2.3 Summary of significant accounting politics

a) Property, Plant and Equipment
Measurement at recognition:

An item of property, plant and equipment that qualifies as an asset is measured on initial recognition at cost. Following
initial recognition, items of property, plant and equipment are carried at Its cost less accumulated depreciation and
accumulated Impairment losses.

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

The cost of an item of pioperty, plant and equipment comprises of its purchase price including import duties and other
non refundable purchase taxes or levies, directly attributable cost of bringing the asset to its working condition for Its
intended use and the initial estimate of decommissioning, restoration and similar liabilities, if any. Any trade discounts
and rebates are deducted in arriving at the purchase price. Cost includes cost of replacing a part of a plant and equipment
if the recognition criteria are met. Expenses directly attributable to new manufacturing facility during its construction
period are capitalized if the recognition criteria are met Expenditure related to plans, designs and drawings of buildings
or plant and machinery Is capitalized under relevant heads of property, plant and equipment if the recognition criteria are
met.

Items such as spare parts, stand-by equipment and servicing equipment that meet the definition of property, plant and
equipment are capitalized at cost and depreciated over their useful life. Costs In nature of repairs and maintenance are
recognized in the Statement of Profit and Loss as and when Incurred.

Capital work In progress and Capital advances;

Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work in progress. Advances
given towards acquisition of fixed assets outstanding at each Balance Sheet date are disclosed as Other Kon-Currcnt
Assets

Depreciation;

Depreciation on each part of an item of property, plant and equipment is provided using the Written Down Value Method
based on the useful life of the asset as estimated by the management and is charged to the Statement of Profit and Loss as
per the requirement of Schedule II of the Companies Act, 2013. The estimate of the useful life of the assets has been
assessed based on technical advice which considers the nature of the asset, the usage of the asset, expected physical wear
and tear, the operating conditions of the asset, anticipated technological changes, manufacturers warranties and
maintenance support. etc.The estimated useful life of Items of property, plant and equipment is mentioned below:

The Company, based on technical assessment made by technical expert and management estimate, depreciates certain
items of property plant and equipment (as mentioned below) over estimated useful lives which are different from die
useful lives prescribed under Schedule II to the Companies Act, 2013 (Schedule HI). The management believes that these
estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.

The useful lives, residual values of each part of an item of property, plant and equipment and the depreciation methods
are reviewed at the end of each financial year. If any of these expectations differ from previous estimates, such change is
accounted for as a change in an accounting estimate.

Derecognition;

The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future economic
benefits are expected from Its use or disposal. The gain or loss arising from the Derecognition of an item of property, plant
and equipment is measured as the difference between the net disposal proceeds and the carrying amount of the item and
is recognized in the Statement of Profit and Loss when the item is derecognized.

b) Intangible assets

Measurement at recognition;

Intangible assets acquired separately are measured on Initial recognition at cost. Intangible assets arising on acquisition
of business are measured at fair value as at date of acquisition. Internally generated Intangibles Including research cost
are not capitalized and the related expenditure is recognized In the Statement of Profit and Loss in the period In which the
expenditure Is Incurred. Following initial recognition. Intangible assets are carried at cost less accumulated amortization
and accumulated impairment loss, if any

Amortization;

Intangible Assets with finite lives are amortized on a Written down value basis over the estimated useful economic life.
The amortization expense on intangible assets with finite lives is recognized in the Statement of Profit and Loss. The
estimated useful life of intangible assets is mentioned below:

ratjculars Years

Information Technology Software 3

The Company, based on technical assessment made by technical expert and management estimate, depreciates
Information Technology Software (as mentioned below) over estimated useful lives which are different from the useful
lives prescribed under Schedule II to the Companies Act, 2013 (Schedule III). The management believes that these
estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.

The amortization period and the amortization method for an intangible asset with finite useful life Is reviewed at the end
of each financial year. If any of these expectations differ from previous estimates, such change Is accounted for as a change
in an accounting estimate.

nevarngnitinn:

The carrying amount of an intangible asset is derecognized ail disposal or when no future economic benefits are expected
from its use or disposal, The gain or lass arising from the Derecognition of an intangible asset is measured as the
difference between the net disposal proceeds and the canying amount of the intangible asset and is recognized in the
State menltif Profit and Ldss when the asset is derttngniied.

Goodwill

Goodwill on acqusition might be arised is recognised in the financial statement Goodwill is not amortisEd but it is tested
for impairment annually ot more- frequently., if events or changes in circumstances, indicate that it might be imparled- it is
carried as cost less accumulated Impairment losses. Gains and losses on the disposal of an entity include the carrying
amount of goodwill reSatingto the entity sold.

c] Impairment:

Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are tested for
impairment annually and whenever there Is an indication that the asset may be impaired. Assets that are subject to
depreciation atid amortization are reviewed for impairment, whenever events or changes in circumstances indicate that
currying amount may not be recoverable. Such circumstances include, though ate not limited to, significant or sustained
decline In revenues or earnings and material adverse changes In the economic environment.

An impairment loss L5 recognized whenever the Carrying amount of an asset or its cash generating unit (CGU] exceeds its
recoverable amount- The recoverable amount of an asset ;s the greater of its fair value less cost to sell and value in use. To
calculate value in use, the estimated future cash flews are discounted to their present value using a pre-tax discount rate
that reflects current market rales and the risk specific to the asset for an asset that does opt 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 eslimaLe 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 recognized in die Statement of Profit and Loss and included in depreciation and
amortization expenses, Impairment losses are reversed in the Statement of Profit and Loss only to the extent that the
asset's carrying amount does not exceed the canying amount; that would hsva been determined If no impairment loss had

previously been rerngnized.

d] Revenue

ind AS 115 requires an entity to report information regarding nature, amount, timing and uncertainty of revenue and
cash flaws arising from a contract with customers.

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects
the consideration we expect to receive in exchange for those products or services-

The impart of application of the Standard is not material.

Revenue is measured at the fait value of the consideration received or receivable, net of returns, trade discounts and
volume rebates allowed by the Company.

Revenue includes only the gross inflows of economic benefits received and receivable by the Company, on Us own
account. Amounts collected on behalf of third parties such as GST are excluded from revenue.

Sale of product!;-

Revenue from sale of products is recognised when the Company transfers all significant risks and rewards of ownership
tn the buyer, while the Company retains neither continuing managerial involvement nor effective control over the
products sold-

Fendering of sendees:

Revenue from services is recognized when the stage of completion can be measured reliably. Stage of completion is
measured by the services performed til] Balance Sheet date as a percentage of total services contracted.

Interest royalties and dividends:

Interest income is recognized using effective interest method- DEPE licence income/ MEIS licence income / Subsidy
Income / T'PS income is recognized on an accrual basis in accordance with the substance of the relevant agreement
Dividend income is recognised when the right to receive payment is established

c) Inventory

Raw materials, work-in-progress, finished goods, packing materials, stares, spares, components and consumables are
carried at the IoWei of Cost and nEt realizable valuE. HoWevEr, materials and other itEms held for use in production of
mventories me not written down below cost if the finished goods in which they will be incorporated are expected to be
sold at or above cost, The comparison of cost and net realizable value la made on an Item-by Item basis.

In determining the cost of raw materials, packing materials, stores, spares, components and consumables, flrat in first out
cost method Is used. Cost of lnventcoy comprises all costs of purchase, dudes, taxes [other than those subsequently
recoverable from tax authorities! and all cither costs incurred in bringing the inventory to theii present location and
condition,

Cost of finished goods and Work-in-progress includes the Cost of raw materials, packing materials, an appropriate share of
fixed and variable production overheads, excise duty as applicable and other costs incunred in bringing tb# Inventories to
their present location and condition, Fixed production overheads are allocated on the basis of normal capacity of
pro du cti on facilities.

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.

fl Financial Instruments

A financial instrument is any contract that gives risE to a financial asset of cm? Entjiy and a financial liability or equity
instru msnt of another Entity.

> Financial Assets

1 n iti al recognition ind mEaSurerriEnti

The Company rotognizes a financial asset In its Balance Sheet when It become party to Hie contractual provisions of the
irstrumEnt All financial assEt? are recognizad initially atfairvalus, plus in the case of financial assets not recorded at lair
value through profit or loss [FVT^LJ, transaction costs that are attributable to the acquisition of the fintmeia! asset.

Where the lair value of a financial asset at initial recognition is different from its transaction price, the difference between
the fair value and tire transaction price is recognized as a gain or loss in the Statement of Profit and Loss at initial
recognition !f the fair value Is determined through a quoted market price In an active market for an Identical asset [Le.
level 1 input] or through a valuation technique LffaL uses data from observable markets [Le.level 2 inpuL],

In case ibe fair value is not de-termined using a level L or level 2 Input as mentioned sbove, the difference between the fair
value and transaction price is defeiTsd appropriately and recognized as a gain or loss in the Statement nf Profit and Loss
only to the extent that such gain or loss arises due to a change in factor that market participants take into account when
pricing the financial asset.

However. iretlo receivables that do not contain a signlfican 1 flhan ring component are meas uted at ire hsariion price.

Siihcoqnrmt it urn summon!:

For subsequent measurement, the Company classifies a financial asset in accordance with the below criteria:

i. The Company's business model for managing the financial asset and
ii Tlte contractual cash flow characteristics of the financial asset.

Based on the above criteria., the Company classifies its financial assets into the fallowing categories:

j. Financial assets measured at amortised cost

ii. Financial assets measured at fair valuE through ether comprehensive jncainE (FVTO(l)
iii- Financial assets measured at fair value through profit or loss (FVTPL]

1 JinanS';*! .assets measured at atno rtlzed cost:

A financial asset is measured at the amortiiod cosL IftotJ] the following conditio ns art met;

a) The Company's business model ob|tclivfl for managing tfia, financial asset Is Lo hold financial assets In order to collect
contractual cash Bows, and

b) The contractual terms of the financial asset give rise on specified dates to cash flnws that are solely payments of
principal and interest on the principal amount nutstanding.

This category oppiies to cash and bank balances, trade receivables. Loans and other financial assets of the Company.Such
financial assets are subsequently measured at amortized cost usingthe effective Interest method.

iJnder the effective interest method, the future cash receipts are exactly discounted to the Initial reraghltiflti value using
~he effective interest rate. TIie cumulative unr-ortiiation using thE effective interest method ofthE difference between the
initial recognition amount and the maturity amount is added to the initial recognition value [net nf principal repayments,
if any) of the financial asset over the relevant period of the financial asset to arrive at the amortiied cost at each reporting
date. The corresponding effect of the amortization under effective interest method is recognized as interest income over
the relevant period of the financial asset. The same is included under other income in the Statement of Profit and Loss,

The amortized cast of a financial asset is also adjusted for loss allowance, if any.

ii. Financial assets measured at FVTOCI:

A fiuanciaL asset =s measured at FVTOCI if both of the following conditions are met:

a) The Company's business model objective for managing the financial asset is achieved both by collecting wntraChial
cash flows and selling the financial assets, and

?1 The contractual terms ef the R nun rial tsset give rise on Specified dates to tush flows that are scley payments cf
principal and interest on the principal amount ?LLtStandlng.

UL Financial assets measured alFVTPL:

A financial asset is measured at FVTPL unless it is measured at amortized cost or at FVTOCI as explained above. This is a
residual category, Such financial assets are subsequently measured at fair value at each reporting date, Fair value changes
are recognized in the Statement of Profit and Loss.

Bsrecagniifon:

A financial asset [or, where applicable, a part of a financial asset or part of a group of similar financial assets] Is
decwogriLzed (L*. removed from the Company's Balance Sheet) when any of the following occurs:

I. Th e contractual rights tn Cash flows from fheffhande] asset expires;

If The Company transfers its contractual rights to roceivie cash flews of the financial asset and has substantially
transferred ell the risks and rewards of ownership nf the financial asset;

UL The Company retains the contractual rights ta receive cosh flaws but assumes a contractual obligation to pay the cash
flows without material delay to one or move recipients under a 'pass-through' arrangement [thereby substantially
transferring all the risks and rewards nf ownership of the financial asset};

iv. The Company neither transfers nor retains substantially all risk and rewards of ownership and does rot main control
aver the financial asset.

In case? where Company has neither transferred nor retained substantially all of the risks and rewards of the financial
asset, but retains control of the financial asset, the Company continues to recognize such financial asset Lo the extent of its
continuing involvement in the financial asset. In that esse, the Company also recognizes an assn dated liability- The
financial asset and the associated liability are measured On a basis that reflects the rights and obligations that the
Company has retained.

On Derecognition of a financial asset, (except as mentioned in ii above for financial assets measured at FVTOCI], the
difference between the carrying amount and the consideration received is recognized in the Statement of Profit and Loss-
Impairment nf firan rial assets:

The Company applies -expected credit losses [ECL] model for measurement and recognition of loss allowance an the
following:

i. Trade receivables

if. Financial assets measured at amortized cost (other than trade receivables}

iii Financial assets measured at fair value through other comprehensive income (FVTOCI}

In case of trade receivables and lease receivables the Company fellows a simplified approach whore In an amount equal to
lifetime ECL is measured and recognized as loss allowance.

In case of other assets (listed as 11 and 111 above], the Company determines if there has been a significant Increase In credit
risk of the financial asset since Initial recognition. If the credit risk of such assets has not increased significantly, an
amount equal to 12 month ECL Is measured and recognized as loss allowance. However, If credit risk lias Increased
significantly, an amount equal to lifetime ECL Is measured and i e cognized as loss allowance.

ECL impairment loss allowance (or reversal} recognized during the period is recognized as Income/ expense In the
Statement of Profit and Loss under the head 'Other expenses'¬
> Financial Liabilities
initial recognition and measurement.

THe Company recognizes a financial liability in. its balance .shea L when it become a party to the contractual provisions of
the Instrument, a]: financial liabilities are recognized initially at fair value minus, in the case of financial liabilities not
recorded at Pair value through profit or loss (FVTPL], transaction costs that are attributable tn the acquisition of the
financial liability.

Where Lhe fair value of a financial liability at initial recognition is different from Its transaction price, the difference
between the fair value and the transaction price is recognized as a gain or loss in the Statement of Profit and Loss at initial
recognition if tliE fair value is determined through a quoted market price in an active market for an identical assEt (i.e.
level 1 input} or through a valuation technique that uses data from observable markets (i.e. level 2 input}.

In case the fair value is not determined using a level 1 or level 2 Input as mentioned above, the difference between the fair
value and transaction price is deferred appropriately and recognized as a gsln or loss in the Statement of Profit and Lass
only tn the extent that such gain or loss arises due to a change In factor tint market participants take into account when
prLclrtgtbe financial 11 ability.

Subsequent measurement

All financial liabilities of the Company are subsequently measured at amortized tost usingthe effective interest method

Derecognition:

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. Wien 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 between the carrying amount of the financial
liability derecognized and the consideration paid is recognized In the Statement of Profit and Loss.

g) Fair value

The Company measures financial instruments at fair value in accordance with the accounting policies mentioned above.
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 pricipal market for the assest or liability, or

> In the absence of principal market, in the most advantageous market for the assets or liability

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within
the fair value hierarchy that categorizes Into three levels, described as follows, the Inputs to valuation techniques used to
measure value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or
liabilities (Level 1 inputs) and die lowest priority to unobservable inputs (Level 3 inputs).

Level 1 — quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 — Inputs other than quoted prices Included within Level 1 that are obseivable for the asset or liability, either
directly or Indirectly

Level 3 — inputs that are unobservable for the asset or liability

For assets and liabilities that are recognized In the financial statements at fair value on a recurring basis, the Company
determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of
each reporting period and discloses die same.

h) Foreign Currency Translation
Initial Recognition:

On initial recognition, transactions in foreign currencies entered into by die Company are recorded in die functional
currency (i.e. Indian Rupees), by applying to the foreign currency amount, the spot exchange rate between the functional
currency and the foreign currency at the date of the transaction. Exchange differences arising on foreign exchange
transactions settled during the year are recognized in the Statement of Profit and Loss.

Measurement of foreign currency Items at reporting date:

Foreign currency monetary items of the Company are translated at the closing exchange rates. Non-monetary items that
are measured at historical cost in a foreign currency, are translated using the exchange rate at the date of the transaction.
Non-monetary items that are measured at fair value in a foreign currency, are translated using the exchange rates at die
date when the fair value Is measured.

Exchange differences arising out of these translations are recognized in the Statement of Profit and Loss.

I) Income Taxes

Tax expense is the aggregate amount included in the determination of profit or loss for the period in respect of current tax
and deferred tax.

Current tax;

Current tax is the amount of Income taxes payable In respect of taxable profit for a period. 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 under the Income Tax Act, 1961.

Current tax is measured using tax rates that have been enacted by the end of reporting period for the amounts expected to
be recovered from or paid to the taxation authorities.

Deferred tax;

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial

statements and the corresponding tax bases used In die computation of taxable profit under Income Tax Act, 1961

Deferred tax liabilities are generally recognized for all taxable temporary differences. However, in case of temporary

Deferred tax assets are generally recognized for all deductible temporary differences to the extent it is probable that
taxable profits will be available against which those deductible temporary difference can be utilized. In case of temporary
differences that arise from initial recognition of assets or liabilities in a transaction (other than business combination)
that affect neither the taxable profit nor the accounting profit, deferred tax assets are not recognized.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that
it is no longer probable that sufficient taxable profits will be available to allow the benefits of part or all of such deferred
tax assets to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted by the
Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or setded.

Presentation of current and deferred tax;

Current and deferred tax are recognized as income or an expense in the Statement of Profit and Loss, except when they
relate to items that are recognized in Other Comprehensive Income, in which case, the current and deferred tax income/
expense are recognized in Other Comprehensive Income.

The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the
recognized amounts and where it intends either to setde on a net basis, or to realize the asset and settle the liability
simultaneously. In case of deferred tax assets and deferred tax liabilities, the same are offset if the Company has a legally
enforceable right to set off corresponding current tax assets against current tax liabilities and the deferred tax assets and
deferred tax liabilities relate to income taxes levied by the same tax authority on the Company.