3. Summary of Material Accounting Policies3.1. 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.

Operating cycle

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.

Following are significant estimates (For details refer
Note 4.1)

• Useful life of Property, plant and equipment and
Intangible Assets

• Defined benefit plans

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 functional and presentation currency
is Indian Rupee. 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 (i.e., translation
differences on items whose fair value gain or loss is
recognised in OCI or profit or loss are also recognised
in OCI or profit or loss, respectively).

3.4. Fair value measurement

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

• In the absence of a principal market, in the most
advantageous market for the asset or liability.

The principal or the most advantageous market must be
accessible by the Company.

The fair value of an asset or a liability is measured using
the assumptions that market participants would use
when pricing the asset or liability, assuming that market
participants act in their economic best interest.

A fair value measurement of a non-financial asset takes
into account a market participant’s ability to generate
economic benefits by using the asset in its highest and
best use or by selling it to another market participant
that would use the asset in its highest and best use.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
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 follows,
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 derivative instruments and for
non-recurring measurement, such as asset held for sale.

3.5. 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 and
borrowing costs for long-term construction projects
if the recognition criteria are met. 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 lives
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.

Borrowing cost relating to acquisition / construction of
fixed assets which take substantial period of time to get
ready for its intended use are also included to the extent
they relate to the period till such assets are ready to be
put to use.

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.

De-recognition

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 de-recognised.

Depreciation

Depreciation on property, plant and equipment is
provided so as to write off the cost of assets less
residual values over their useful lives of the assets,
using the straight line method as prescribed under Part
C of Schedule II to the Companies Act 2013 except for
Plant and Machinery (other than Lab equipment, Power

generation plant, Electrical installations, Wind power
generation plant and Engineering Equipments which
are depreciated as per schedule II of the Companies Act,
2013) and Leasehold Improvements.

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 on Plant and Machinery (other than
Lab equipment, Power generation plant, Electrical
installations, Wind power generation plant and
Engineering Equipments) and Leasehold Improvements
is provided on straight-line basis over the useful lives
of the assets as estimated by Management based on
technical assessment of the assets, the estimated usage
of the assets, nature of assets, operating condition
of the assets, maintenance supports and anticipated
technological changes required in the assets. The
Management estimates the useful lives as follows:

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 lives for these assets are different from the useful
lives as prescribed under Part C of Schedule II to the
Companies Act 2013.

Depreciation for assets purchased/sold during a period
is proportionately charged for the period of use.

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

3.6. Leases

The Company assesses at contract inception whether a
contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified
asset for a period of time in exchange for consideration.

Company as a lessee

The Company applies a single recognition and
measurement approach for all leases, except for
short-term leases and leases of low-value assets. The
Company recognises lease liabilities to make lease
payments and right-of-use assets representing the right
to use the underlying assets.

i) Right of use assets

The Company recognises right-of-use assets at
the commencement date of the lease (i.e., the
date the underlying asset is available for use).
Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses,
and adjusted for any remeasurement of lease
liabilities. The cost of right-of-use assets includes
the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made
at or before the commencement date less any
lease incentives received. Right-of-use assets are
depreciated on a straight-line basis over the lease
term. The right of use assets are also subject to
impairment.

ii) Lease liabilities

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.

iii) Short-term leases and leases of low-value assets

The Company applies the short-term lease
recognition exemption to its short-term leases (i.e.,
those leases that have a lease term of 12 months
or less from the commencement date and do not
contain a purchase option). It also applies the lease
of low-value assets recognition exemption that are

considered to be low value. Lease payments on
short-term leases and leases of low-value assets
are recognised as expense on a straight-line basis
over the lease term.

Company as a lessor

Leases in which the Company does not transfer
substantially all the risks and rewards of ownership of
an asset are classified as operating leases. Rental income
from operating lease is recognised on a straight-line basis
over the term of the relevant lease. Initial direct costs
incurred in negotiating and arranging an operating lease
are added to the carrying amount of the leased asset
and recognised over the lease term on the same basis
as rental income. Contingent rents are recognised as
revenue in the period in which they are earned.

3.7. Investment properties

Property that is held for long-term rental yields or for
capital appreciation or both, and that is not occupied
by the Company, is classified as investment property.
Investment properties are measured initially at cost,
including transaction costs. Subsequent to initial
recognition, investment properties are stated at cost
less accumulated depreciation and accumulated
impairment loss, if any.

The cost includes the cost of replacing parts and
borrowing costs for long-term construction projects
if the recognition criteria are met. When significant
parts of the property are required to be replaced at
intervals, the Company depreciates them separately
based on their specific useful lives. All other repair and
maintenance costs are recognised in profit or loss as
incurred.

An investment property is derecognised on disposal or
on permanently withdrawal from use or when no future
economic benefits are expected from its 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.

Transfers are made to (or from) investment property
only when there is a change in use. Transfers between
investment property, owner-occupied property and
inventories are at carrying amount of the property
transferred.

Depreciation on Investment property is provided on the
straight line method over useful lives of the assets as

prescribed under Part C of Schedule II to the Companies
Act 2013.

3.8. Intangible Assets

Intangible Assets that the Company controls and
from which it expects future economic benefits are
capitalised upon acquisition and measured initially:

• for assets acquired in a business combination at
fair value on the date of acquisition

• for separately acquired assets, at cost comprising
the purchase price and directly attributable costs
to prepare the asset for its intended use.

Revenue expenditure pertaining to research is charged
to the Statement of Profit and Loss. Development costs
of products are charged to the Statement of Profit and
Loss unless a product’s technological and commercial
feasibility has been established, in which case such
expenditure is capitalised.

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 lives of intangible assets are assessed as
finite.

Intangible assets with finite lives are amortised
over their useful economic lives 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 lives 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 is amortised over Management’s estimate of
its useful life of 5 years or License Period whichever is
lower and Patent/Know how is amortised over its useful
validity period. Website is amortised over 5 years.

3.9. Inventories

Inventories of Raw material, Work-in-progress, Finished
goods and Stock-in-trade are valued at the lower of cost
and net realisable value. However, Raw material and
other items held for use in the production of inventories
are not written down below cost if the finished products
in which they will be incorporated are expected to be
sold at or above cost.

Costs incurred in bringing each product to its present
location and condition are accounted for as follows:

• Raw materials and accessories: 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.

• Finished goods and work in progress: cost includes
cost of direct materials and labour and a proportion
of manufacturing overheads based on the normal
operating capacity, but excluding borrowing costs.
Cost is determined on weighted average basis.

• Traded goods: 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.

All other inventories of stores, consumables, project
material at site are valued at cost. The stock of waste is
valued at net realisable value.

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.

3.10. Impairment of non-financial assets

The Company assesses at each reporting date whether
there is an indication that an asset may be impaired.
If any indication exists, or when annual impairment
testing for an asset is required, the Company estimates
the asset’s recoverable amount. An asset’s recoverable
amount is the higher of an asset’s or cash-generating
unit’s (CGU) fair value less costs to sell and its value
in use. It is determined for an individual asset, unless
the asset does not generate cash inflows that are
largely independent of those from other assets of the

Company. When the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax
discount rate that reflects current market assessments
of the time value of money and the risks specific to
the asset. In determining fair value less costs to sell,
recent market transactions are taken into account, if
available. If no such transactions can be identified, an
appropriate valuation model is used. These calculations
are corroborated by valuation multiples, quoted share
prices for publicly traded Subsidiaries or other available
fair value indicators.

The Company bases its impairment calculation on
detailed budgets and forecasts which are prepared
separately for each of the Company’s CGU to which
the individual assets are allocated. These budgets and
forecast calculations are generally covering a period of
five years. For longer periods, a long-term growth rate is
calculated and applied to project future cash flows after
the fifth year.

Impairment losses, including impairment on
inventories, are recognised in the Statement of Profit
and Loss in those expense categories consistent with
the function of the impaired asset.

For assets excluding goodwill, an assessment is made
at each reporting date as to whether there is any
indication that previously recognised impairment losses
may no longer exist or may have decreased. If such
indication exists, the Company estimates the asset’s
or CGU’s recoverable amount. A previously recognised
impairment loss is reversed only if there has been
a change in the assumptions used to determine the
asset’s recoverable amount since the last impairment
loss was recognised. The reversal is limited so that
the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount
that would have been determined, net of depreciation,
had no impairment loss been recognised for the asset in
prior years. Such reversal is recognised in the Statement
of Profit and Loss unless the asset is carried at a
revalued amount, in which case the reversal is treated
as a revaluation increase.

3.11. Revenue Recognition

Revenue from contracts with customers is recognised
on transfer of control of promised goods or services to
a customer at an amount that reflects the consideration
to which the Company is expected to be entitled to in
exchange for those goods or services. Revenue towards
satisfaction of a performance obligation is measured
at the amount of transaction price (net of variable
consideration) allocated to that performance obligation.
The transaction price of goods sold and services rendered
is net of variable consideration on account of various
discounts and schemes offered by the Company as part
of the contract. This variable consideration is estimated
base on the expected value of outflow. Revenue (net of
variable consideration) is recognised only to the extent
that it is highly probable that the amount will not be
subject to significant reversal when uncertainty relating
to its recognition is resolved.

Revenue from sale of products is recognised when
the control of the goods have been transferred to the
customer. The performance obligation in case of sale
of product is satisfied at a point in time i.e., when the
material is shipped to the customer or on delivery to the
customer, as may be specified in the contract. It includes
revenue from real estate development of residential
unit (recognised at the point in time, when the control
of the asset is transferred to the customer)

Export Incentive

Export incentives under various schemes notified by
government are accounted for in the year of exports
based on eligibility and when there is no uncertainty in
receiving the same.

Dividend Income

Dividend income from investments is recognised when
the Company’s right to receive is established which
generally occurs when the shareholders approve the
dividend.

3.12. Financial instruments - initial recognition and
subsequent measurement

Financial assets and financial liabilities are recognised
when a Company becomes a party to the contractual
provisions of the instruments. For recognition and
measurement of financial assets and financial liabilities,
refer policy as mentioned below:

Initial recognition of financial assets and financial
liabilities:

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

Profit or loss on sale of Investments

Profit or Loss on sale of investments are 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.

Interest Income

Interest income from debt instruments are recorded
using the effective interest rate (EIR) and accrued on a
timely basis. 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.

Subsequent measurement of financial assets:

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

(a) Financial assets at amortised cost

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

(c) Equity instruments

(a) 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.

(b) Financial assets at fair value through other
comprehensive income

A financial asset is measured at fair value through
other comprehensive income if the financial asset
is held within a business model whose objective is
achieved by both collecting contractual cash flows
and selling financial assets, 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.

Financial assets included within the FVTOCI
category are measured at each reporting date at fair
value. Fair value movements are recognised in the
other comprehensive income (OCI). However, the
Company recognises interest income, impairment
losses & reversals and foreign exchange gain
or loss in the Statement of Profit and Loss. On
derecognition of the asset, cumulative gain or loss
previously recognised in OCI is reclassified from
the equity to P&L. Interest earned whilst holding
FVTOCI financial asset is reported as interest
income using the EIR method.

(c) Equity instruments:

All equity investments in scope of Ind AS 109
other than Investment in Subsidiaries, Joint
Ventures and Associates 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.

Equity Investment in Subsidiaries, Joint Ventures
and Associates are measured at cost as per Ind AS
27 - Separate Financial Statements.

If the Company decides to classify an equity
instrument as at FVTOCI, then all fair value changes on
the instrument, excluding dividends, are recognised
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.

Impairment of financial assets

The Company assesses at each reporting date whether
a financial asset (or a group of financial assets) such as
investments, trade receivables, advances and security
deposits held at amortised cost and financial assets that
are measured at fair value through other comprehensive
income are tested for impairment based on evidence
or information that is available without undue cost or
effort. Expected credit losses (ECL) are assessed and
loss allowances recognised if the credit quality of the
financial asset has deteriorated significantly since initial
recognition.

Loss allowance for trade receivables with no significant
financing component is measured at an amount equal
to lifetime ECL. For all other financial assets, ECL is
measured at an amount equal to the 12 months ECL,
unless there has been a significant increase in credit
risk from initial recognition in which case these are
measured at lifetime ECL. The amount of expected
credit losses (or reversal) that is required to adjust the
loss allowance at the reporting date to the amount that
is required to be recognised as an impairment gain or
loss in Statement of Profit and Loss.

Derecognition of financial assets

Financial assets are derecognised when the right to
receive cash flows from the assets has expired, or has
been transferred, and the Company has transferred
substantially all of the risks and rewards of ownership.

Concurrently, if the asset is one that is measured at:

(a) amortised cost, the gain or loss is recognised in the
Statement of Profit and Loss;

(b) fair value through other comprehensive income,
the cumulative fair value adjustments previously
taken to reserves are reclassified to the Statement
of Profit and Loss unless the asset represents an
equity investment in which case the cumulative
fair value adjustments previously taken to reserves

is reclassified within equity.

Reclassification

When and only when the business model is changed
the Company shall reclassify all affected financial
assets prospectively from the reclassification date as
subsequently measured at amortised cost, fair value
through other comprehensive income, fair value
through profit or loss without restating the previously
recognised gains, losses or interest and in terms o
the reclassification principles laid down in the Ind AS
relating to Financial Instruments.

Financial liabilities and equity instruments

Classification as debt or equity

Debt and equity instruments issued by a Company
are classified as either financial liabilities or as equity
in accordance with the substance of the contractual
arrangements and the definitions of a financial liability
and an equity instrument.

Financial liabilities

All financial liabilities are subsequently measured at
amortised cost using the effective interest method.

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 fail
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 enterec
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 al
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 recognised in OCI. These gains/
loss are not subsequently transferred to Statement
of Profit or 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.

Equity instruments

An equity instrument is any contract that evidences
a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued
by a Company are recognised at the proceeds received,
net of direct issue costs.

Financial guarantee contracts

A financial guarantee contract is a contract that requires
the issuer to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor
fails to make payments when due in accordance with
the terms of a debt instrument.

Financial guarantee contracts issued by a Company
are initially measured at their fair values and, if not
designated as at FVTPL, are subsequently measured at
the higher of:

• the amount of loss allowance determined in
accordance with impairment requirements of Ind
AS 109; and

• the amount initially recognised less, when
appropriate, the cumulative amount of income
recognised in accordance with the principles of Ind
AS 18.

Derecognition of financial liabilities

The Company derecognises financial liabilities
when, and only when, the Company’s obligations are
discharged, cancelled or have expired. An exchange
with a lender of debt instruments with substantially
different terms is accounted for as an extinguishment
of the original financial liability and the recognition
of a new financial liability. Similarly, a substantial
modification of the terms of an existing financial liability
(whether or not attributable to the financial difficulty of
the debtor) is accounted for as an extinguishment of the
original financial liability and the recognition of a new
financial liability. The difference between the carrying
amount of the financial liability derecognised and the
consideration paid and payable is recognised in profit
or loss.

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 Company or
the counterparty.

Derivatives and Hedge Accounting

Derivatives are initially recognised at fair value and
are subsequently re-measured to their fair value at
the end of each reporting period. The resulting gains/
losses are recognised in the Statement of Profit and
Loss immediately unless the derivative is designated
and effective as a hedging instrument, in which event
the timing of recognition in profit or loss / inclusion in
the initial cost of non-financial asset depends on the
nature of the hedging relationship and the nature of the
hedged item.

The Company complies with the principles of hedge
accounting where derivative contracts are designated
as hedge instruments. At the inception of the hedge
relationship, the Company documents the relationship
between the hedge instrument and the hedged item,
along with the risk management objectives and its
strategy for undertaking hedge transactions, which can
be a cash flow hedge.

(i) Cash flow hedges

The effective portion of changes in the fair value
of derivatives that are designated and qualify
as cash flow hedges is recognised in the other
comprehensive income and accumulated as ‘Cash
Flow Hedging Reserve’. The gains / losses relating
to the ineffective portion is recognised in the
Statement of Profit and Loss.

Amounts previously recognised and accumulated
in other comprehensive income are reclassified
to profit or loss when the hedged item affects the
Statement of Profit and Loss. However, when the
hedged item results in the recognition of a non¬
financial asset, such gains / losses are transferred
from equity (but not as reclassification adjustment)
and included in the initial measurement cost of the
non-financial asset.

Hedge accounting is discontinued when the
hedging instrument expires or is sold, terminated,
or exercised, or when it no longer qualifies for
hedge accounting. Any gains/losses recognised in
other comprehensive income and accumulated
in equity at that time remains in equity and is
reclassified when the underlying transaction
is ultimately recognised. When an underlying

transaction is no longer expected to occur, the
gains / losses accumulated in equity is recognised
immediately in the Statement of Profit and Loss.

3.13. Cash and cash equivalent

Cash and cash equivalent in the Balance Sheet includes
cash on hand, at banks 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 cash flows statement, cash and
cash equivalents includes cash, short-term deposits,
as defined above, other short-term and highly liquid
investments with original maturities of three months
or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk
of changes in value adjusted for outstanding bank
overdrafts as they are considered an integral part of
the Company’s cash management. Bank Overdrafts are
shown within Borrowings in current liabilities in the
Balance Sheet.

3.14. Government Grants

Government grants are recognised where there is
reasonable assurance that the grant will be received
and all attached conditions will be complied with. When
the grant relates to an expense item, it is recognised in
Statement of Profit or Loss on a systematic basis over the
periods that the related costs, for which it is intended to
compensate, are expensed. When the grant relates to an
asset, it is recognised as income in equal amounts over
the expected useful life of the related asset.

3.15. Taxes

Tax expense comprises of current income tax and
deferred tax.

Current income tax:

The tax currently payable is based on taxable profit
for the year. Taxable profit differs from ‘profit before
tax’ as reported in the Statement of Profit and Loss
because of items of income or expense that are taxable
or deductible in other years and items that are never
taxable or deductible. 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 assets and liabilities are measured
at the amount expected to be recovered from or paid
to the taxation authorities. 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.

Current tax is recognised in the Statement of Profit
and 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.

Deferred tax

Deferred tax is provided using the Balance Sheet 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 and
interests in joint arrangements, 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,
associates and interests in joint arrangements,
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 is recognised in the Statement of Profit
and 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.

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.

3.16. Employee Benefits

(a) Short-term Employee Benefits

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 Compensatory Pension Scheme are
Company’s defined benefit plans.

Gratuity fund scheme and Compensatory
Pension Scheme

The present value of the obligation under
Defined benefit schemes 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.

(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.

3.17. 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.

3.18. Earnings per share (EPS)

Basic EPS is computed by dividing the net 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 computed by dividing the net profit / loss
attributable to ordinary equity holders of the Company
by the weighted average number of ordinary shares
outstanding during the year adjusted for 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 Standalone
Financial Statements by the Board of Directors.

3.19. 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.