Note 2 - Material Accounting Policies and
Key Accounting Estimates and Judgements

This note provides a list of the Material accounting
policies adopted in the preparation of these financial
statements. These policies have been consistently
applied to all the years presented, unless otherwise
stated.

2.1 Basis of Preparation and Presentation of
Financial Statements

2.1.1 Statement of Compliance with Ind AS

(a) The standalone financial statements
has been prepared in accordance and
comply in all material aspects with
Indian Accounting Standards (Ind AS)
notified under the Companies (Indian
Accounting Standards) Rules, 2015 as
amended from time to time, the relevant
provisions of the Companies Act, 2013
(“the Act'') and guidelines issued by the
Securities and Exchange Board of India
(SEBI), as applicable.

(b) All assets and liabilities have been
classified as current or non-current as
per the Company's normal operating
cycle and other criteria set out in the
Schedule III to the Companies Act,
2013.

(c) For the purpose of current/ Non-current
classification of assets and liabilities, the
company has ascertained it's normal
operating cycle as twelve months.
This is based on the nature of services
and the time between the acquisition
of assets or inventory for processing
and their realisation in cash and cash
equivalents.

(d) Accounting policies have been
consistently applied except where a
newly issued accounting standard is
initially adopted or a revision to an
existing accounting standard requires a
change in the accounting policy hitherto
in use.

2.1.2 Historical Cost Convention

These financial statements have been
prepared and presented under the
historical cost convention, on the accrual
basis of accounting except for certain
financial assets and financial liabilities
that are measured at fair values and
assets held for sale which is measured
at lower of the carrying amount and fair
value less estimated cost to sell, at the
end of each reporting period, as stated
in the accounting policies set out below.
The accounting policies have been
applied consistently over all the periods
presented in these financial statements.

2.2 Use of Estimates and Judgements

The presentation of the financial statements is
in conformity with the Ind AS which requires the
management to make estimates, judgments and
assumptions that affect the reported amounts of
assets and liabilities, revenues and expenses and
disclosure of contingent liabilities. Such estimates
and assumptions are based on management's
evaluation of relevant facts and circumstances
as on the date of financial statements. The actual
outcome may differ from these estimates.

Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to the
accounting estimates are recognised in the period

in which the estimates are revised and in any
future periods affected.

This note provides an overview of the areas
that involved a higher degree of judgement or
complexity, and of items which are more likely
to be materially adjusted due to estimates and
assumptions turning out to be different than those
originally assessed. Detailed information about
each of these estimates and judgements is included
in relevant notes together with information about
the basis of calculation for each affected line item
in the financial statements.

Information about assumptions and estimation
uncertainties that have a significant risk of resulting
in a material adjustment within the next financial
year are included in the following notes:

Note 39 Current/deferred tax expense.

Note 42 Contingent liabilities and assets.

Note 11 Expected credit loss for receivables.

Note 45 Measurement of defined benefit
obligations.

Note 43 Fair value of Financial Instruments
Note 3 useful life of Property, Plant and Equipment

2.3 Property, Plant and Equipment

An item of Property, plant and equipment that
qualifies as an assets is measured at their cost.
Following initial recognition, items of property,
plant and equipment are carried at cost less
accumulated depreciation and accumulated
impairment losses.

The Company identifies and determines the cost
of each part of an item of property, plant and
equipment separately, if the part has a cost which is
significant to the total cost of that item of property,
plant and equipment and has useful life that is
materially different from that of the remaining item.

The cost of an item of property, plant and equipment
comprises of its purchase price including import
duties and other non-refundable purchase taxes
or levies, directly attributable cost of bringing
the asset to its working condition for its intended
use and the initial estimate of decommissioning,
restoration and similar liabilities, if any. Any trade

discounts and rebates are deducted in arriving at
the purchase price. Cost includes cost of replacing
a part of a plant and equipment if the recognition
criteria are met. Expenses directly attributable to
new manufacturing facility during its construction
period are capitalized if the recognition criteria are
met. Expenditure related to plans, designs and
drawings of buildings or plant and machinery is
capitalized under relevant heads of property, plant
and equipment if the recognition criteria are met.

Items such as spare parts, stand-by equipment
and servicing equipment that meet the definition
of property, plant and equipment are capitalized at
cost and depreciated over their useful life.

Subsequent expenditures, including replacement
costs where applicable, incurred for an item of
Property plant and equipment are added to its
books value only if they increase the future benefits
from the existing asset beyond its previously
assessed standard of performance and the cost
of the item can be measured reliably. The carrying
amount of any component accounted for as a
separate asset is de-recognised when replaced.

Costs in nature of repairs and maintenance are
recognized in the Statement of Profit and Loss as
and when incurred.

Any item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic
benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the
asset (calculated as the difference between the
net disposal proceeds and the carrying amount
of the asset) is charged to revenue in the income
statement when the asset is derecognised.

The cost and related accumulated depreciation
are eliminated from the financial statements upon
sale or retirement of the asset.

2.4 Capital Work in Progress:

Expenditure on projects pending capitalization is
shown under the head “Capital Work In Progress”
which will be capitalized to respective heads of
Property, Plant and Equipment on commencement
of commercial production.

All the directly identifiable and ascertainable
expenditure, incidental and related to construction
incurred during the period of construction on a
project, till it is commissioned, is kept as Capital
work in progress (CWIP) and after commissioning
the same is transferred / allocated to the respective
“Property, Plant and Equipment”.

Further, advances paid towards the acquisition of
property, plant and equipment outstanding at each
balance sheet date are classified and disclosed as
capital advances under Other Non-Current Assets.

2.5 Investment Properties

Investment properties comprise of Immovable
Properties that are held for rental yield and/or
capital appreciation.

Investment property is measured initially at its
cost, including related transaction costs and where
applicable borrowing costs. Subsequent expenditure
is capitalised to the asset's carrying amount only
when it is probable that future economic benefits
associated with the item will flow to the Company
and the cost of the item can be measured reliably. All
other repairs and maintenance costs are expensed
as and when incurred. When part of an investment
property is replaced, the carrying amount of the
replaced part is derecognised.

2.6 Intangible Assets

Intangible asset is recognized only where it is
probable that future economic benefits attributable
to the asset will accrue to the enterprise and cost
can be measured reliably. Intangible assets acquired
separately are measured on initial recognition at cost.
Internally generated intangibles including research
cost are not capitalized and the related expenditure
is recognized in the Statement of Profit and Loss
in the period in which the expenditure is incurred.
Following initial recognition, intangible assets are
carried at cost less accumulated amortization and
accumulated impairment loss, if any.

Acquired Intangible Assets in the form of “Process
Know How” is recognized at the cost of acquisition
and amortized on straight line basis. Capitalized
software includes cost on Enterprise Resource
Planning (ERP) project and other Software cost

including license fees, which provides significant
future benefits.

Expenses incurred during development of Process
know how or Product development is shown under
the head “Intangible asset under development”.

Any item of intangible assets is derecognised upon
disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss
arising on derecognition of the intangible asset
(calculated as the difference between the net
disposal proceeds and the carrying amount of the
intangible asset) is recognised in the statement of
Profit and Loss when the asset is derecognised.

2.7 Depreciation and amortisation methods,
estimated useful lives and residual values

Depreciation is calculated to systematically
allocate the cost of property, plant and equipment,
intangible asset and investment property net of the
estimated residual values over the estimated useful
life. Depreciation is computed using Straight Line
Method (SLM) over the useful lives of the assets as
specified in Schedule II to the Companies Act, 2013.

The estimate of the useful life of the assets has
been assessed based on technical evaluation
which considers the nature of the asset, the usage
of the asset, expected physical wear and tear,
the operating conditions of the asset, anticipated
technological changes, manufacturers warranties
and maintenance support, etc. The management
believes that these useful lives are realistic and
reflect fair approximation of the period over which
the assets are likely to be used. The useful lives
are reviewed by the management at each financial
year end and revised, if appropriate. In case of
a revision, the unamortised depreciable amount
(remaining net value of assets) is charged over the
revised remaining useful lives.

Based on management estimate, residual value of
5% is considered for respective PPE except Lease
hold land.

Intangible assets are amortized over their individual
estimated useful lives on a Straight Line basis,
commencing from the year in which the same are

available to the company for its intended use. The
useful lives as estimated by the management for
the intangible assets are as follows:

in use. To calculate value in use, the estimated future
cash flows are discounted to their present value
using a pre-tax discount rate that reflects current
market rates and the risk specific to the asset. For
an asset that does not generate largely independent
cash inflows, the recoverable amount is determined
for the CGU to which the asset belongs. Fair value
less cost to sell is the best estimate of the amount
obtainable from the sale of an asset in an arm's length
transaction between knowledgeable, willing parties,
less the cost of disposal. Assets whose carrying value
exceeds their recoverable amount are written down
to the recoverable amount. Recoverable amount
is higher of an assets or cash generating unit's net
selling price and its value in use.

Assessment is also done at each Balance Sheet
date as to whether there is any indication that an
impairment loss recognized for an asset in prior
accounting periods may no longer exist or may
have decreased.

Impairment losses of continuing operations,
including impairment on inventories, if any are
recognised in the statement of profit and loss,
except for properties previously revalued with the
revaluation surplus taken to Other Comprehensive
Income (OCI). For such properties, the impairment
is recognised in OCI up to the amount of any
previous revaluation surplus.

2.9 Revenue recognition

Revenue from contracts with customers is
recognized when control of the goods or services
are transferred to the customer at an amount that
reflects the consideration to which the company
expects to be entitled in exchange for those goods
or services.

Revenue is measured based on the transaction price,
which is the consideration, adjusted for discounts
and other incentives, if any, as specified in the
contract with the customer. Revenue also excludes
taxes or other amounts collected from customers
in its capacity as an agent. If the consideration in a
contract includes a variable amount, the company
estimates the amount of consideration to which
it will be entitled in exchange for transferring the
goods to the customer. The variable consideration is

estimated at contract inception and constrained until
it is highly probable that a significant revenue reversal
in the amount of cumulative revenue recognised will
not occur when the associated uncertainty with the
variable consideration is subsequently resolved.

The accounting policies for the specific revenue
streams of the company as summarized below:

i) Interest income is recognised on Effective
Interest Rate (EIR) basis considering the
amount outstanding and the applicable
interest rate as set out in Ind AS 109.

ii) Export benefits available under the prevalent
schemes are recognized when there exists
no significant uncertainty regards to its
realisation.

iii) Dividend income is accounted for when the
right to receive income is established.

iv) Royalty income is recognized on an accrual
basis in accordance with the substance of the
agreement.

v) Rental income is recognized as revenue
on an accrual basis as per the terms of the
underlying contract with customers.

vi) Other operating income and miscellaneous
income are accounted on an accrual basis as
and when the right to receive arises.

Contract Balances:

Contract assets.

A contract asset is the right to consideration in
exchange for goods or services transferred to the
customer. If the company performs by transferring
goods or services to a customer before the
customer pays consideration or before payment is
due, a contract asset is recognised for the earned
consideration that is conditional.

Trade receivables

A receivable represents the company's right to
an amount of consideration that is unconditional
i.e. only the passage of time is required before
payment of consideration is due.

Contract liabilities.

A contract liability is the obligation to transfer
goods or services to a customer for which
the company has received consideration (or
an amount of consideration is due) from the
customer. Contract liabilities are recognised as
revenue when the company performs obligations
under the contract.

2.10 Borrowing

Borrowings are initially recognised at fair value, net
of transaction costs incurred. Borrowings -interest
bearing loans are subsequently measured at
amortised cost by using the effective interest method
(EIR method). Any difference between the proceeds
(net of transaction costs) and the redemption
amount is recognised in profit or loss over the period
of borrowing using the effective interest method
(EIR). The EIR Amortization is included as Finance
Costs in the statement of profit and loss.

Fees paid on the establishment of loan facilities
are recognised as transaction costs of loan to the
extent that it is probable that some or all the facility
will be draw down. In this case, the fee is deferred
until the draw down occurs. To the extent there is
no evidence that it is probable that some or all of
the facility will be drawn down, the fee is deferred
as a payment for liquidity services and amortised
over the period of the facility to which it relates.

Borrowings are removed from the balance sheet
when the obligation specified in the contract is
discharged, cancelled or expired. The difference
between the carrying amount of a financial
liability that has been extinguished or transferred
to another party and the consideration paid,
including any non-cash assets transferred or
liabilities assumed, is recognised in profit or loss as
other income or other expenses as well as through
the EIR amortization process.

Borrowings are classified as current liabilities unless
the Company has an unconditional right to defer
settlement of the liability for at least 12 months after
the reporting period. Where there is a breach of a
material provision of a long term loan arrangement
on or before the end of reporting period with the
effect that the liability becomes payable on demand

However, trade receivables that do not
contain a significant financing component
are measured at transaction price.

Subsequent Measurement

For purpose of subsequent measurement,
financial assets are classified into:

• Financial assets measured at
amortised cost;

• Financial assets measured at fair
value through profit or loss (FVTPL);
and

• Financial assets measured at fair
value through other comprehensive
income (FVTOCI).

The Company classifies its financial assets in
the above-mentioned categories based on:

• The Company's business model for
managing the financial assets, and

• The contractual cash flows
characteristics of the financial asset.

A financial asset is measured at amortised
cost if both of the following conditions are
met:

• The financial asset is held within a
business model whose objective is to
hold financial assets in order to collect
contractual cash flows and

• The contractual terms of the financial
assets give rise on specified dates to
cash flows that are solely payments
of principal and interest (SPPI) on the
principal amount outstanding.

This category applies to cash and bank
balances, trade receivables, loans and
other financial assets of the Company
(Refer note 43 for further details).Financial
assets are subsequently measured at
amortised cost using the effective interest
rate (EIR) method. Amortised cost is
calculated by taking into account any
discount or premium on acquisition and
fees or costs that are an integral part of
the EIR. The EIR amortisation is included
in finance income in the profit or loss.

The losses arising from impairment are
recognised in the profit or loss.

A financial asset is measured at fair value
through other comprehensive income if
both of the following conditions are met:

• The financial asset is held within a
business model whose objective
is achieved by both collecting the
contractual cash flows and selling
financial assets and

• The assets contractual cash flows
represent SPPI.

A financial asset is measured at fair value
through profit or loss unless it is measured
at amortised cost or at fair value through
other comprehensive income. In addition,
the Company may elect to designate a
financial asset, which otherwise meets
amortized cost or FVTOCI criteria, as at
FVTPL. However, such election is allowed
only if doing so reduces or eliminates a
measurement or recognition inconsistency
(referred to as ‘accounting mismatch').

Equity Investments:

All equity investments in scope of Ind AS
109 are measured at fair value. Equity
instruments which are held for trading
are classified as at FVTPL. For all other
equity instruments, the Company may
make an irrevocable election to present in
other comprehensive income subsequent
changes in the fair value. The Company
makes such election on an instrument by¬
instrument basis. The classification is made
on initial recognition and is irrevocable.

If the Company decides to classify an
equity instrument as at FVTOCI, then
all fair value changes on the instrument,
excluding dividends, are recognized
in the OCI. There is no recycling of the
amounts from OCI to statement of profit
and loss, even on sale of investment.
However, the Company may transfer
the cumulative gain or loss within equity.
Equity instruments included within the
FVTPL category are measured at fair

value with all changes recognized in the
Profit and Loss.

De-recognition

A financial asset (or, where applicable, a
part of a financial asset or part of a group
of similar financial assets) is primarily
derecognised (i.e. removed from the
Company's balance sheet) when:

1. The contractual rights to the cash
flows from the financial asset have
expired, or

2. The Company has transferred its
rights to receive cash flows from the
asset or has assumed an obligation
to pay the received cash flows in full
without material delay to a third party
under a ‘pass-through' arrangement;
and either

(1) The Company has transferred
substantially all the risks and rewards
of the asset, or

(2) The Company has neither transferred
nor retained substantially all the risks
and rewards of the asset, but has
transferred control of the asset.

When the Company has transferred
its rights to receive cash flows from an
asset or has entered into a pass-through
arrangement, it evaluates if and to what
extent it has retained the risks and
rewards of ownership. When it has neither
transferred nor retained substantially
all of the risks and rewards of the asset,
nor transferred control of the asset, the
Company continues to recognise the
transferred asset to the extent of the
Company's continuing involvement. In that
case, the Company also recognises an
associated liability. The transferred asset
and the associated liability are measured
on a basis that reflects the rights and
obligations that the Company has retained.

On derecognition of a financial asset,
(except for financial assets measured
at FVTOCI), the difference between the

carrying amount and the consideration
received is recognised in the Statement of
Profit and Loss.

Continuing involvement that takes the
form of a guarantee over the transferred
asset is measured at the lower of the
original carrying amount of the asset and
the maximum amount of consideration
that the Company could be required to
repay.

Impairment of Financial Assets

The Company assesses impairment based
on expected credit loss (ECL) model to the
following:

i) Trade receivables

ii) Financial assets measured at
amortised cost (Other than trade
receivables).

iii) Financial assets measured at fair
value through other comprehensive
income.

Expected credit losses are measured
through a loss allowance at an amount
equal to:

• The 12-months expected credit losses
(expected credit losses that result
from those default events on the
financial instrument that are possible
within 12 months after the reporting
date); or

• Full time expected credit losses
(expected credit losses that result
from all possible default events over
the life of the financial instrument).

The Company follows ‘simplified
approach' for recognition of impairment
loss allowance on trade receivables or
contract revenue receivables. Under the
simplified approach, the Company is not
required to track changes in credit risk.
Rather, it recognises impairment loss
allowance based on lifetime ECLs together
with appropriate management estimates
for credit loss at each reporting date, right
from its initial recognition.

I n case of other assets (listed as (ii) and
(iii) above), the Company determines if
there has been a significant increase in
credit risk of the financial asset since initial
recognition. If the credit risk of such assets
has not increased significantly, an amount
equal to 12-month ECL is measured and
recognised as loss allowance. However, if
credit risk has increased significantly, an
amount equal to lifetime ECL is measured
and recognised as loss allowance.

The Company uses a provision matrix to
determine impairment loss allowance on the
portfolio of trade receivables. The provision
matrix is based on its historically observed
default rates over the expected life of the
trade receivable and is adjusted for forward
looking estimates. At every reporting date,
the historical observed default rates are
updated and changes in the forward-looking
estimates are analysed.

Subsequently, if the credit quality of the
financial asset improves such that there
is no longer a significant increase in credit
risk since initial recognition, the Company
reverts to recognising impairment loss
allowance based on 12-month ECL.

ECL impairment loss allowance (or
reversal) recognized during the period
is recognized as income/ expense in
the statement of profit and loss. This
amount is reflected under the head ‘other
expenses' in the statement of Profit and
Loss. The balance sheet presentation for
various financial instruments is described
below:

• Financial assets measured as at
amortised cost and contractual
revenue receivables - ECL is
presented as an allowance, i.e., as an
integral part of the measurement of
those assets in the balance sheet. The
allowance reduces the net carrying
amount. Until the asset meets write¬
off criteria, the company does not
reduce impairment allowance from
the gross carrying amount.

Financial assets measured at FVTOCI -
Since financial assets are already reflected
at fair value, impairment allowance is not
further reduced from its value. Rather,
ECL amount is presented as accumulated
impairment amount in the OCI.

For assessing increase in credit risk and
impairment loss, the Company combines
financial instruments on the basis of shared
credit risk characteristics with the objective
of facilitating an analysis that is designed to
enable significant increases in credit risk to
be identified on a timely basis.

The Company does not have any
purchased or originated credit impaired
(POCI) financial assets, i.e., financial assets
which are credit impaired on purchase/
origination.

2.12.2 Financial Liabilities

Initial recognition and measurement

The Company recognises a financial liability
in its Balance Sheet when it becomes
party to the contractual provisions of the
instrument. Financial liabilities are classified,
at initial recognition, as financial liabilities at
fair value through profit or loss, loans and
borrowings, payables, or as derivatives
designated as financial instruments in an
effective hedge, as appropriate.

All financial liabilities are recognised
initially at fair value and, in case of loans
and borrowings and payables, net of
directly attributable transaction costs.

The Company's financial liabilities include
trade and other payables, loan and
borrowings including bank overdrafts,
financial guarantee contracts and
derivative financial instruments.

Subsequent measurement

• Financial liabilities measured at
amortised cost.

• Financial liabilities subsequently
measured at fair value through profit
or loss.

Financial liabilities at fair value through
profit or loss include financial liabilities
held for trading and financial liabilities
designated upon initial recognition as at
fair value through profit or loss. Financial
liabilities are classified as held for trading
if they are incurred for the purpose of
repurchasing in the near term. Gains or
losses on liabilities held for trading are
recognised in the profit or loss.

Financial liabilities designated upon initial
recognition at fair value through profit or
loss are designated as such at the initial
date of recognition, and only if the criteria
in Ind AS 109 are satisfied. For liabilities
designated as FVTPL, fair value gains/
losses attributable to changes in own credit
risk are recognized in OCI. These gains/
loss are not subsequently transferred to
Profit and Loss. However, the Company
may transfer the cumulative gain or loss
within equity. All other changes in fair
value of such liability are recognised in the
statement of profit or loss. The Company
has not designated any financial liability as
at fair value through profit and loss.

Financial Guarantee Contracts

Financial guarantee contracts issued by
the Company are those contracts that
require a payment to be made to reimburse
the holder for a loss it incurs because the
specified debtor fails to make a payment
when due in accordance with the terms
of a debt instrument. Financial guarantee
contracts are recognised initially as a
liability at fair value, adjusted for transaction
costs that are directly attributable to the
issuance of the guarantee. Subsequently,
the liability is measured at the higher of
the amount of loss allowance determined
as per impairment requirements of Ind
AS 109 and the amount recognised less
cumulative amortisation.

Loan and Borrowings

After initial recognition, interest-bearing
loans and borrowings are subsequently
measured at amortised cost using the

Effective Interest Rate (EIR) method. Gains
and losses are recognised in profit or
loss when the liabilities are derecognised
as well as through the EIR amortisation
process. Amortised cost is calculated
by taking into account any discount or
premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR
amortisation is included as finance costs in
the statement of profit and loss.

Derecognition

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

2.12.3 Equity instruments

An equity instrument is a contract that
evidences residual interest in the assets
of the company after deducting all of
its liabilities. Incremental costs directly
attributable to the issuance of equity
instruments are recognised as a deduction
from equity instrument net of any tax
effects.

2.12.4 Derivative Financial Instruments and
Hedge Accounting

The Company uses derivative financial
instruments such as foreign currency
forward contracts to mitigate the risk of
changes exchange rates. At the inception
of a hedge relationship, the Company
formally designates and documents the
hedge relationship to which the Company
wishes to apply hedge accounting and
the risk management objective and
strategy for undertaking the hedge. Such
derivative financial instruments are initially
recognised at fair value on the date on
which a derivative contract is entered into

and are also subsequently measured at fair
value. Derivatives are carried as Financial
Assets when the fair value is positive and
as Financial Liabilities when the fair value is
negative.

Hedging instrument is initially recognised
at fair value on the date on which a
derivative contract

is entered into and is subsequently
measured at fair value at each reporting
date. Any gains or losses arising from
changes in the fair value of derivatives are
taken directly to Statement of Profit and
Loss, except for the effective portion of
cash flow hedge which is recognised in
Other Comprehensive Income and later
to Statement of Profit and Loss when the
hedged item affects profit or loss or is
treated as basis adjustment if a hedged
forecast transaction subsequently results
in the recognition of a Non-Financial
Assets or Non-Financial liability.

On Derecognition of the hedged item,
the unamortised fair value of the hedging
instrument adjusted to the hedged item, is
recognised in the Statement of Profit and
Loss.

Fair Value Hedges:

The Company designates derivative
contracts or non-derivative Financial Assets /
Liabilities as hedging instruments to mitigate
the risk of change in fair value of hedged
item due to movement in foreign exchange
rates. Changes in the fair value of hedging
instruments and hedged items that are
designated and qualify as fair value hedges
are recorded in the Statement of Profit and
Loss. If the hedging relationship no longer
meets the criteria for hedge accounting,
the adjustment to the carrying amount of a
hedged item for which the effective interest
method is used is amortised to Statement of
Profit and Loss over the period of maturity.

2.12.5 Offsetting financial instruments

Financial assets and liabilities are offset
and the net amount is reported in the

balance sheet where there is a legally
enforceable right to offset the recognised
amounts and there is an intention to
settle on a net basis or realise the asset
and settle the liability simultaneously.
The legally enforceable right must not
be contingent on future events and must
be enforceable in the normal course
of business and in the event of default,
insolvency or bankruptcy of the group or
the counterparty.

2.13 Fair Value

The Company measures certain financial instruments
at fair value at each balance sheet date.

Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:

• In the principal market for the asset or
liability, or

• I n 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.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorised within the fair value hierarchy,
described as under, based on the lowest level input
that is significant to the fair value measurement as
a whole:

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

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

• 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 categorisation (based on the lowest
level input that is significant to the fair value
measurement as a whole) at the end of each
reporting period.

The Company's management determines the
policies and procedures for both recurring fair
value measurement, such as unquoted financial
assets measured at fair value, and for non¬
recurring measurement, such as assets held
for distribution in discontinued operations. The
management comprises of the Managing Director
and Chief Financial Officer.

External valuers are involved for valuation of
significant assets, such as unquoted financial
assets. Involvement of external valuers is decided
upon annually by the Valuation Committee
after discussion with and approval by the
management. Selection criteria include market
knowledge, reputation, independence and
whether professional standards are maintained.
Valuers are normally rotated every three years.
The management decides, after discussions with
the Company's external valuers, which valuation
techniques and inputs to use for each case.

At each reporting date, the management analyses
the movements in the values of assets and
liabilities which are required to be re-measured
or re-assessed as per the Company's accounting
policies. For this analysis, the management verifies

the major inputs applied in the latest valuation by
agreeing the information in the valuation.

The management, in conjunction with the
Company's external valuers, also compares the
change in the fair value of each asset and liability
with relevant external sources to determine
whether the change is reasonable.

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.

This note summarises accounting policy for fair
value. Other fair value related disclosures are given
in the relevant notes. (refer note 43)

1. Disclosures for valuation methods,

significant estimates and assumptions.

2. Quantitative disclosures of fair value

measurement hierarchy.

3. Investment in unquoted equity shares.

4. Financial instruments (including those
carried at amortised cost).

2.14 Inventories

Raw materials, work-in-progress, finished goods,
packing materials, stores, spares, components,
consumables and stock-in trade are carried
at the lower of cost and net realizable value.
However, materials and other items held for
use in production of inventories are not written
down below cost if the finished goods in which
they will be incorporated are expected to be
sold at or above cost. The comparison of cost
and net realizable value is made on an item-by
item basis.

In determining the cost of raw materials,
packing materials, stock-in-trade, stores, spares,
components and consumables, moving weighted
average cost method is used. Cost of inventory
comprises all costs of purchase, duties, taxes
(other than those subsequently recoverable from
tax authorities) and all other costs incurred in

bringing the inventory to their present location
and condition.

Cost of finished goods and work-in-progress
includes the cost of raw materials, packing
materials, an appropriate share of fixed and
variable production overheads, excise duty as
applicable and other costs incurred in bringing the
inventories to their present location and condition.
Fixed production overheads are allocated on the
basis of normal capacity of production facilities.

Net realisable value is the estimated selling price in
the normal course of business less estimated costs
of completion and estimated costs to complete
the sale.

2.15 Investment in Subsidiaries, Associates and
Joint Venture

The Company has elected to recognise its
investments in subsidiary and associate companies
at cost in accordance with the option available
in Ind AS 27, ‘Separate Financial Statements'.
Cost includes cash consideration paid on initial
recognition, adjusted for embedded derivative
and estimated contingent consideration (earn
out), if any. The details of such investments are
given in Note 5. Impairment policy applicable on
such investments is same as mentioned in note

2.12.1 above.

The company at transition date has elected
to recognise its investments in subsidiary and
associate companies at fair value as deemed cost
for investments held on the transition date.

2.16 Non-current assets held for sale and
discontinued operation

Non-current assets are classified as held for sale if
their carrying amount will be recovered principally
through a sale transaction rather than through
continuing use and a sale is considered highly
probable. They are measured at the lower of their
carrying amount and fair value less costs to sell,
except for assets such as deferred tax assets, assets
arising from employee benefits, financial assets and
contractual rights under insurance contracts, which
are specifically exempt from this requirement.

An impairment loss is recognised for any initial
or subsequent write-down of the asset to fair
value less costs to sell. A gain is recognised
for any subsequent increases in fair value less
costs to sell of an asset, but not in excess of
any cumulative impairment loss previously
recognised. A gain or loss not previously
recognised by the date of the sale of the non¬
current asset (or disposal group) is recognised
at the date of de-recognition.

Non-current assets are not depreciated or
amortised while they are classified as held for sale.
Non-current assets classified as held for sale are
presented separately from the other assets in the
balance sheet.

A discontinued operation is a component of the
Company that has been disposed of or is classified
as held for sale and that represents a separate major
line of business or geographical area of operations,
is part of a single co-ordinated plan to dispose of
such a line of business or area of operations, or is a
subsidiary acquired exclusively with a view to resale.
The results of discontinued operations are presented
separately in the statement of profit and loss.

2.17 Foreign Currency Transactions

2.17.1 Functional and Presentation Currency

I tems included in the financial statements
are measured using the currency of the
primary economic environment in which
the Company operates (‘the functional
currency'). The financial statements are
presented in Indian rupee (INR), which is
the functional and presentation currency
of the Company.

2.17.2 Transactions and balances

Foreign currency transactions are
translated into the functional currency
using the exchange rates at the date 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 the year-end
exchange rates are generally recognised in
profit or loss.

All foreign exchange gains and losses are
presented in the statement of profit and
loss on a net basis within other income or
other expenses.

Non-monetary items that are measured in
terms of historical cost in a foreign currency
are translated using the exchange rates at
the dates of the initial transactions. Non¬
monetary items that are measured at fair
value in a foreign currency are translated
using the exchange rates at the date when
the fair value was determined. Translation
differences on assets and liabilities carried
at fair value are reported as part of the fair
value gain or loss.

2.18 Employee Benefits

Employees Benefits are provided in the books

as per Ind AS -19 on “Employee Benefits” in the

following manner:

2.18.1 Post-Employment Benefit Plans

Defined Contribution Plan

Defined contribution plans are employee
state insurance scheme and Government
administered pension fund scheme for all
applicable employees and superannuation
scheme for eligible employees. The
Company does not carry any other
obligation apart from the monthly
contribution.

The Company recognizes contribution
payable to a defined contribution plan as an
expense in the Statement of Profit and Loss
when the employees render services to the
Company during the reporting period. If the
contributions payable for services received
from employees before the reporting date
exceeds the contributions already paid, the
deficit payable is recognized as a liability
after deducting the contribution already
paid. If the contribution already paid
exceeds the contribution due for services
received before the reporting date, the
excess is recognized as an asset to the
extent that the prepayment will lead to, for
example, a reduction in future payments or
a cash refund.

Defined Benefit Plans

The company provides for gratuity, a defined
benefit plan covering eligible employees in
accordance with the Payment of Gratuity
Act, 1972, through an approved Gratuity
Fund. The Gratuity Fund is separately
administered through a Trust/Scheme.
Contributions in respect of gratuity are
made to the approved Gratuity Fund.

All expenses represented by current
service cost, past service cost, if any, and
net interest on the defined benefit liability
/ (asset) are recognized in the Statement
of Profit and Loss. Remeasurements of
the net defined benefit liability / (asset)
comprising actuarial gains and losses and
the return on the plan assets (excluding
amounts included in net interest on the
net defined benefit liability/asset), are
recognized in Other Comprehensive
Income. Such remeasurements are not
reclassified to the Statement of Profit and
Loss in the subsequent periods.

The Company presents the above liability/
(asset) as current and non-current in the
Balance Sheet as per actuarial valuation
by the independent actuary; however,
the entire liability towards gratuity is
considered as current as the Company will
contribute this amount to the gratuity fund
within the next twelve months.

2.18.2 Short Term Employee Benefits

The undiscounted amount of short term
employee benefits expected to be paid
in exchange for services rendered by
employees is recognized during the period
when the employee renders the services.
Short term employee benefits includes
salary and wages, bonus, incentive and
ex-gratia and also includes accrued leave
benefits, which are expected to be availed
or encashed within 12 months from the
end of the year.

2.19 Leases

The determination of whether an arrangement is

(or contains) a lease is based on the substance of

the arrangement at the inception of the lease. The
arrangement is, or contains, a lease if fulfilment
of the arrangement is dependent on the use of
a specific asset or assets and the arrangement
conveys a right to use the asset or assets,
even if that right is not explicitly specified in an
arrangement.

As a lessee

The Company's leased assets consist of leases for
land, buildings & vehicles. The Company assesses
whether a contract contains a lease, at inception
of a contract. A contract is, or contains, a lease
if the contract conveys the right to control the
use of an identified asset for a period of time in
exchange for consideration. To assess whether a
contract conveys the right to control the use of an
identified asset, the Company assesses whether:
(i) the contract involves the use of an identified
asset (ii) the Company has substantially all of the
economic benefits from use of the asset through
the period of the lease and (iii) the Company has
the right to direct the use of the asset.

At the date of commencement of the lease, the
Company recognizes a right-of-use asset (“ROU”)
and a corresponding lease liability for all lease
arrangements in which it is a lessee, except for
leases with a term of twelve months or less (short¬
term leases) and low value leases. For these
short-term and low value leases, the Company
recognizes the lease payments as an operating
expense as per the terms of the lease.

The right-of-use assets are initially recognized at
cost, which comprises the initial amount of the
lease liability adjusted for any lease payments
made at or prior to the commencement date
of the lease plus any initial direct costs less any
lease incentives. They are subsequently measured
at cost less accumulated depreciation and
impairment losses.

Right-of-use assets are subsequently depreciated
from the commencement date on a straight¬
line basis over the shorter of the lease term and
useful life of the underlying asset. The estimated
useful lives of right-of-use assets are determined
on the same basis as those of Property, Plant and
Equipment. In addition, the right-of-use asset is
periodically reduced by impairment losses, if any,

and adjusted for certain remeasurements of the
lease liability.

The lease liability is initially measured at the
present value of the lease payments that are
not paid at the commencement date, discounted
using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the
Company's incremental borrowing rate. Generally,
the Company uses its incremental borrowing rate
as the discount rate.

The lease liability is subsequently measured
at amortised cost using the effective interest
method. It is remeasured when there is a change
in future lease payments arising from a change
in an index or rate, if there is a change in the
Company's estimate of the amount expected to
be payable under a residual value guarantee, or if
the Company changes its assessment of whether it
will exercise a purchase, extension or termination
option.

When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in
profit or loss if the carrying amount of the right-of-
use asset has been reduced to zero.

Lease liability and ROU assets have been
separately presented in the Balance Sheet and
lease payments have been classified as financing
cash flows.

As a lessor

Leases for which the Company is a lessor is
classified as a finance or operating lease. Whenever
the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee, the
contract is classified as a finance lease. All other
leases are classified as operating leases. When
the Company is an intermediate lessor, it accounts
for its interests in the head lease and the sublease
separately. The sublease is classified as a finance
or operating lease by reference to the ROU asset
arising from the head lease. For operating leases,
rental income is recognized on a straight line basis
over the term of the relevant lease.

2.20 Taxation

Tax expenses is the aggregate amount included in
the determination of profit or loss for the period

in respect of current tax (i.e. amount of tax for the
period determined in accordance with the Income
Tax Law) and deferred tax (reflecting the tax
effects of timing differences between accounting
income and taxable income for the period).
Income tax expenses are recognised in statement
of profit or loss except tax expenses related to
items recognised directly in reserves (including
statement of other comprehensive income) which
are recognised with the underlying items.

2.20.1 Current Tax

The current tax expense or credit for
the period is the tax payable on the
current period's taxable income based
on the applicable income tax rate for
each jurisdiction adjusted by changes
in deferred tax assets and liabilities
attributable to temporary differences and
to unused tax losses.

The current income tax charge is
calculated on the basis of the tax laws
enacted or substantively enacted at the
end of the reporting period i.e. as per the
provisions of the Income Tax Act, 1961, as
amended from time to time. Management
periodically evaluates positions taken in
tax returns with respect to situations in
which applicable tax regulation is subject
to interpretation. It establishes provisions
where appropriate on the basis of amounts
expected to be paid to the tax authorities.

Advance taxes and provisions for current
income taxes are presented in the balance
sheet after off-setting advance tax paid
and income tax provision arising in the
same tax jurisdiction for relevant tax
paying units and where the Company is
able to and intends to settle the asset and
liability on a net basis.

2.20.2 Deferred Taxes

Deferred tax is provided in full on
temporary difference arising between
the tax bases of the assets and liabilities
and their carrying amounts in financial
statements at the reporting date.
Deferred taxes are recognised in respect
of deductible temporary differences being

the difference between taxable income
and accounting income that originate in
one period and are capable of reversal
in one or more subsequent periods., the
carry forward of unused tax losses and
the carry forward of unused tax credits.

Deferred income tax is determined
using tax rates (and laws) that have
been enacted or substantially enacted
by the end of the reporting period and
are expected to apply when the related
deferred income tax asset is realised, or
the deferred income tax liability is settled.

Deferred tax assets are recognised for
all deductible temporary differences and
unused tax losses only if it is probable that
future taxable amounts will be available to
utilise those temporary differences and
losses. In case of temporary differences
that arise from initial recognition of assets
or liabilities in a transaction (other than
business combination) that affect neither
the taxable profit nor the accounting profit,
deferred tax assets are not recognised.

The carrying amount of deferred tax
assets is reviewed at each reporting date
and reduced to the extent that it is no
longer probable that sufficient taxable
profit will be available to allow all or part
of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are
re-assessed at each reporting date and
are recognised to the extent that it has
become probable that future taxable
profits will allow the deferred tax asset to
be recovered.

Any tax credit available under the
provision of the Income Tax Act, 1961 is
recognised as deferred tax to the extent
that it is probable that future taxable profit
will be available against which the unused
tax credits can be utilised. The said asset is
created by way of credit to the statement
of profit and loss and shown under the
head deferred tax asset.

Deferred tax assets and liabilities are offset
when there is a legally enforceable right to
offset current tax assets and liabilities and
when the deferred tax balances relate to
the same taxation authority. Current tax
assets and tax liabilities are offset where
the Company has a legally enforceable
right to offset and intends either to settle
on a net basis, or to realise the asset and
settle the liability simultaneously.

Current and deferred tax is recognised
in profit or loss, except to the extent that
it relates to items recognised in other
comprehensive income or directly in equity.
In this case, the tax is also recognised in
other comprehensive income or directly in
equity, respectively.

2.21 Earnings Per Share

Basic earnings per share

Basic earnings per share is calculated by dividing
the profit attributable to owners of the Company
by the weighted average number of equity shares
outstanding during the period. Earnings considered
in ascertaining the company's earnings per share
is the net profit for the period after deducting
preference dividends, if any, and any attributable
distribution tax thereto for the period.

Diluted earnings per share

Diluted earnings per share adjusts the figures used
in the determination of basic earnings per share
to take into account the after income tax effect of
interest and other financing costs associated with
dilutive potential equity shares and the weighted
average number of additional equity shares
that would have been outstanding assuming the
conversion of all dilutive potential equity shares.