2 Material accounting policies

(i) Basis of preparation and presentation

These standalone financial statements have been prepared in accordance with Indian Accounting
Standards (Ind AS) under the historical cost convention on the accrual basis except for

i) Certain financial assets and liabilities measured at fair value,

ii) Defined benefit plans - plan assets measured at fair value.

The standalone financial statements of the Company have been prepared to comply with the
Indian Accounting Standards ('Ind AS') notified under Companies (Indian Accounting Standards)
Rules, 2015 (as amended from time to time) read with section 133 of the Companies Act, 2013
("the Act”).

(ii) Current and non-current classification

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

a) An asset is treated as current when it is:

i) expected to be realised or intended to be sold or consumed in normal operating cycle,

ii) held primarily for the purpose of trading,

iii) expected to be realised within twelve months after the reporting period,

iv) cash or cash equivalents unless restricted from being exchanged or used to settle a
liability for at least twelve months after the reporting period, or

v) carrying current portion of non current financial assets.

All other assets are classified as non-current.

b) A liability is current when:

i) it is expected to be settled in normal operating cycle,

ii) it is held primarily for the purpose of trading ,

iii) it is due to be settled within twelve months after the reporting period,

iv) there is no unconditional right to defer the settlement of the liability for at least twelve
months after the reporting period, or

v) it includes current portion of non current financial liabilities.

All other liabilities are classified as non-current.

(iii) Operating cycle

All assets and liabilities have been classified as current and non-current as per the Company's
normal operating cycle and other criteria set out above which are in accordance with the

schedule III to the Act. Based on the nature of services and time between the acquisition of
assets for providing of services and their realisation in cash and cash equivalents, the Company
has ascertained its operating cycle as 12 months for the purpose of current / non-current
classification of assets and liabilities.

(iv) Property, plant and equipment:

Property, plant and equipment are stated at cost, net of accumulated depreciation and
accumulated impairment losses, if any. Such cost includes purchase price, taxes and duties,
labour cost and direct overheads for self-constructed assets and other direct costs incurred
up to the date the asset is ready for its intended use. In case of land, the Company has opted
to state fair value as deemed cost on the date of transition to Ind AS. When significant parts of
property, plant and equipment are required to be replaced at intervals, the Company depreciates
them separately based on their specific useful lives. Likewise, when a major refurbishment
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 statement of profit and loss as incurred.

Expenditure during construction period incurred on the projects under implementation are
treated as pre-operative expenses pending allocation to the assets, and are included under
"Capital Work in Progress”. These expenses are apportioned to property, plant and equipment
on commencement of commercial production. Capital Work in Progress is stated at the amount
incurred up to the date of Balance Sheet.

Depreciation on property, plant and equipment is provided on straight line method and based
on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013 except,
leasehold and improvements which are amortized over the lower of estimated useful life or
lease period, on assets acquired under finance lease depreciation is provided over the lease
term. Depreciation on assets added, sold or discarded during the year is provided on pro rata
basis.

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. Gains or
losses arising from de-recognition of a property, plant and equipment 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 de-recognised.

(v) Leases
Company as lessee

Assets taken on lease are accounted as right-of-use (ROU) assets and the corresponding lease
liability is accounted at the lease commencement date.

Initially the ROU asset is measured at cost which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the commencement date, plus any
initial direct costs incurred and an estimate of costs to dismantle and remove the underlying
asset or to restore the underlying assets or the site on which it is located, less any lease
incentives received.

The lease liability is initially measured at the present value of the lease payments, discounted
using the Company's incremental borrowing rate. It is remeasured when there is a change in
future lease payments arising from a change in an index or a rate, or a change in the estimate
of the guaranteed residual value, or a change in the assessment of purchase, extension or
termination option. When the lease liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right-of-use asset, or is recorded in the
Statement of Profit and Loss if the carrying amount of the ROU asset has been reduced to zero.

The ROU asset is measured by applying cost model i.e. ROU asset at cost less accumulated
depreciation and cumulative impairment, if any. The ROU asset is depreciated using the
straight-line method from the commencement date to the end of the lease term or useful life

of the underlying asset whichever is earlier. Carrying amount of lease liability is increased by
interest on lease liability and reduced by lease payments made.

Lease payments associated with following leases are recognised as expense on straight-line
basis:

(i) Low value leases; and

(ii) Leases which are short-term.

Company as lessor

Assets given on lease are classified either as operating lease or as finance lease. A lease is
classified as a finance lease if it transfers substantially all the risks and rewards incidental
to ownership of an underlying asset. Assets given under finance lease are recognised as a
receivable at an amount equal to the net investment in the lease. Finance income is recognised
over the lease term, based on a pattern reflecting a constant periodic rate of return on the
Company's net investment in the lease. A lease which is not classified as a finance lease is an
operating lease. The Company recognises lease payments in case of assets given on operating
leases as income on a straight-line basis. The Company presents underlying assets subject to
operating lease in its balance sheet under the respective class of asset.

(vi) Intangible assets:

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated
amortisation / depletion and impairment loss, if any. The cost comprises purchase price,
borrowing costs, and any cost directly attributable to bringing the asset to its working condition
for the intended use.

Gains or losses arising from de-recognition of an intangible assets are measured as the
difference between the net disposal proceeds and the carrying amount of the assets and are
recognised in the statement of profit and loss when the asset is derecognised.

Computer softwares are amortised over a period of 5 years. The amortisation period and the
amortisation method for intangible assets with a finite useful life are reviewed at each reporting
date.

(vii) Research & Development Expenditure:

Revenue expenditure on Research is expensed out in the statement of profit and loss for the
year. 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. Capital expenditure on research and development is shown as an
addition to property, plant and equipment.

(viii) Borrowing Cost:

Borrowing costs include exchange differences arising from foreign currency borrowings to the
extent they are regarded as an adjustment to the interest cost. Borrowing costs that are directly
attributable to the acquisition or construction of qualifying assets are capitalised as part of the
cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to
get ready for its intended use.

Interest income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are charged to the profit and loss statement in the period in which they
are incurred.

(ix) Inventories:

i) Stock of raw materials is valued at cost or net realisable value whichever is lower. Cost is
arrived at on FIFO Basis. However, these items are considered to be realizable at cost if the
finished products, in which they will be used, are expected to be sold at or above cost.

ii) Stock of materials-in-process and finished goods are valued at cost or net realisable value
whichever is lower.

iii) Stores, spares and packing materials are valued at cost. Cost is arrived at on weighted
average basis.

iv) Obsolete stores and spares when identified and technically determined, are valued at
estimated realisable value.

v) By-products have been valued at estimated realisable value.

vi) Trial run inventories are valued at cost or estimated realisable value whichever is lower.

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

(x) Earnings per share (EPS):

Basic EPS is calculated by dividing the net profit or loss for the year attributable to equity
shareholders by the weighted average number of equity shares outstanding during the year.
Ordinary shares that will be issued upon the conversion of a mandatorily convertible instrument
are included in the calculation of basic earnings per share from the date the contract is entered
into. Diluted EPS is computed using the weighted average number of equity and dilutive equity
equivalent shares outstanding during the year.

(xi) Impairment of non-financial Assets:

The carrying amount of any property, plant and equipment and intangible assets with finite
lives are reviewed at each balance sheet date, if there is any indication of impairment based on
internal / external factors. An asset is impaired when the carrying amount of the asset exceeds
the recoverable amount. Recoverable amount is higher of an asset's or cash generating unit's
(CGU) net selling price and its value in use. An impairment loss is charged to the statement
of profit and loss in the year in which an asset is identified as impaired. An impairment loss
recognised in prior accounting periods is reversed if there has been change in the estimate
of the recoverable amount. Where it is not possible to estimate the recoverable amount of an
individual asset, the Company estimates the recoverable amount of the CGU to which the asset
belongs.