3. SUMMARY OF MATERIAL ACCOUNTING
POLICIES

The following are the significant accounting
policies applied by the Company in preparing its
Standalone Financial Statements consistently to all
the periods presented:

3.1 Current versus non-current classification

The Company presents assets and liabilities
in the Balance Sheet based on current/non-
current classification.

An asset is current when it is:

• Expected to be realised or intended to be sold
or consumed in the normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realised within twelve months
after the reporting period; or

• Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in the normal
operating cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months after
the reporting period; or

• There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period.

The Company classifies all other liabilities as non¬
current.

Deferred tax assets and liabilities are classified as
non-current assets and liabilities.

All other assets and liabilities are classified as
noncurrent. For the purpose of current/non-current
classification of assets and liabilities, the Company
has ascertained its normal operating cycle as twelve
months. This is based on the nature of services
and the time between the acquisition of assets or
inventories for processing and their realisation in
cash and cash equivalents.

3.2 Use of estimates and judgements

The estimates and judgements used in the
preparation of the financial statements are
continuously evaluated by the Company and are
based on historical experience and various other
assumptions and factors (including expectations
of future events) that the Company believes to
be reasonable under the existing circumstances.
Difference between actual results and estimates

are recognised in the period in which the results are
known / materialised.

The said estimates are based on the facts and events,
that existed as at the reporting date, or that occurred
after that date but provide additional evidence about
conditions existing as at the reporting date.

3.3 Foreign currencies

The Company's financial statements are presented
in INR, which is also the Company's functional and
presentation currency.

Transactions and balances

Transactions in foreign currencies are initially
recorded by the Company's functional currency
spot rates at the date the transaction first qualifies
for recognition.

Monetary assets and liabilities denominated in
foreign currencies are translated at the functional
currency spot rates of exchange at the reporting
date. Differences arising on settlement of such
transaction and on translation of monetary assets
and liabilities denominated in foreign currencies
at year end exchange rate are recognised in profit
or loss. They are deferred in equity if they relate to
qualifying cash flow hedges.

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 measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value is
determined. The gain or loss arising on translation of
non-monetary items measured at fair value is treated
in line with the recognition of the gain or loss on the
change in fair value of the item.

3.4 Property, plant and equipment

Property, plant and equipment is stated at cost,
net of accumulated depreciation and accumulated
impairment losses, if any. Such cost includes the
cost of replacing part of the plant and equipment.
When significant parts of Property, plant and
equipment are required to be replaced at intervals,
the Company recognises such parts as individual

assets with specific useful life and depreciates them
accordingly. Likewise, when a major inspection is
performed, its cost is recognised in the carrying
amount of the plant and equipment as a replacement
if the recognition criteria are satisfied. All other repair
and maintenance costs are recognised in profit or
loss as incurred. The present value of the expected
cost for the decommissioning of an asset after its use
is included in the cost of the respective asset if the
recognition criteria for a provision are met.

Capital work-in-progress comprises cost of fixed
assets that are not yet installed and ready for their
intended use at the balance sheet date.

Derecognition

An item of property, plant and equipment 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 included in the Statement of Profit and Loss
when the asset is derecognised.

Depreciation

Depreciation on property, plant and equipment is
provided so as to write off the cost of assets less
residual values over their useful life of the assets,
using the straight line method as prescribed under
Part C of Schedule II to the Companies Act 2013
except for following assets category as shown in
Table below.

However, Leasehold Improvements have been
depreciated considering the lease term or useful life
whichever is lower.

The management believes that the useful life as
given above best represent the period over which
management expects to use these assets. Hence
the useful life for these assets are different from the
useful life as prescribed under Part C of Schedule II
to the Companies Act 2013. Any change in useful file
are being applied prospectively in accordance with
Ind AS 8 - Accounting Policies, Changes in Accounting
Estimates and Errors.

When parts of an item of property, plant and
equipment have different useful life, they are
accounted for as separate items (Major Components)
and are depreciated over their useful life or over the
remaining useful life of the principal assets whichever
is less. Depreciation for assets purchased/sold during
a period is proportionately charged for the period
of use.

The residual values, useful life and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.

3.5 Leases

The Company assesses whether a contract contains
a lease, at the 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: (1) the contract involves the use of an
identified asset (2) the Company has substantially
all of the economic benefits from use of the asset
through the period of the lease and (3) 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 on a
straight-line basis over the term of the lease.

Certain lease arrangements include the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that
they will be exercised. 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 depreciated from the
commencement date on a straight-line basis over
the shorter of the lease term and useful life of the
underlying asset. Right of use assets are evaluated
for recoverability whenever events or changes in
circumstances indicate that their carrying amounts
may not be recoverable. For the purpose of
impairment testing, the recoverable amount (i.e. the
higher of the fair value less cost to sell and the value-
in-use) is determined on an individual asset basis
unless the asset does not generate cash flows that
are largely independent of those from other assets.
In such cases, the recoverable amount is determined
for the Cash Generating Unit (CGU) to which the
asset belongs.

At the commencement date of the lease, the
Company recognises lease liabilities measured at the
present value of lease payments to be made over the
lease term. The lease payments are fixed payments.
In calculating the present value of lease payments,
the Company uses its incremental borrowing rate at
the lease commencement date because the interest
rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change
in the lease term, a change in the lease payments
(e.g., changes to future payments resulting from a
change in an index or rate used to determine such
lease payments) or a change in the assessment of an
option to purchase the underlying asset.

Lease liability and ROU asset are separately
presented in the Balance Sheet and lease payments
are classified as financing cash flows.

3.6 Intangible Assets.

Intangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
Intangible assets are carried at cost less accumulated
amortisation and accumulated impairment losses, if
any. Internally generated intangible assets, excluding
capitalised development costs, are not capitalised
and expenditure is recognised in the Statement of
Profit and Loss in the period in which expenditure
is incurred.

The useful life of intangible assets are assessed
as finite.

Intangible assets with finite life are amortised over
their useful economic life and assessed for impairment
whenever there is an indication that the intangible
asset may be impaired. The amortisation period and
the amortisation method for an intangible asset with
a finite useful life are reviewed at least at the end
of each reporting period. Changes in the expected
useful life or the expected pattern of consumption
of future economic benefits embodied in the asset
are considered to modify the amortisation period or
method, as appropriate, and are treated as changes
in accounting estimates. The amortisation expense
on intangible assets with finite life is recognised in
the Statement of Profit and Loss.

Gains or losses arising from derecognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the
carrying amount of the asset and are recognised
in the Statement of Profit and Loss when the asset
is derecognised.

Amortisation

Software and Website are amortized over
management estimate of its useful life of 5 years on
straight line basis.

Acquired Trademark are amortized over management
estimate of its useful life of 2 years on straight
line basis.

3.7 Inventories

Stock-in-trade are valued at the lower of cost and net
realisable value.

• Stock in Trade: Cost includes cost of purchase and

other costs incurred in bringing the inventories
to their present location and condition. Cost is
determined on weighted average basis.

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.

3.8 Impairment

Assessment for impairment is done at each Balance
Sheet date as to whether there is any indication that a
non-financial asset may be impaired. Assets that are
subject to depreciation and amortisation and assets
representing investments in subsidiary are reviewed
for impairment, whenever events or changes in
circumstances indicate that carrying amount may not
be recoverable. Such circumstances include, though
are not limited to, significant or sustained decline in
revenues or earnings and material adverse changes
in the economic environment.

An impairment loss is recognised whenever the
carrying amount of an asset or its CGU exceeds its
recoverable amount. The recoverable amount of
an asset is the greater of its fair value less cost to
sell and value 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.

Impairment losses, if any, are recognised in the
Statement of Profit and Loss and included in
depreciation and amortisation expense. Impairment
losses, on assets other than goodwill are reversed in
the Statement of Profit and Loss only to the extent

that the asset's carrying amount does not exceed the
carrying amount that would have been determined if
no impairment loss had previously been recognised.

3.9 Revenue Recognition

The Company derives revenues primarily from
sale of traded goods and related services. Revenue
from contracts with customers is recognised 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. The
Company has concluded that it is the principal in its
revenue arrangements.

a) Sale ofgoods

Revenue from the sale of goods is recognised
at the point in time when control of the goods
is transferred to the customer, i.e., generally on
delivery of the goods and when the ownership
of goods and control are transferred for a
consideration. Revenue is measured at the
fair value of the consideration received or
receivable net of returns and allowances
trade discounts and volume rebates, taking
into accounts contractually defined terms of
payment excluding taxes and duties collected
on behalf of the government. In case of sales
made through franchisee revenue is measured
on gross basis net of taxes and consideration
payable to franchisee is recognised as expenses.

Variable consideration

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. Some contracts for the
sale of goods provide customers with a right of
return and discounts. The rights of return and
discounts give rise to variable consideration.

i. Rights of return

Certain contracts provide a customer with a
right to return the goods within a specified
period. The Company uses the expected
value method to estimate the goods that
will be returned because this method
best predicts the amount of variable
consideration to which the Company will
be entitled. The requirements in Ind AS
115 on constraining estimates of variable
consideration are also applied in order
to determine the amount of variable
consideration that can be included in
the transaction price. For goods that
are expected to be returned, instead
of revenue, the Company recognises a
refundable liability. A right of return asset
(and corresponding adjustment to change
in inventory is also recognised for the right
to recover products from a customer.

ii. Discounts

Discounts are offset against amounts
payable by the customer. To estimate the
variable consideration for the expected
future discounts, the Company applies
the expected value method. The selected
method that best predicts the amount of
variable consideration is primarily driven
by the number of volume thresholds
contained in the contract.

b) Assets and liabilities arising from returns
i. Returnable asset

Returnable asset represents the Company's
right to recover the goods expected to be
returned by customers. The asset is measured
at the former carrying amount of the inventory,
less any expected costs to recover the goods,
including any potential decrease in the value
of the returned goods. The Company updates
the measurement of the asset recorded for any
revisions to its expected level of returns, as well
as any additional decrease in the value of the
returned products.

ii. Refundable liabilities

A refundable liability is the obligation to refund
some or all of the consideration received (or
receivable) from the customer and is measured
at the amount the Company ultimately expects
it will have to return to the customer. The
Company updates its estimates of refundable
liabilities (and the corresponding change in the
transaction price) at the end of each reporting
period. Refer to above accounting policy on
variable consideration.

c) Gift Vouchers

The amount collected on sale of a gift voucher
is recognized as a liability and transferred to
revenue (sales) when redeemed or to revenue
(sale of services) on expiry.

d) Interest income

For all financial instruments measured at
amortised cost and interest-bearing financial
assets classified as fair value through other
comprehensive income, interest income is
recorded using the effective interest rate
(EIR). The EIR is the rate that exactly discounts
the estimated future cash receipts over the
expected life of the financial instrument or a
shorter period, where appropriate, to the net
carrying amount of the financial asset. When
calculating the effective interest rate, the
Company estimates the expected cash flows
by considering all the contractual terms of the
financial instrument (for example, prepayment,
extension, call and similar options) but does not
consider the expected credit losses. Interest
income is included in other income in the
statement of profit or loss.

e) Profit or loss on sale of Investments

Profit or Loss on sale of investments is recorded
on transfer of title from the Company, and is
determined as the difference between the sale
price and carrying value of investment and other
incidental expenses.

f) Dividend

Dividend income from investments in subsidiary
is recognised when the Company's right to

receive is established which generally occurs
when the shareholders approve the dividend.

3.10 Financial instruments - initial recognition
and subsequent 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.

a) Financial assets

(i) Initial recognition and measurement of
financial assets

Financial assets are initially measured at
fair value. Transaction costs that are directly
attributable to the acquisition or issue of
financial assets (other than financial assets at
fair value through profit or loss) are added to
or deducted from the fair value of the financial
assets, as appropriate, on initial recognition.
Transaction costs that are directly attributable
to the acquisition or issue of financial assets at
fair value through profit or loss are recognised
immediately in profit or loss.

Purchases or sales of financial assets that require
delivery of assets within a time frame established
by regulation or convention in the market place
(regular way trades) are recognised on the trade
date, i.e., the date that the Company commits to
purchase or sell the asset.

(ii) Subsequent measurement of financial
assets

For purposes of subsequent measurement,
financial assets are classified in four categories:

• Financial assets at amortised cost

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

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

• Equity instruments measured at fair value
through other comprehensive income
(FVTOCI)

• Financial assets at amortised cost:

A financial asset is measured at amortised
cost if:

- 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
asset give rise on specified dates to
cash flows that are solely payments
of principal and interest (SPPI) on the
principal amount outstanding.

This category is the most relevant to the
Company. After initial measurement, such
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. This
category generally applies to trade and
other receivables.

(iii) Derecognition of financial assets

A financial asset is derecognised when:

- the contractual rights to the cash flows from
the financial asset expire, or

- The Company has transferred its contractual
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

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

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

When the Company has transferred
its rights to receive cash flows from an
asset or has entered into a pass-through
arrangement, it evaluates if and to what
extent it has retained the risks and
rewards of ownership. When it has neither
transferred nor retained substantially
all of the risks and rewards of the asset,
nor transferred control of the asset, the
Company continues to 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.

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.

(iv) Impairment of financial assets

a) Financial assets

In accordance with Ind-AS 109, the Company
applies expected credit loss (ECL) model for
measurement and recognition of impairment
loss on the following financial assets and credit
risk exposure:

• Financial assets that are debt instruments,
and are measured at amortised cost e.g.,
loans, debt securities, deposits, trade
receivables and bank balance

• Trade receivables or any contractual right to
receive cash or another financial asset that
result from transactions that are within the
scope of Ind AS 109 and IND AS 115

The Company follows 'simplified 12 months
approach' for recognition of impairment loss
allowance on:

• Trade receivables or contract assets
resulting from transactions within the scope
of Ind AS 109 and IND AS 115, if they do not
contain a significant financing component

• Trade receivables or contract assets
resulting from transactions within the
scope of Ind AS 109 and IND AS 115 that
contain a significant financing component,
if the Company applies practical expedient
to ignore separation of time value of
money, and

• Right Of Use Assets resulting from
transactions within the scope of Ind AS 116

The application of simplified 12 months approach
does not require the Company to track changes
in credit risk. Rather, it recognises impairment
loss allowance based on lifetime ECLs at each
reporting date, right from its initial recognition.

For recognition of impairment loss on other
financial assets and risk exposure, the Company
determines that whether there has been a
significant increase in the credit risk since initial
recognition. If credit risk has not increased
significantly, 12-month ECL is used to provide
for impairment loss. However, if credit risk has
increased significantly, lifetime ECL is used. If,
in a subsequent period, credit quality of the
instrument improves such that there is no
longer a significant increase in credit risk since
initial recognition, then the entity reverts to
recognising impairment loss allowance based
on 12-month ECL.

Lifetime ECL are the expected credit losses
resulting from all possible default events over
the expected life of a financial instrument. The
12-month ECL is a portion of the lifetime ECL
which results from default events on a financial
instrument that are possible within 12 months
after the reporting date.

ECL is the 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 (i.e.,
all cash shortfalls), discounted at the original
EIR. When estimating the cash flows, an entity
is required to consider:

• All contractual terms of the financial
instrument (including prepayment,
extension, call and similar options) over the
expected life of the financial instrument.
However, in rare cases when the expected
life of the financial instrument cannot be
estimated reliably, then the Company is
required to use the remaining contractual
term of the financial instrument

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

ECL impairment loss allowance (or reversal)
recognized during the period is recognized as
income/ expense in the statement of profit and
loss (P&L). This amount is reflected in a separate
line under the head "Other expenses" in the
P&L. The balance sheet presentation for various
financial instruments is described below:

• Financial assets measured as at amortised
cost, contract assets and ROU Assets: 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.

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.

b) Financial Liabilities

(i) Initial recognition and measurement of
financial liabilities

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
hedging instruments in an effective hedge,
as appropriate.

All financial liabilities are recognised initially at
fair value minus, in the case of financial liabilities
not recorded at fair value through profit or loss,
transaction costs that are attributable to the
issue of the financial liabilities.

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

(ii) Subsequent measurement of financial
liabilities

The measurement of financial liabilities depends
on their classification, as described below:

• Financial liabilities at fair value
through profit or loss

Financial liabilities at fair value through
profit or loss include financial liabilities
held for trading and financial liabilities
designated upon initial recognition as at
fair value through profit or loss. Financial
liabilities are classified as held for trading
if they are incurred for the purpose
of repurchasing in the near term. This
category also includes derivative financial
instruments entered into by the Company
that are not designated as hedging
instruments in hedge relationships as
defined by Ind-AS 109. 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 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 risks
are recognized in OCI. These gains/ losses
are not subsequently transferred to P&L.
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.

• Loans and Borrowings

This is the category most relevant to the
Company. After initial recognition, interest¬
bearing borrowings are subsequently
measured at amortised cost using the 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.

This category generally applies
to borrowings.

(iii) Derecognition of financial liabilities

A financial liability (or a part of a financial liability)
is derecognised from its balance sheet when,
and only when, it is extinguished i.e. when the
obligation specified in the contract is discharged
or cancelled or expired.

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.

c) 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.

3.11 Investment in subsidiary Companies

The Company has elected to recognise its investments
in subsidiary companies at cost in accordance with
the option available in Ind AS 27, 'Separate Financial
Statements'. Cost includes cash consideration paid
on initial recognition and adjusted for embedded
derivative, if any.

Subsidiaries are all the entities over which
Company has direct or indirect control. Control is
achieved when:

• Has power over its investee,

• Is exposed to, or has rights to, variable returns
from its involvement with the investee; and

• Has the ability to use its power to affect
its returns

The details of such investments are given in Note 7(a).

Impairment policy applicable on such investments is
explained in Note 3.8 above.

3.12 Cash and cash equivalents

Cash and cash equivalents in the balance sheet
comprise cash at banks and on hand and short-term
deposits with a 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.

3.13 Taxes

Tax expense comprises of current income tax and
deferred tax.

Current income tax

Current income tax assets and liabilities are measured
at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or
substantively enacted at the reporting date.

Current income tax relating to items recognised outside
Statement of profit and loss is recognised outside
Statement of profit and loss. Current income tax are
recognised in correlation to the underlying transaction
either in other comprehensive income or directly in
equity. Management periodically evaluates positions
taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation
and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the liability method on
temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial
reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable
temporary differences, except:

• When the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a
transaction that is not a business combination and,
at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss;

• In respect of taxable temporary differences associated
with investments in subsidiaries, when the timing
of the reversal of the temporary differences can
be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax

assets are recognised to the extent that it is probable
that taxable profit will be available against which the
deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses
can be utilised, except:

• When the deferred tax asset relating to the deductible
temporary difference arises from the initial
recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor
taxable profit or loss;

• In respect of deductible temporary differences
associated with investments in subsidiaries deferred
tax assets are recognised only to the extent that it is
probable that the temporary differences will reverse
in the foreseeable future and taxable profit will be
available against which the temporary differences
can be utilised.

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.

Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realised 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 recognised outside
Statement of profit and loss is recognised outside
Statement of profit and loss. Deferred tax items
are recognised in correlation to the underlying
transaction either in other comprehensive income
or directly in equity.

The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from
the manner in which the Company expects, at the
end of the reporting period, to recover or settle the
carrying amount of its assets and liabilities.

Deferred tax assets and deferred tax liabilities are
offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and
the deferred taxes relate to the same taxable entity
and the same taxation authority.

The Company recognizes tax credits in the nature
of MAT credit as an asset only to the extent that
there is convincing evidence that the Company will
pay normal income tax during the specified period,
i.e., the period for which tax credit is allowed to be
carried forward. In the year in which the Company
recognizes tax credits as an asset, the said asset
is created by way of tax credit to the Statement
of profit and loss. The Company reviews such tax
credit asset at each reporting date and writes down
the asset to the extent the Company does not have
convincing evidence that it will pay normal tax during
the specified period. Deferred tax includes MAT
tax credit.

3.14 Employee Benefit

a) Short Term Employee Benefit

All employee benefits payable within twelve
months of rendering the service are classified
as short-term benefits. Such benefits include
salaries, wages, bonus, short term compensated
absences, awards, ex-gratia, performance pay
etc. and the same are recognised in the period in
which the employee renders the related service.

b) Post-Employment Benefits

(i) Defined contribution plan

The Company's approved provident fund scheme,
superannuation fund scheme, employees'
state insurance fund scheme and Employees'
pension scheme are defined contribution
plans. The Company has no obligation, other
than the contribution paid/payable under such
schemes. The contribution paid/payable under
the schemes is recognised during the period in
which the employee renders the related service.

(ii) Defined benefit plan

The employee's gratuity fund scheme and
post-retirement medical benefit schemes are
Company's defined benefit plans. The present
value of the obligation under such defined

benefit plans is determined based on the
actuarial valuation using the Projected Unit
Credit Method as at the date of the Balance
sheet. In case of funded plans, the fair value of
plan asset is reduced from the gross obligation
under the defined benefit plans, to recognise
the obligation on the net basis.

Re-measurements, comprising of actuarial
gains and losses, the effect of the asset ceiling,
excluding amounts included in net interest on
the net defined benefit liability and the return
on plan assets (excluding amounts included in
net interest on the net defined benefit liability),
are recognised immediately in the Balance
Sheet with a corresponding debit or credit to
retained earnings through OCI in the period in
which they occur. Re-measurements are not
reclassified to Statement of Profit and Loss in
subsequent periods.

c) Other long term employment benefits:

The employee's long term compensated
absences are Company's defined benefit plans.
The present value of the obligation is determined
based on the actuarial valuation using the
Projected Unit Credit Method as at the date of
the Balance sheet. In case of funded plans, the
fair value of plan asset is reduced from the gross
obligation, to recognise the obligation on the
net basis.

d) Termination Benefits:

Termination benefits such as compensation
under voluntary retirement scheme are
recognised in the year in which termination
benefits become payable.

3.15 Share-based payments

Employees (including senior executives) of the
Company receive remuneration in the form of
share-based payments, whereby employees render
services as consideration for equity instruments
(equity-settled transactions).

Equity-settled transactions

The cost of equity-settled transactions is determined
by the fair value at the date when the grant is made
using an appropriate valuation model.

That cost is recognised, together with a corresponding
increase in share-based payment (SBP) reserves in
equity, over the period in which the performance
and/or service conditions are fulfilled in employee
benefits expense. The cumulative expense recognised
for equity-settled transactions at each reporting date
until the vesting date reflects the extent to which
the vesting period has expired and the Company's
best estimate of the number of equity instruments
that will ultimately vest. The statement of profit
and loss expense or credit for a period represents
the movement in cumulative expense recognised
as at the beginning and end of that period and is
recognised in employee benefits expense.

Service and non-market performance conditions
are not taken into account when determining the
grant date fair value of awards, but the likelihood
of the conditions being met is assessed as part of
the Company's best estimate of the number of
equity instruments that will ultimately vest. Market
performance conditions are reflected within the
grant date fair value. Any other conditions attached
to an award, but without an associated service
requirement, are considered to be non-vesting
conditions. Non-vesting conditions are reflected in
the fair value of an award and lead to an immediate
expensing of an award unless there are also service
and/or performance conditions.

No expense is recognised for awards that do not
ultimately vest because non-market performance
and/or service conditions have not been met. Where
awards include a market or non-vesting condition,
the transactions are treated as vested irrespective
of whether the market or non-vesting condition is
satisfied, provided that all other performance and/
or service conditions are satisfied.

When the terms of an equity-settled award are
modified, the minimum expense recognised is the
expense had the terms had not been modified, if the
original terms of the award are met. An additional
expense is recognised for any modification that

increases the total fair value of the share-based
payment transaction, or is otherwise beneficial to the
employee as measured at the date of modification.
Where an award is cancelled by the entity or by the
counterparty, any remaining element of the fair value
of the award is expensed immediately through profit
or loss.

The dilutive effect of outstanding options is reflected
as additional share dilution in the computation of
diluted earnings per share.

3.16 Earnings per share

Basic EPS is calculated by dividing the profit / loss
for the year attributable to ordinary equity holders
of the Company by the weighted average number of
ordinary shares outstanding during the year.

Diluted EPS is calculated by dividing the profit / loss
attributable to ordinary equity holders of the parent
by the weighted average number of ordinary shares
outstanding during the year plus the weighted
average number of ordinary shares that would be
issued on conversion of all the dilutive potential
ordinary shares into ordinary shares.

The dilutive potential equity shares are adjusted for
the proceeds receivable had the equity shares been
actually issued at fair value (i.e. the average market
value of the outstanding equity shares). Dilutive
potential equity shares are deemed converted as of
the beginning of the period, unless issued at a later
date. Dilutive potential equity shares are determined
independently for each period presented. The
number of equity shares and potentially dilutive
equity shares are adjusted retrospectively for all
periods presented for any share splits and bonus
shares issues including for changes effected prior to
the approval of the financial statements by the Board
of Directors.

3.17 Dividend

The Company recognises a liability (including tax
thereon) to make cash or non-cash distributions
to equity shareholders of the Company when the
distribution is authorised and the distribution is no
longer at the discretion of the Company.

Non-cash distributions are measured at the fair
value of the assets to be distributed with fair value
re-measurement recognised directly in equity.

Upon distribution of non-cash assets, any difference
between the carrying amount of the liability and
the carrying amount of the assets distributed is
recognised in the Statement of Profit and Loss.