated costs of completion and the
estimated costs necessary to make the sale.

e. Income Taxes

Tax expense recognized in the statement
of profit and loss comprises the sum of
deferred tax and current tax not recognized
in Other Comprehensive Income (OCI) or
directly in equity.

Current tax is measured at the amount
expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961.
Current tax relating to items recognized outside
statement of profit and loss is recognized
outside statement of profit and loss (i.e. in OCI
or equity depending upon the treatment of
underlying item).

Deferred tax liabilities are generally recognized
in full for all taxable temporary differences.
Deferred tax assets are recognized to the
extent that it is probable that the deductible
temporary difference will be utilized against
future taxable income. This is assessed based
on the Company''s forecast of future operating
results, adjusted for significant non-taxable
income and expenses. Unrecognized deferred
tax assets are re-assessed at each reporting
date and are recognized 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 realized 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 recognized outside the statement of
profit and loss is recognized outside statement
of profit and loss (in OCI or equity depending
upon the treatment of underlying item).

f. Cash and cash equivalents

Cash and cash equivalent in the balance sheet
comprise cash at banks and on hand and
short-term deposits with an original maturity
of three months or less, which are subject to
an insignificant risk of changes in value. For the
purpose of the statement of cash flows, cash
and cash equivalents consist of cash and
short-term deposits, as defined above, net
of outstanding bank overdrafts as they are

considered an integral part of the Company''s
cash management.

g. Foreign currency transactions

Functional and Presentation currencies

The Company''s financial statements are
presented in Indian Rupees (?) which is also the
Company''s functional currency.

Foreign currency transactions are translated
into the functional currency using the
exchange rates at the dates of the transactions.
Foreign exchange gains and losses resulting
from the settlement of such transactions and
from the translation of monetary assets and
liabilities denominated in foreign currencies
at year end exchange rates are generally
recognized in profit or loss.

Foreign exchange differences regarded as an
adjustment to borrowing costs are presented in
the statement of profit and loss, within finance
costs. All other foreign exchange gains and
losses are presented in the statement of profit
and loss on a net basis within other income/
expenses, as the case maybe.

h. Financial instruments

Initial recognition and measurement

A financial instrument is any contract that
gives rise to a financial asset of one entity
and a financial liability or equity instrument of
another entity.

Financial assets

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.

Subsequent measurement

For the purpose of subsequent measurement,
financial assets are classified into the following
categories upon initial recognition:

Financial assets carried at amortised cost - a
financial instrument is measured at amortised
cost if both the following conditions are met:

â¢ The asset is held within a business model
whose objective is to hold assets for
collecting contractual cash flows, and

â¢ 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 method.

Financial assets at fair value

Investments in equity instruments (other
than subsidiary) -

All equity investments in scope of Ind AS
109, "Financial Instruments" are measured
at fair value. Equity instruments which are
held for trading and contingent consideration
recognised by an acquirer in a business
combination, if any to which Ind AS 103,
Business combinations applies are classified as
at fair value through Profit or loss. Further, there
is no such equity investments measured at Fair
value through profit or loss or fair value through
other comprehensive income in the company.

I f the Company decides to classify an equity
instrument as at FVOCI, then all fair value
changes on the instrument, excluding
dividends, are recognised in the other
comprehensive income (OCI). There is no
recycling of the amounts from OCI to P&L, even
on sale of investment. However, the Company
may transfer the cumulative gain or loss within
equity. Dividends on such investments are
recognised in profit or loss unless the dividend
clearly represents a recovery of part of the cost
of the investment.

Equity instruments included within the FVTPL
category are measured at fair value with all
changes recognised in the P&L.

De-recognition of financial assets

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

Financial liabilities and equity

Classification as debt or equity

Debt and equity instruments 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

All financial liabilities are recognised initially at
fair value plus, in the case of financial liabilities
not recorded at fair value through profit or
loss, transaction costs that are attributable
to the acquisition of the financial liabilities.
Transaction costs directly attributable to
the acquisition of financial liabilities at fair
value through profit or loss are recognised
immediately in finance costs in the statement
of profit and loss.

Subsequent measurement

All financial liabilities are measured
subsequently at amortised cost using the
effective interest method or at FVTPL.
Amortised cost is calculated after considering
any discount or premium on acquisition and
fees or costs that are an integral part of the EIR.
The effect of EIR amortisation is included as
finance costs in the statement of profit and loss.

De-recognition of financial liabilities

A financial liability is de-recognised 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 recognised in the statement of
profit and loss.

Derivative financial instruments

Initial and subsequent measurement

Derivatives are initially recognised at fair value
on the date a derivative contract is entered into
and are subsequently re-measured to their fair
value at the end of each reporting period.

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 recognised amounts
and there is an intention to settle on a net basis,
to realise the assets and settle the liabilities
simultaneously.

Impairment of financial assets

All financial assets except for those at FVTPL
are subject to review for impairment at least
at each reporting date to identify whether
there is any objective evidence that a financial
asset or a group of financial assets is impaired.
Different criteria to determine impairment are
applied for each category of financial assets.

In accordance with Ind-AS 109, the Company
applies expected credit loss (ECL) model for
measurement and recognition of impairment
loss for financial assets carried at amortised cost.

ECL is the weighted average of difference
between all contractual cash flows that are due
to the Company in accordance with the contract
and all the cash flows that the Company expects
to receive, discounted at the original effective
interest rate, with the respective risks of default
occurring as the weights. When estimating the
cash flows, the Company is required to consider

â¢ All contractual terms of the financial assets
(including prepayment and extension)
over the expected life of the assets.

â¢ Cash flows from the sale of collateral held
or other credit enhancements that are
integral to the contractual terms

Trade receivables

The Company applies simplified approach
permitted by Ind AS 109 Financial Instruments,
which requires lifetime expected credit losses
to be recognised upon initial recognition of
receivables. Lifetime ECL are the expected credit
losses resulting from all possible default events
over the expected life of a financial instrument.

Other financial assets

the Company measures the loss allowance at
an amount equal to 12-month expected credit
losses, else at an amount equal to the lifetime
expected credit losses

When making this assessment, the Company
uses the change in the risk of a default
occurring over the expected life of the financial
asset. To make that assessment, the Company
compares the risk of a default occurring on the
financial asset as at the balance sheet date with
the risk of a default occurring on the financial
asset as at the date of initial recognition
and considers reasonable and supportable
information, that is available without undue
cost or effort, that is indicative of significant
increases in credit risk since initial recognition.
The Company assumes that the credit risk on
a financial asset has not increased significantly
since initial recognition if the financial asset
is determined to have low credit risk at the
balance sheet date.

i. Impairment of non-financial assets

For impairment assessment purposes, assets
are grouped at the lowest levels for which there
are largely independent cash inflows (cash
generating units). As a result, some assets are
tested individually for impairment and some
are tested at cash-generating unit level.

At each reporting date, the Company assesses
whether there is any indication based on
internal/ external factors, that an asset may
be impaired. If any such indication exists, the
Company estimates the recoverable amount
of the asset. If such recoverable amount
of the asset or the recoverable amount of
the cash generating unit to which the asset
belongs is less than its carrying amount, the
carrying amount is reduced to its recoverable
amount and the reduction is treated as an
impairment loss and is recognised in the
statement of profit and loss. If, at the reporting
date there is an indication that a previously
assessed impairment loss no longer exists, the
recoverable amount is reassessed which is the
higher of fair value less costs of disposal and
value-in-use and the asset is reflected at the
recoverable amount subject to a maximum of
depreciated historical cost. Impairment losses
previously recognised are accordingly reversed
in the statement of profit and loss.

To determine value-in-use, management
estimates expected future cash flows from

each cash generating unit and determines a
suitable discount rate in order to calculate the
present value of those cash flows. The data
used for impairment testing procedures are
directly linked to the Company''s latest approved
budget, adjusted as necessary to exclude the
effects of future re-organisations and asset
enhancements.Discountfactorsare determined
individually for each cash-generating unit and
reflect current market assessment of the time
value of money and asset-specific risk factors.

j. Fair value measurement

The Company measures financial instruments
such as derivatives 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 or transfer the liability takes place either:

â¢ In the principal market for the asset
or liability, or

â¢ 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:

â¢ Level 1 - Quoted (unadjusted) market
prices in active markets for identical assets
or liabilities

â¢ Level 2 - Valuation techniques for which
the lowest level input that is significant to
the fair value measurement is directly or
indirectly observable

â¢ 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 recognised 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.

For the purpose of fair value disclosures, the
Company has determined classes of assets
and liabilities on the basis of the nature,
characteristics and risks of the asset or liability
and the level of the fair value hierarchy as
explained above.

k. Investments in subsidiary and associate/
joint venture

The Company has measured its investment
in subsidiaries and associate/joint venture at
cost in its financial statements in accordance
with Ind AS 27, Separate Financial Statements.
Profit/loss on sale of investments is recognized
on the date of sale and is computed
with reference to the original cost of the
investment sold.

l. Property, plant and equipment (PPE)

The Company has elected to continue with
the carrying value for all its property, plant
and equipment as recognized in the financial
statements as at the date of transition to Ind-AS
and use the same as its deemed cost as at the
date of transition.

Recognition and initial measurement

intended use. Any trade discount and rebates
are deducted in arriving at the purchase price.
Subsequent costs are included in the asset''s
carrying amount or recognized as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with
the item will flow to the Company and definition
of asset is met. All other repair and maintenance
costs are recognized in the statement of profit
or loss as incurred.

Subsequent measurement (depreciation
and useful lives)

Depreciation on property, plant and equipment
is provided on straight line method based
on life prescribed as per Schedule II of the
Companies Act, 2013.

De-recognition

An item of property, plant and equipment
and any significant part initially recognized
is de-recognized upon disposal or when no
future economic benefits are expected from
its use or disposal. Any gain or loss arising on
de-recognition of the asset (calculated as the
difference between the net disposal proceeds
and the carrying amount of the asset) is
included in the statement of profit and loss
when the asset is derecognized.

m. Intangible assets

Recognition, initial measurement and
subsequent measurement Intangible assets
acquired separately are measured on initial
recognition at cost. Following initial recognition,
intangible assets are carried at cost less any
accumulated amortisation and accumulated
impairment losses. Internally generated
intangibles, excluding capitalized development
costs, are not capitalized and the related

expenditure is reflected in profit or loss in the
period in which the expenditure is incurred

n. Capital work-in progress

Cost of material consumed and erection charges
thereon along with other direct cost incurred
by the Company for the projects are shown as
capital work-in-progress until capitalisation

o. Leases

The Company as a lessee

Classification of leases

The Company enters into leasing arrangements
for various assets. The assessment of the lease
is based on several factors, including, but not
limited to, transfer of ownership of leased
asset at end of lease term, lessee''s option to
extend/purchase etc.

Recognition and initial measurement

At lease commencement date, the Company
recognizes a right-of-use asset and a lease
liability on the balance sheet. The right-of-
use asset is measured at cost, which is made
up of the initial measurement of the lease
liability, any initial direct costs incurred by the
Company, an estimate of any costs to dismantle
and remove the asset at the end of the lease (if
any), and any lease payments made in advance
of the lease commencement date (net of any
incentives received).

Subsequent measurement

The Company depreciates the right-of-use
assets on a straight-line basis from the lease
commencement date to the earlier of the end
of the useful life of the right-of-use asset or
the end of the lease term. The Company also
assesses the right-of-use asset for impairment
when such indicators exist.

fixed payments) and variable payments based
on an index or rate. Subsequent to initial
measurement, the liability will be reduced for
payments made and increased for interest.
It is re-measured to reflect any reassessment
or modification, or if there are changes in
in-substance fixed payments. When the lease
liability is re-measured, the corresponding
adjustment is reflected in the right-of-use asset.

The Company has elected to account for
short-term leases and leases of low-value
assets using the practical expedients.
Instead of recognizing a right-of-use asset and
lease liability, the payments in relation to these
are recognized as an expense in standalone
statement of profit and loss on a straight-line
basis over the lease term.

p. Borrowing costs

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

Mar 31, 2024

2. Material accounting policies 2.1 Basis of preparation

The Standalone financial statements (''financial statements'') of the Company, have been prepared in accordance with the Indian Accounting Standard (Ind AS) notified under section 133 of the Companies Act, 2013 ("the Act") read with relevant rules issued thereunder and other accounting principles generally accepted in India.

The financial statements have been prepared on accrual and going concern basis under historical cost convention except for certain financial instruments and plan assets, which are measured at fair values. The accounting policies are applied consistently to all the periods presented in the financial statements.

The financial statements are presented in Indian Rupees (?) in lakh and all values are rounded to the nearest lakh ('' 00,000), except when otherwise stated.

The material accounting policies and measurement bases have been summarised below.

a. Current versus non-current classification

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and as per terms of agreements wherever applicable. The company has considered a normal operating cycle of 1 2 months. Deferred tax assets and liabilities are classified as non-current assets and non-current liabilities, as the case may be.

b. Revenue recognition Sale ofgoods

Sales are recognized, at transaction price as per terms of agreements with the customers, net of returns and other variable consideration on account of discounts, if any, on satisfaction of performance obligation by transfer of effective control of the promised goods to the customers, which generally coincides with dispatch/ delivery to customers, as applicable. Sales excludes goods and services tax.

The Company recognises revenue when the amount of revenue and its related cost can be reliably measured and it is probable that future economic benefits will flow to the entity and degree of managerial involvement associated with ownership or effective control have been met for each of the Company''s activities. The Company bases its estimates on histsorical results, taking into consideration the type of customer, the type of transactions and the specifics of each arrangement.

Revenue is recognized for domestic and export sales of goods on satisfaction of performance obligation by transfer of effective control of the promised goods to the customers as per terms of agreements with the customers.

Contract modification:

Contract modification is a change in the scope or price (or both) of a contract that is approved by the parties to the contract. Contract modification are accounted based on the prospective accounting and cumulative catch up. The Company accounts for a modification as a separate contract, if both the scope increases due to the addition of ''distinct'' goods or services and the price increase

reflects the goods'' or services'' stand-alone selling prices under the circumstances of the modified contract.

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.

c. Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.

Government grants relating to income are deferred and recognised in profit or loss over the period necessary to match them with costs that they are intended to compensate and presented with other income/ other operating revenue.

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 over the periods and in the proportions necessary to match then with the depreciation expense on the related assets and presented within other income.

d. Inventories

Inventories of raw materials, components, stores and spares are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and conditions are accounted for as follows:

â¢ Raw materials and components: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition such as non-refundable duties, freight etc. Costs of Raw materials and components are computed using the weighted average cost formula.

Costs of finished goods and work in progress are computed using the weighted average cost formula.

Provision for obsolescence and slow-moving inventory is made based on management''s best estimates of net realisable value of such inventories.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

e. Income Taxes

Tax expense recognized in the statement of profit and loss comprises the sum of deferred tax and current tax not recognized in Other Comprehensive Income (OCI) or directly in equity.

Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Current tax relating to items recognized outside statement of profit and loss is recognized outside statement of profit and loss (i.e. in OCI or equity depending upon the treatment of underlying item).

Deferred tax liabilities are generally recognized in full for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that the deductible temporary difference will be utilized against future taxable income. This is assessed based on the Company''s forecast of future operating results, adjusted for significant non-taxable income and expenses. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized 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 realized 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 recognized outside the statement of profit and loss is recognized outside statement of profit and loss (in OCI or equity depending upon the treatment of underlying item).

f. Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.

g. Foreign currency transactions Functional and Presentation currencies

The Company''s financial statements are presented in Indian Rupees (?) which is also the Company''s functional currency.

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss.

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other income/expenses, as the case maybe.

h. Financial instruments

Initial recognition and measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets

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.

Subsequent measurement

For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:

Financial assets carried at amortised cost - a financial instrument is measured at amortised cost if both the following conditions are met:

â¢ The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

â¢ 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 method.

Financial assets at fair value

Investments in equity instruments (other than subsidiary) -

All equity investments in scope of Ind AS 109, "Financial Instruments" are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination, if any to which Ind AS 103, Business combinations applies are classified as at fair value through Profit or loss. Further, there is no such equity investments measured at Fair value through profit or loss or fair value through other comprehensive income in the company.

If the Company decides to classify an equity instrument as at FVOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the other comprehensive income (OCI). There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity. Dividends on such investments are recognised in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.

Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the P&L.

De-recognition of financial assets

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

Financial liabilities and equity Classification as debt or equity

Debt and equity instruments 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 Group are recognised at the proceeds received, net of direct issue costs.

Initial recognition and measurement

All financial liabilities are recognised initially at fair value plus, in the case of financial liabilities not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial liabilities. Transaction costs directly attributable to the acquisition of financial liabilities at fair value through profit or loss are recognised immediately in finance costs in the statement of profit and loss.

Subsequent measurement

All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL. Amortised cost is calculated after considering any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The effect of EIR amortisation is included as finance costs in the statement of profit and loss.

De-recognition of financial liabilities

A financial liability is de-recognised 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 recognised in the statement of profit and loss.

Derivative financial instruments Initial and subsequent measurement

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period.

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 recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

Impairment of financial assets

All financial assets except for those at FVTPL are subject to review for impairment at least at each reporting date to identify whether there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets.

In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets carried at amortised cost.

ECL is the weighted average of difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate, with the respective risks of default occurring as the weights. When estimating the cash flows, the Company is required to consider

â¢ All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.

â¢ Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms

Trade receivables

The Company applies approach permitted by Ind AS 109 Financial Instruments, which requires lifetime expected credit losses to be recognised upon initial recognition of receivables. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument.

Other financial assets

For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses

When making this assessment, the Company uses the change in the risk of a default occurring over the expected life of the financial asset. To make that assessment, the Company compares the risk of a default occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. The Company assumes that the credit risk on a financial asset has not increased significantly since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date.

i. Impairment of non-financial assets

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.

At each reporting date, the Company assesses whether there is any indication based on internal/ external factors, that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If, at the reporting date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed which is the higher of fair value less costs of disposal and value-in-use and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost. Impairment losses previously recognised are accordingly reversed in the statement of profit and loss.

To determine value-in-use, management estimates expected future cash flows from each cash generating unit and determines a suitable discount rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Company''s latest approved budget, adjusted as necessary to exclude the effects of future re-organisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect current market assessment of the time value of money and asset-specific risk factors.

j. Fair value measurement

The Company measures financial instruments such as derivatives 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 or transfer the liability takes place either:

â¢ In the principal market for the asset or liability, or

â¢ 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:

â¢ Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

â¢ Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

â¢ 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 recognised 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.

For the purpose of fair value disclosures, the Company has determined classes of assets and

liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

k. Investments in subsidiary and associate

The Company has measured its investment in subsidiaries and associates at cost in its financial statements in accordance with Ind AS 27, Separate Financial Statements. Profit/loss on sale of investments is recognized on the date of sale and is computed with reference to the original cost of the investment sold.

l. Property, plant and equipment (PPE)

The Company has elected to continue with the carrying value for all its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind-AS and use the same as its deemed cost as at the date of transition.

Recognition and initial measurement

Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and definition of asset is met. All other repair and maintenance costs are recognized in the statement of profit or loss as incurred.

Subsequent measurement (depreciation and useful lives)

Depreciation on property, plant and equipment is provided on straight line method based on life prescribed as per Schedule II of the Companies Act, 2013.

De-recognition

An item of property, plant and equipment and any significant part initially recognized is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognized.

m. Intangible assets

Recognition, initial measurement and subsequent measurement Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalized development costs, are not capitalized and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred

n. Capital work-in progress

Cost of material consumed and erection charges thereon along with other direct cost incurred by the Company for the projects are shown as capital work-in-progress until capitalisation

o. Leases

The Company as a lessee Classification of leases

The Company enters into leasing arrangements for various assets. The assessment of the lease is based on several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee''s option to extend/purchase etc.

Recognition and initial measurement

At lease commencement date, the Company recognizes a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Company, an estimate of any costs to dismantle and remove the asset at the end of the lease (if any), and any lease payments made in advance of the lease commencement date (net of any incentives received).

Subsequent measurement

The Company depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Company also assesses the right-of-use asset for impairment when such indicators exist.

At lease commencement date, the Company measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Company''s incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed payments) and variable payments based on an index or rate. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is re-measured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When the lease liability is re-measured, the corresponding adjustment is reflected in the right-of-use asset.

The Company has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognizing a right-of-use asset and lease liability, the payments in relation to these are recognized as an expense in standalone statement of profit and loss on a straight-line basis over the lease term.

p. Borrowing costs

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

Mar 31, 2023

1. Â Â Â Corporate information

EPACK Durable Limited (âthe Companyâ) formerly known as EPACK Durable Private Limited and EPACK Durables Solutions Private Limited, having C1N U74999UP2019PLC116048, wasÂ incorporated on April 20, 2019 under the Companies Act, 2013 by converting âE-visionâ aÂ partnership firm (âthe Firmâ) with the consent of all the partners. The Company is engaged in theÂ business of manufacturing of Electronics consumer durable items. The registered office of theÂ Company is located at 61-B, Udyog Vihar, Surajapur, Kasna Road. Greater Noida-201306, GautamÂ Buddha Nagar, Uttar Pradesh, India.

2. Â Â Â Significant accounting policiesÂ 2.1 Basis of preparation

The Standalone financial statements (âfinancial statementsâ) of the Company have been prepared in accordance with the Indian Accounting Standards (âInd ASâ) notified under section 133 of theÂ Companies Act, 2013 (âthe Actâ) read with the relevant rules issued thereunder and other accountingÂ principles generally accepted in India.

The financial statements have been prepared on accrual and going concern basis under historical cost convention except for certain financial instruments and plan assets, which are measured at fairÂ values. The accounting policies are applied consistently to all the periods presented in the financialÂ statements.

The financial statements are presented in Indian Rupees (INR) in lakh and all values are rounded to the nearest lakh (INR 00,000), except when otherwise stated.

The significant accounting policies and measurement bases have been summarised below. 2.2Significant accounting policies

a. Â Â Â Current versus non-current classification

All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and as per terms of agreements wherever applicable. The company hasÂ considered a normal operating cycle of 12 months. Deferred tax assets and liabilities are classifiedÂ as non-current assets and non-current liabilities, as the case may be.

b. Â Â Â Revenue recognitionÂ Sale of goods

Sales are recognized, at transaction price as per terms of agreements with the customers, net of returns and other variable consideration on account of discounts, if any, on satisfaction ofÂ performance obligation by transfer of effective control of the promised goods to the customers,Â which generally coincides with dispatch/ delivery to customers, as applicable. Sales excludesÂ goods and services tax.

of the Company's activities. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transactions and the specifics of each arrangement.

Revenue is recognized for domestic and export sales of goods on satisfaction of performance obligation by transfer of effective control of the promised goods to the customers as per terms ofÂ agreements with the customers.

Contract modification:

Contract modification is a change in the scope or price (or both) of a contract that is approved by the parties to the contract. Contract modification are accounted based on the prospectiveÂ accounting and cumulative catch up. The Company accounts for a modification as a separateÂ contract, if both the scope increases due to the addition ofâdistinctâ goods or services and theÂ price increase reflects the goodsâ or services' stand-alone selling prices under the circumstancesÂ of the modified contract.

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.

c. Â Â Â Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.

Government grants relating to income are deferred and recognised in profit or loss over the period necessary to match them with costs that they are intended to compensate and presented with otherÂ income/ other operating revenue.

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 over the periods and in the proportions necessary to match then with the depreciation expense on the related assets andÂ presented within other income.

d. Â Â Â Inventories

Inventories of raw materials, components, stores and spares are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and conditionsÂ are accounted for as follows:

â¢ Â Â Â Raw materials and components: cost includes cost of purchase and other costs incurred inÂ bringing the inventories to their present location and condition such as non-refundable duties,Â freight etc. Costs of Raw materials and components are computed using the weighted averageÂ cost formula.

â¢ Â Â Â Finished goods and work in progress: cost includes cost of direct materials and labour and aÂ proportion of manufacturing overheads based on the normal operating capacity, but excludingÂ borrowing costs. Costs of finished goods and work in progress are computed using theÂ weighted average cost formula.

^ Â Â Â /O/--'SÂ£â\

Provision for obsolescence and slow-moving inventory is made based on managementâs best estimates of net realisable value of such inventories.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

e. Â Â Â Income Taxes

Tax expense recognized in the statement of profit and loss comprises the sum of deferred tax and current tax not recognized in Other Comprehensive Income (OCI) or directly in equity.

Current tax is measured at tire amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Current tax relating to items recognized outside statement ofÂ profit and loss is recognized outside statement of profit and loss (i.e. in OCI or equity dependingÂ upon the treatment of underlying item).

Deferred tax liabilities are generally recognized in full for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that the deductible temporaryÂ difference will be utilized against future taxable income. This is assessed based on the CompanyâsÂ forecast of future operating results, adjusted for significant non-taxable income and expenses.Â Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to theÂ extent that it has become probable that future taxable profits will allow the deferred tax asset toÂ 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 realized or the liability is settled, based on tax rates (and tax laws) thatÂ have been enacted or substantively enacted at the reporting date. Deferred tax relating to itemsÂ recognized outside the statement of profit and loss is recognized outside statement of profit andÂ loss (in OCI or equity depending upon the treatment of underlying item).

f. Â Â Â Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificantÂ risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalentsÂ consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts asÂ they are considered an integral part of the Companyâs cash management.

g. Â Â Â Foreign currency transactionsÂ Functional and Presentation currencies

The Companyâs financial statements are presented in Indian Rupees (INR) which is also the Companyâs functional currency.

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlementÂ of such transactions and from the translation of monetary assets and liabilities denominated inÂ foreign currencies at year end exchange rates are generally recognized in profit or loss.

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses areÂ , presented in the statement of profit and loss on a net basis within other income/expenses. as theÂ 'NxpNhase maybe.

h. Financial instruments

Initial recognition and measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity,

Financial assets

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 theÂ acquisition of the financial asset.

Subsequent measurement

For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:

Financial assets carried at amortised cost - a financial instrument is measured at amortised cost if both the following conditions are met:

â¢ Â Â Â The asset is held within a business model whose objective is to hold assets for collectingÂ contractual cash flows, and

â¢ Â Â Â Contractual terms of the asset give rise on specified dates to cash flows that are solelyÂ payments of principal and interest (SPP1) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest method.

Financial assets at fair value

Investments in equity instruments (other than subsidiary) -

All equity investments in scope of Ind AS 109, âFinancial Instrumentsâ are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised byÂ an acquirer in a business combination, if any to which Ind AS 103, Business combinations appliesÂ are classified as at fair value through Profit or loss. Further, there is no such equity investmentsÂ measured at Fair value through profit or loss or fair value through other comprehensive incomeÂ in the company.

If the Company decides to classify an equity instrument as at FVOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the other comprehensive income (OCI).Â There is no recycling of the amounts from OCI to P&L, even on sale of investment. However,Â the Company may transfer the cumulative gain or loss within equity. Dividends on suchÂ investments are recognised in profit or loss unless the dividend clearly represents a recovery ofÂ part of the cost of the investment.

Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the P&L.

De-recognition of financial assets

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

Financial liabilities and equity Classification as debt or equity

Debt and equity instruments 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 andÂ an equity instrument.

Equity instruments

Initial recognition and measurement

All financial liabilities are recognised initially at fair value plus, in the case of financial liabilities not recorded at fair value through profit or loss, transaction costs that are attributable to theÂ acquisition of the financial liabilities. Transaction costs directly attributable to the acquisition ofÂ financial liabilities at fair value through profit or loss are recognised immediately in finance costsÂ in the statement of profit and loss.

Subsequent measurement

All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL. Amortised cost is calculated after considering any discount or premium onÂ acquisition and fees or costs that are an integral part of the EIR. The effect of EIR amortisationÂ is included as finance costs in the statement of profit and loss.

De-recognition of financial liabilities

A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the sameÂ lender on substantially different terms, or the terms of an existing liability are substantiallyÂ modified, such an exchange or modification is treated as the de-recognition of the originalÂ liability and the recognition of a new liability. The difference in the respective carrying amountsÂ is recognised in the statement of profit and loss.

Derivative financial instruments Initial and subsequent measurement

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period.

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 recognised amounts and there isÂ an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

Impairment of financial assets

All financial assets except for those at FVTPL are subject to review for impairment at least at each reporting date to identify whether there is any objective evidence that a financial asset or aÂ group of financial assets is impaired. Different criteria to determine impairment are applied for

each category of financial assets.

In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets carried at amortised cost.

ECL is the weighted average of difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects toÂ receive, discounted at the original effective interest rate, with the respective risks of defaultÂ occurring as the weights. When estimating the cash flows, the Company is required to consider

â¢ Â Â Â All contractual terms of the financial assets (including prepayment and extension) over theÂ expected life of the assets.

â¢ Â Â Â Cash flows from the sale of collateral held or other credit enhancements that are integralÂ to the contractual terms

Trade receivables

The Company applies approach permitted by Ind AS 109 Financial Instruments, which requires lifetime expected credit losses to be recognised upon initial recognition of receivables. LifetimeÂ ECL are the expected credit losses resulting from all possible default events over the expectedÂ life of a financial instrument.

Other financial assets

For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition.Â If the credit risk has not increased significantly since initial recognition, the Company measuresÂ the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equalÂ to the lifetime expected credit losses

When making this assessment, the Company uses the change in the risk of a default occurring over the expected life of the financial asset. To make that assessment, the Company comparesÂ the risk of a default occurring on the financial asset as at the balance sheet date with the risk of aÂ default occurring on the financial asset as at the date of initial recognition and considersÂ reasonable and supportable information, that is available without undue cost or effort, that isÂ indicative of significant increases in credit risk since initial recognition. The Company assumesÂ that the credit risk on a financial asset has not increased significantly since initial recognition ifÂ the financial asset is determined to have low credit risk at the balance sheet date.

i. Impairment of non-financial assets

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash generating units). As a result, some assets are testedÂ individually for impairment and some are tested at cash-generating unit level.

At each reporting date, the Company assesses whether there is any indication based on internal/ external factors, that an asset may be impaired. If any such indication exists, the CompanyÂ estimates the recoverable amount of the asset. If such recoverable amount of the asset or theÂ recoverable amount of the cash generating unit to which the asset belongs is less than its carryingÂ amount, the carrying amount is reduced to its recoverable amount and the reduction is treated asÂ an impairment loss and is recognised in the statement of profit and loss. If, at the reporting dateÂ there is an indication that a previously assessed impairment loss no longer exists, the recoverableÂ Nxamount is reassessed which is the higher of fair value less costs of disposal and value-in-use andÂ VJrvhe asset is reflected at the recoverable amount subject to a maximum of depreciated-bistmical

cost. Impairment losses previously recognised are accordingly reversed in the statement of profit and loss.

To determine value-in-use, management estimates expected future cash flows from each cash generating unit and determines a suitable discount rate in order to calculate the present value ofÂ those cash flows. The data used for impairment testing procedures are directly linked to theÂ Companyâs latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for eachÂ cash-generating unit and reflect current market assessment of the time value of money and asset-specific risk factors.

j. Fair value measurement

The Company measures financial instruments such as derivatives 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 aÂ liability in an orderly transaction between market participants at the measurement date. The fairÂ value measurement is based on the presumption that the transaction to sell the asset or transferÂ the liability takes place either:

â¢ Â Â Â In the principal market for the asset or liability, or

â¢ Â Â Â In the absence of a principal market, in the most advantageous market for the asset orÂ 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 theirÂ economic best interest.

A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it toÂ 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 observableÂ 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 levelÂ input that is significant to the fair value measurement as a whole:

â¢ Â Â Â Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

â¢ Â Â Â Level 2 - Valuation techniques for which the lowest level input that is significant to the fairÂ value measurement is directly or indirectly observable

â¢ Â Â Â Level 3 - Valuation techniques for which the lowest level input that is significant to the fairÂ value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair valueÂ measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liabilitvaiuiLhe levelÂ ~'N^\of the fair value hierarchy as explained above.

k. Â Â Â Investments in subsidiary and associate

The Company has measured its investment in subsidiaries and associates at cost in its financial statements in accordance with Ind AS 27, Separate Financial Statements. Profit/loss on sale ofÂ investments is recognized on the date of sale and is computed with reference to the original costÂ of the investment sold.

l.Â Â Â Â Property, plant and equipment (PPE)

The Company has elected to continue with the carrying value for all its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind-AS and useÂ the same as its deemed cost as at the date of transition.

Recognition and initial measurement

Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringingÂ the asset to its working condition for the intended use. Any trade discount and rebates areÂ deducted in arriving at the purchase price. Subsequent costs are included in the asset's carryingÂ amount or recognized as a separate asset, as appropriate, only when it is probable that futureÂ economic benefits associated with the item will flow to the Company and definition of asset isÂ met. All other repair and maintenance costs are recognized in the statement of profit or loss asÂ incurred.

Subsequent measurement (depreciation and useful lives)

Depreciation on property, plant and equipment is provided on straight line method based on life prescribed as per Schedule II of the Companies Act, 2013.

Asset category	Useful lives
Plant and machinery	15 years
Plant and machinery (Laboratory equipments)	10 years
Factory Buildings	30 years
Office equipment	5 years
Computers including servers	3-6 years
Electrical installations	10 years
Furniture and Fixtures	10 years
Vehicle	8 years
Intangible Assets (Software)	2-6 years

De-recognition

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the differenceÂ between the net disposal proceeds and the carrying amount of the asset) is included in theÂ statement of profit and loss when the asset is derecognized.

m. Intangible assets

Internally generated intangibles, excluding capitalized development costs, are not capitalized and the related expenditure is reflected in profit or loss in the period in which the expenditure isÂ incurred

n. Â Â Â Capital work-in progress

Cost of material consumed and erection charges thereon along with other direct cost incurred by the Company for the projects are shown as capital work-in-progress until capitalisation

o. Â Â Â Leases

The Company as a lessee Classification of leases

The Company enters into leasing arrangements for various assets. The assessment of the lease is based on several factors, including, but not limited to, transfer of ownership of leased asset at endÂ of lease term, lesseeâs option to extend/purchase etc.

Recognition and initial measurement

At lease commencement date, the Company recognizes a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initialÂ measurement of the lease liability, any initial direct costs incurred by the Company, an estimateÂ of any costs to dismantle and remove the asset at the end of the lease (if any), and any leaseÂ payments made in advance of the lease commencement date (net of any incentives received).

Subsequent measurement

The Company depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the endÂ of the lease term. The Company also assesses the right-of-use asset for impairment when suchÂ indicators exist.

At lease commencement date, the Company measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease ifÂ that rate is readily available or the Companyâs incremental borrowing rate. Lease paymentsÂ included in the measurement of the lease liability are made up of fixed payments (including inÂ substance fixed payments) and variable payments based on an index or rate. Subsequent to initialÂ measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixedÂ payments. When the lease liability is re-measured, the corresponding adjustment is reflected inÂ the right-of-use asset.

The Company has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognizing a right-of-use asset and lease liability, theÂ payments in relation to these are recognized as an expense in standalone statement of profit andÂ loss on a straight-line basis over the lease term.

p. Â Â Â Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale areÂ capitalised as part of the cost of the asset. All other borrowing costs are expensed in the periodÂ in which they occur. Borrowing costs consist of interest and other costs that an entjlyuii^urs inÂ connection with the borrowing of funds. Borrowing cost also includes exchange differences toÂ the extent regarded as an adjustment to the borrowing costs.

q. Â Â Â Provisions, contingent liabilities and contingent assets

Provisions are recognized when present obligations as a result of a past event will probably lead to an outflow of economic resources and amounts can be estimated reliably. Timing or amountÂ of the outflow may still be uncertain. A present obligation arises when there is a presence of aÂ legal or constructive commitment that has resulted from past events, for example, legal disputesÂ or onerous contracts. Provisions are not recognized for future operating losses.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks andÂ uncertainties associated with the present obligation. Provisions are discounted to their presentÂ values, where the time value of money is material.

All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. In those cases where the outflow of economic resources as a result of present obligations isÂ considered improbable or remote, no liability is recognized.

Contingent liability is disclosed for:

â¢ Â Â Â Possible obligations which will be confirmed only by future events not wholly within theÂ control of the Company or

â¢ Â Â Â Present obligations arising from past events where it is not probable that an outflow ofÂ resources will be required to settle the obligation or a reliable estimate of the amount of theÂ obligation cannot be made

â¢ Â Â Â Contingent assets are not recognized. However, when inflow of economic benefits isÂ probable, related asset is disclosed.

r. Â Â Â Government grants

Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attachedÂ conditions.

Government grants relating to income are deferred and recognized in the profit or loss over the period necessary to match them w ith the costs that they are intended to compensate and presentedÂ within other income.

s. Â Â Â Employee benefits

Expenses and liabilities in respect of employee benefits are provided in accordance with Indian Accounting standard 19- Employee Benefits.

Defined contribution plans

Provident Fund

The Company makes contribution to statutory provident fund in accordance with Employees Provident Fund and Miscellaneous Provisions Act, 1952. The plan is a defined contribution planÂ and contribution paid or payable is recognized as an expense in the period in which services areÂ rendered by the employee.

Defined benefit plans (gratuity)

The Company operates one defined benefit plan for its employees, viz. gratuity. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year-end using the projected unit credit method. Actuarial gain and loss for the defined benefit plan isÂ recognized in full in the period in which they occur in other comprehensive income.

Short-term employee benefits

Expense in respect of other short-term benefits is recognized on the basis of the amount paid or payable for the period during which services are rendered by the employee.

Accumulated leave, which is expected to be utilized within a period of next 12 months, is treated as short term employee benefit. The Company measures the expected cost of such absences asÂ the additional amount that it expects to pay as a result of unused entitlement that has accumulatedÂ at the reporting date.

t. Â Â Â Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number ofÂ equity shares outstanding during the period. The weighted average number of equity sharesÂ outstanding during the period is adjusted for events including a bonus issue. For the purpose ofÂ calculating diluted earnings per share, the net profit or loss for the period attributable to equityÂ shareholders and the weighted average number of shares outstanding during the period areÂ adjusted for the effects of all dilutive potential equity shares.

u. Â Â Â Segment reporting

Operating segments are reported in a manner consistent with the internal reporting done to the chief operating decision maker. The Company operates in a single operating segment andÂ geographical segment.

v. Â Â Â Business Combinations

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fairÂ value and the amount of any non-controlling interests in the acquiree. For each businessÂ combination, the Company elects whether to measure the non-controlling interests in the acquireeÂ at fair value or at the proportionate share of the acquireeâs identifiable net assets. Acquisition-related costs are expensed as incurred. At the acquisition date, the identifiable assets acquired,Â and the liabilities assumed are recognised at their acquisition date fair values. For this purpose,Â the liabilities assumed include contingent liabilities representing present obligation and they areÂ measured at their acquisition fair values irrespective of the fact that outflow of resourcesÂ embodying economic benefits is not probable.

w. Â Â Â Amendments to Ind AS issued but not yet effective

MCA vide notification no. G.S.R. 242(E) dated March 31,2023 has issued the Companies (Indian Accounting Standards) Amendment Rules, 2023 which amends following Ind AS (as applicableÂ to the Company):Â Â Â Â ----

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â¢ Ind AS Â Â Â 107,Â Â Â Â FinancialÂ Â Â Â Instruments:Â Â Â Â DisclosuresÂ Â Â Â \z\

Ind AS Â Â Â 109,Â Â Â Â FinancialÂ Â Â Â InstrumentsÂ Â Â Â jn)

Ind AS Â Â Â 1 15,Â Â Â Â RevenueÂ Â Â Â from Contracts with CustomersÂ Â Â Â J^jJ

â¢ Â Â Â Ind AS 1, Presentation of Financial Statements

â¢ Â Â Â Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors

â¢ Â Â Â Ind AS 12, Income Taxes

The amendments are applicable for annual periods beginning on or after April I, 2023. The Company has evaluated the amendments and the impact is not expected to be material.

2.3Signiflcant accounting judgments, estimates and assumptions

When preparing the financial statements management undertakes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses.

The actual results are likely to differ from the judgments, estimates and assumptions made by management, and will seldom equal the estimated results.

Information about significant judgments, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussedÂ below:

Significant judgements:

(i) Â Â Â Evaluation of indicators for impairment of non-financial assets

The evaluation of applicability of indicators of impairment of non-financial assets requires assessment of several external and internal factors which could result in deterioration ofÂ recoverable amount of the assets.

(ii) Â Â Â Recognition of deferred tax assets

The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilized. TheÂ recognition of deferred tax assets and reversal thereof is based on estimates of future taxableÂ profits.

(iii) Â Â Â Employee benefits

The accounting of employee benefit plans in the nature of defined benefit requires the Company to use assumptions. These assumptions have been explained under employee benefits note.

Sources of estimation uncertainty:

Provisions

At each balance sheet date, basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding guarantees. However, theÂ actual future outcome may be different from managementâs estimates.

Fair valuation of financial instruments

Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptionsÂ consistent with how market participants would price the instrument.

Recoverability of advances/receivables

At each balance sheet date, based on historical default rates observed over expected life, the ===^jmanagement assesses the expected credit loss on outstanding receivables and advancgs^-^

Allowance for doubtful trade receivables

The allowance for doubtful trade receivables reflects managementâs estimate of losses inherent in its credit portfolio. This allowance is based on Companyâs estimate of the losses to be incurred,Â which derives from past experience with similar receivables, current and historical past due amounts,Â write-offs and collections, the careful monitoring of portfolio credit quality and current and projectedÂ economic and market conditions.

Allowance for obsolete and slow-moving inventory

The allowance for obsolete and slow-moving inventory reflects managementâs estimate of the expected loss in value, and has been determined on the basis of past experience and historical andÂ expected future trends in the used RAC market. A worsening of the economic and financial situationÂ could cause a further deterioration in conditions in the used RAC market compared to that taken intoÂ consideration in calculating the allowances recognised in the financial statements.

Useful lives of depreciable/amortisable assets

Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate toÂ technical and economic obsolescence that may change the utility of certain software, IT equipmentÂ and other plant and equipment.

Defined benefit obligations (DBO)

Managementâs estimate of the DBO is based on a number of critical underly ing assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases.Â Variation in these assumptions may significantly impact the DBO amount and theai^AB^SnedÂ benefit expenses.

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