NOTE 03 MATERIAL ACCOUNTING POLICIES

a) Property, Plant and Equipment

Capital work in progress is stated at cost of
aquisition, net of accumulated impairment loss, if
any.

Property, plant & equipment are stated at cost of
acquisition or construction where cost includes
amount added/deducted on revaluation less
accumulated depreciation / amortization and
impairment loss, if any. All costs directly relating
to the acquisition and installation of assets
are capitalized and include borrowing costs
relating to funds attributable to construction or
acquisition of qualifying assets, up to the date the
asset / plant is ready for intended use. The cost of
replacing a part of an item of property, plant and
equipment is recognized in the carrying amount
of the item of property, plant and equipment, if
it is probable that the future economic benefits
embodies within the part will flow to the
Company and its cost can be measured reliably
with the carrying amount of the replaced part
getting derecognized. The cost for day-to-day
servicing of property, plant and equipment are

An item of property, plant and equipment is
derecognized on disposal. Any gain or loss arising
from derecognition of an item of property, plant
and equipment is included in the statement of
profit and loss.

The Management has arrived the useful life/rate
of depreciation after considering the residual
value of property, plant & equipments.

b) Capital Advances

Advances paid towards the acquisition of
property, plant and equipment, outstanding at
each balance sheet date is classified as capital
advances under "other non-current assets”.

c) Intangible assets

Recognition of Intangible assets: Intangible
assets acquired separately are measured on
initial recognition at cost. Following initial
recognition, intangible assets are carried at cost
less accumulated amortization and accumulated
impairment loss, if any.

Amortization methods, useful lives and residual
values are reviewed at each reporting date and
adjusted if appropriate.

d) Lease

The determination of whether an arrangement is
(or contains) a lease is based on the substance of
the arrangement at the inception of the lease. The
arrangement is, or contains, a lease if ulfilment
of the arrangement is dependent on the use of
a specific asset or assets and the arrangement
conveys a right to use the asset or assets, even
if that right is not explicitly specified in an
arrangement. 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 cognizes 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 recognizes 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 recognized, 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 shorter of the lease term and
the estimated useful lives of the assets. If
ownership of the leased asset transfers to
the Company at the end of the lease term or
the cost reflects the exercise of a purchase
option, depreciation is calculated using the
estimated useful life of the asset. The right-
of-use assets are also subject to impairment.

ii) Lease Liabilities

At the commencement date of the lease,
the Company recognizes lease liabilities
measured at the present value of lease
payments to be made over the lease term.
The lease payments include fixed payments
less any lease incentives receivable. 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 or a
change in the assessment of an option to
purchase the underlying asset.

Short-term leases and leases of low-value
assets

The Company applies the short-term lease
recognition exemption to its short-term
leases of machinery and equipment (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 to leases of office

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

e) Inventories

Inventories of raw materials and components,
traded goods, stores & spares are valued at
the lower of cost and net realizable value after
providing for obsolescence and other losses,
where considered necessary. Cost is ascertained
on weighted average basis. The cost of work-in¬
progress and finished goods is determined on
absorption cost basis. Costs incurred in bringing
each product to its present location and condition
are accounted for as follows:

a. Raw materials, stores & spares and tools &
instruments: cost includes cost of purchase
and other costs incurred in bringing the
inventories to their present location and
condition.

b. Finished goods and work in progress: cost
includes cost of direct materials (excluding
taxes for which credit is available), labour and
a proportion of manufacturing overheads
based on the normal operating capacity,
but excluding borrowing costs. Cost is
determined on weighted average basis.

c. Traded goods: cost includes cost of purchase
and other costs incurred, but excluding taxes
for which credit is available, in bringing the
inventories to their present location and
condition.

Net realizable 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.

f) Financial instruments

I) Financial Assets

a) Initial recognition and measurement:

Financial assets are recognized when
the Company becomes a party to the
contractual provisions of the instrument.
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 measured on initial
recognition of financial asset.

Trade receivables that do not contain a
significant financing component or for
which the Company has applied the
practical expedient are measured at the
transaction price determined under Ind
AS 115.”

b) Subsequent measurement:

i) Financial assets at amortized cost

Financial assets are subsequently
measured at amortized cost if

- these financial assets are
held within a business
model whose objective is to
hold these 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
on the principal amount
outstanding.

ii) Financial assets at fair value
through other comprehensive
income

Financial assets are measured at fair
value through other comprehensive
income if these financial assets
are held within a business 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 on the
principal amount outstanding.

iii) Financial assets at fair value
through profit or loss

Financial assets are measured at
fair value through profit or loss
unless it is measured at amortized
cost or at fair value through other
comprehensive income on initial
recognition. The transaction
costs directly attributable to the
acquisition of assets and liabilities
at fair value through profit and loss
are immediately recognized in the
statement of profit and loss.

iv) Reclassification of Financial
Assets

The Company determines
classification of financial assets and
liabilities on initial recognition. After
initial recognition, reclassification is
made due to changes in the business
model for managing financial assets
which are equity instruments and
financial liabilities. For financial
assets which are debt instruments, a
reclassification is made only if there
is a change in the business model for
managing those assets. Changes to
the business model are expected to
be infrequent. The Company's senior
management determines change
in the business model as a result of
external or internal changes which
are significant to the Company's
operations. Such changes are
evident to external parties. A change
in the business model occurs when a
company either begins or ceases to
perform an activity that is significant
to its operations. If the Company
reclassifies financial assets, it applies
the reclassification prospectively
from the reclassification date which
is the first day of the immediately
next reporting period following
the change in business model.
The Company does not restate any
previously recognized gains, losses
(including impairment gains and
losses) or interest.

v) Derecognition of financial assets

The Company derecognizes a
financial asset when the contractual
rights to the cash flows from the
financial asset expire, or it transfers
the rights to receive the financial
asset and substantially all the
risks and rewards of ownership of
the asset to another party. If the
Company neither transfers nor
retains substantially all of the risks
and rewards of ownership and
continues to control the transferred
asset, the Company recognizes its
retained interest in the asset and an
associated liability for the amount it
may have to pay.

vi) Write-off

The gross carrying amount of a
financial asset is written off (either
partially or in full) to the extent
that there is no realistic prospect of
recovery. This is generally the case
when the Company determines
that the debtor does not have assets
or sources of income that could
generate sufficient cash flows to repay
the amounts subject to the write¬
off. However, financial assets that
are written off could still be subject
to enforcement activities under the
Company's recovery procedures,
taking into account legal advice
where appropriate. Any recoveries
made are recognized in profit or loss.

vii) Impairment

The Company applies the Expected
Credit Loss (ECL) model for
recognizing impairment loss on
financial assets. With respect to
trade receivables and financial
assets that are debt instruments
and are measured at amortized
cost, the Company measures the
loss allowance at an amount equal
to lifetime expected credit losses.

Lifetime expected credit lossed
are the expected credit losses that
result from all possible default

events over the expected life of
a financial instrument. Expected
credit losses are recognized for all
financial assets subsequent to initial
recognition other than financials
assets measured at FVTPL category.
For financial assets other than trade
receivables, as per Ind AS 109, the
Company recognizes expected
credit losses for all originated
or acquired financial assets if
at the reporting date the credit
risk of the financial asset has not
increased significantly since its
initial recognition. The impairment
losses and reversals are recognized
in statement of Profit and Loss.

II) Investment in subsidiaries

Investment in subsidiaries are measured at
cost as per Ind AS 27 - Separate standalone
financial statements.

III) Financial Liabilities and Equity Instruments
Financial Liabilities

Financial liabilities are recognized when
the Company becomes a party to the
contractual provisions of the instrument.
Financial liabilities are initially measured at
fair value. Transaction costs that are directly
attributable to the acquisition or issue of
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 measured on initial recognition
of financial liability.

Financial liabilities are measured
subsequently at amortized cost using the
effective interest method if it is above the
defined credit period.

Derivative Financial Instruments

The Company uses foreign exchange
forward contracts to hedge its exposure to
movements in foreign exchange rates on
its long-term borrowings. The use of these
foreign exchange forward contracts reduces
the risk to the Company. The Company
does not use the foreign exchange forward
contracts for trading or speculation Purpose.

These derivatives are initially recognized at
fair value on the date a derivative contract
is entered into and are subsequently
remeasured to their fair value at the end of
each reporting period. No hedge accounting
is applied to these derivatives, which are
carried at fair value with changes being
recognized in the statement of profit and
loss.”

Equity instruments

An equity instrument is a contract that
evidences residual interest in the assets of the
Company after deducting all of its liabilities.
Company recognizes equity instruments at
proceeds received net off direct issue cost.

All equity instruments in scope of Ind AS 109,
other than investments in subsidiaries, are
measured at fair value.”

Derecognition of financial liabilities

A financial liability is derecognized when the
contractual obligation under the liability 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 recognized in profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are
offset and the net amount presented in the
balance sheet when, and only when, the
Company currently has a legally enforceable
right to set off the amounts and it intends
either to settle them on a net basis or to
realize the asset and settle the liability
simultaneously.

Hedge accounting

The Company uses interest rate swaps to
hedge variability in its cash flows from interest
payments arising from floating rate liabilities
i.e., when interests are paid according to
benchmark market interest rates.

The Company also uses commodity swaps
to hedge variability in its cash flows from
changes in commodity prices, primarily
electricity and fuel. Changes in the price of
these commodities could have a significant
effect on the Company's results by affecting
costs and thereby, product margins.

Such derivative financial instruments are
initially recognized at fair value on the date
on which a derivative contract is entered
into and are subsequently re-measured at
fair value. Derivatives are carried as financial
assets when the fair value is positive and
as financial liabilities when the fair value
is negative. The full fair value of a hedging
derivative is classified as a non-current asset
or liability when the remaining maturity
of the hedged item is more than twelve
months; it is classified as a current asset or
liability when the remaining maturity of the
hedged item is less than or equal to twelve
months.

At the inception of the hedge relationship,
the Company formally designates and
documents the economic relationship
between the hedging instrument and the
hedged item, including whether changes in
the cash flows of the hedging instrument are
expected to offset changes in the cash flows
of the hedged item.

The Company documents its risk
management objective and how the
Company will assess whether the hedging
relationship meets the hedge effectiveness
requirements (including the analysis of
sources of hedge ineffectiveness and how
the hedge ratio is determined). Hedges that
meet the strict criteria for hedge accounting
are accounted for as cash flow hedges.

Changes in the fair value (net of tax) of the
derivative contracts that are designated and
effective as hedges of future cash flows are
recognized in the cash flow hedge reserve
within Other Comprehensive Income (OCI),
and any ineffective portion is recognized
immediately in the consolidated statement
of profit and loss.

Amounts so recognized in OCIare later
reclassified to profit or loss when the hedge
item affects profit or loss or are treated as basis
adjustment if a hedged forecast transaction
subsequently results in the recognition of a
non-financial asset or non-financial liability.

Hedge accounting is discontinued when
the hedging instrument expires or is sold,
terminated, or exercised, or no longer
qualifies for hedge accounting. Amounts
accumulated in Other Equity through OCI
are reclassified to the consolidated statement
of profit and loss in the periods in which the
forecast transactions affect profit or loss.

For forecast transactions, any cumulative
gain or loss on the hedging instrument
recognized in Other Equity is retained there
until the forecast transaction occurs. If the
forecast transaction is no longer expected
to occur, the net cumulative gain or loss
recognized in Other Equity is immediately
reclassified to profit or loss for the year as a
reclassification adjustment.”

g) Revenue from contract with customers

1) Revenue from operations:

Revenue Recognition : 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.

i) Revenue from the sale of goods is
recognized when the goods are delivered
and titles have passed, at which time all
the following conditions are satisfied:

(a) the Company has transferred to
the buyer the significant risks and
rewards of ownership of the goods;

(b) the Company retains neither
continuing managerial involvement
to the degree usually associated
with ownership nor effective control
over the goods sold;

(c) the amount of revenue can be
measured reliably;

(d) it is probable that the economic
benefits associated with the
transaction will flow to the
Company; and

(e) the costs incurred or to be incurred
in respect of the transaction can be
measured reliably.

ii) Job-work revenues are accounted as
and when such services are rendered.

iii) In Accordance with IND AS - 115 -
Revenue from Contract with Customers,
Construction Contracts, for Long
Contract Sales and Services/Project
related activity ( including rendering of
engineering design services and other
services), the Company recognizes the
revenue on the basis of Percentage
of Completion Method (POCM).
Percentage of completion is the
proportion of cost of work performed
to-date, to the total estimated contract
costs, provided ultimate '"'collectability
thereof is reasonably certain.

The Company undertakes business of
manufacturing of tool, dies, jigs, fixtures,
mould business and recognizes revenue
and costs on percentage of completion
method (POCM) basis in accordance to
IND AS -115.”

2) Other Income:

Dividend income from investments is
recognized when the shareholder's right
to receive payment has been established
(provided that it is probable that the
economic benefits will flow to the Company
and the amount of income can be measured
reliably).

Interest income from a financial asset is
recognized when it is probable that the
economic benefits will flow to the Company
and the amount of income can be measured
reliably. Interest income is accrued on a
time basis, by reference to the principal
outstanding and at the effective interest rate
applicable.

h) Government Grants & Subsidies

(i) Government grants in respect to
manufacturing units located in developing
regions

The Company is entitled to various
incentives from government authorities in
respect of manufacturing units located in
developing regions. The Company accounts
for its entitlements and Government grant
is recognized when there is reasonable
assurance that the entity will comply with
the attached conditions and reasonable
assurance that grant will be received.

(ii) Government grants in respect of Capital
Expenditure

Grants from the government are recognized
where there is a reasonable assurance that
the grant will be received and the Company
will comply with all attached conditions.
Government grant whose primary condition
is that the Company should purchase,
construct or otherwise acquire capital assets,
is recognized as income and are presented
wihtin other operating revenue over the life
of a depreciable asset in the Statement of
Profit and Loss or as a deferred income on a
systematic and rational basis over the useful
life of the asset.

(iii) Export Benefits

Export benefits in the nature of Duty
Drawback & Remission of Duties and Taxes
on Export Product(RODTEP) are recognized
in the year of export when there is reasonable
assurance that such export benefits will be
received.

(iv) Government grant in respect of interest free
VAT loan

The benefit of a government loan at a
below market rate of interest is treated as a
government grant, measured as difference
between proceed received and the fair value
of the laan based on prevailing interest rate
on borrowing applicable to the concerned
unit.

i) Employee Benefits

i) Defined Contribution Plan:

Provident Fund:

The eligible employees of the Company
are entitled to receive benefits under the
provident fund, a defined contribution plan,
in which both employees and the Company
make monthly contributions at a specified
percentage of the covered employee's
salary. The contributions as specified under
the law are paid to the Central Government
Provident Fund and the Family Pension
Fund and the same is charged to the
Statement of Profit and Loss of the year to
the extent of employers contribution. when
the contributions to the respective funds are
due and when services are rendered by the
employees.

ii) Defined Benefit Plan:

For defined benefit retirement plans, the
cost of providing benefits is determined
using the projected unit credit method,
with actuarial valuations being carried out
at the end of each annual reporting period.
Remeasurement, comprising actuarial gains
and losses, the effect of the changes to the
asset ceiling (if applicable) and the return on
plan assets (excluding interest), is reflected
immediately in the statement of financial
position with a charge or credit recognized
in other comprehensive income in the
period in which they occur. Remeasurement
recognized in other comprehensive income
is reflected immediately in retained earnings
and will not be reclassified to profit or loss.
Past service cost is recognized in profit or
loss in the period of a plan amendment.
Net interest is calculated by applying the
discount rate at the beginning of the period
to the net defined benefit liability or asset.
Defined benefit costs are categorized as
follows:

*service cost (including current service cost,
past service cost, as well as gains and losses
on curtailments and settlements);

*net interest expense or income; and

*remeasurement.

Gratuity:

The Company has an obligation towards
gratuity, a defined benefit retirement
plan covering eligible employees. The
plan provides for a lump sum payment
to vested employees at retirement, death
while in employment or on termination
of employment of an amount equivalent
to 15/26 days salary payable for each
completed year of service. Vesting occurs
upon completion of five years of service.
The Company accounts for the liability for
gratuity benefits payable in future based
on an independent actuarial valuation. The
Company has taken a Company Gratuity
cum Life Assurance Scheme with LIC of India
for future payment of gratuity to the eligible
employees.

Compensated Absences:

The Company provides for the encashment
of compensated absences with pay subject
to certain rules. The employees are entitled to
accumulate compensated absences subject
to certain limits, for future encashment. Such
benefits are provided based on the number
of days of unutilized compensated absence
on the basis of an independent actuarial
valuation.

iii) Short-term employee benefits

All employee benefits payable wholly within
twelve months of rendering the service
are classified as short-term employee
benefits expense. Benefits such as salaries
and performance incentives, are charged
to statement of profit and loss on an
undiscounted, accrual basis during the
period of service rendered by the employees
in the financial year.

j) Borrowing Costs

Borrowing costs directly attributable to the
acquisition, construction or production of
qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for
their intended use or sale, are added to the cost
of those assets, until such time as the assets are
substantially ready for their intended use or sale.
All other borrowing costs are recognized in the
statement of profit or loss in the period in which
they are incurred. Borrowing costs consist of
interest and other costs that an entity incurs in
connection with the borrowing of funds.

k) Foreign Currency Transactions/Translations:

The functional currency of the Company is Indian
rupee.

Transactions in foreign currencies are recorded
at exchange rates prevailing on the date of the
transaction. Foreign currency monetary assets
and liabilities are translated at the exchange
rate prevailing on the balance sheet date; and
exchange gains and losses arising on settlement
or translation are recognized in the statement
of profit and loss. 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 recognized in OCI or profit or loss are also
recognized in OCI or profit or loss, respectively).
In determining the spot exchange rate to use on
initial recognition of the related asset, expense
or income (or part of it) on the derecognition of
a non-monetary asset or nonmonetary liability
relating to advance consideration, the date of the
transaction is the date on which the Company
initially recognizes the non-monetary asset or
nonmonetary liability arising from the advance
consideration. If there are multiple payments or
receipts in advance.

l) Taxation

Income tax expense comprises current tax
expense and the net change in the deferred tax
asset or liability during the year. Current and
deferred tax are recognized in the statement of
profit or loss, except when they relate to items
that are recognized in other comprehensive
income or directly in equity, in which case, the
current and deferred tax are also recognized in
other comprehensive income or directly in equity,
respectively. Income tax expense represents the
sum of the tax currently payable and deferred tax.

i) 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 or loss and other comprehensive
income because of items of income or
expense that are taxable or deductible in
other years and items that are never taxable
or deductible.

The Company's current tax is calculated
using tax rates that have been enacted or
substantively enacted by the end of the
reporting period.

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

ii) Deferred taxes

Deferred income tax is recognized using the
balance sheet approach. Deferred income
tax assets and liabilities are recognized
for deductible and taxable temporary
differences arising between the tax base
of assets and liabilities and their carrying
amount. Deferred income tax assets are
recognized 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 utilized. The
carrying amount of deferred income 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
income tax asset to be utilized. Deferred tax
assets and liabilities are measured using
enacted or substantively enacted tax rates
expected to apply to taxable income in the
years in which the temporary differences are
expected to be received or settled. Deferred
tax assets and liabilities are offset when they
relate to income taxes levied by the same
taxation authority and the relevant entity
intends and has ability to settle its current tax
assets and liabilities on a net basis.

Deferred tax relating to items recognized
outside profit or loss is recognized outside
profit or loss (either in other comprehensive
income or in equity). Deferred tax items are
recognized in correlation to the underlying
transaction either in OCI or directly in equity.

m) Earnings Per Share (EPS)

The basic earnings per share ('EPS') is computed
by dividing the net profit after tax for the year
attributable to equity shareholders of the Parent
by the weighted average number of equity shares
outstanding during the year.

The weighted average number of equity shares
outstanding during the period and for all periods
presented is adjusted for events, such as bonus
shares, stock split, other than the conversion of
potential equity shares that have changed the
number of equity shares outstanding, without a
corresponding change in resources.

The number of shares used in computing diluted
earnings per share comprises the weighted
average number of shares considered for deriving
basic earnings per share and also the weighted
average number of equity shares that could
have been issued on the conversion of all dilutive
potential equity shares. Dilutive potential equity
shares are deemed converted as of the beginning
of the period unless issued at a later date. In
computing diluted earnings per share, only
potential equity shares that are dilutive i.e. which
reduces earnings per share or increases loss per
share are included.

n) Segment reporting

The Company is in the business of manufacture
and sale of automobile components, which in
the context of Indian Accounting Standard (Ind
AS) 108 "Operating Segments” represents single
reportable business segment. The accounting
policies of the reportable segments are the same
as the accounting policies disclosed in Note no.
3(g). The revenues, total expenses and net profit
as per the Statement of Profit and Loss represents
the revenue, total expenses and the net profit of
the sole reportable segment.

o) Trade Receivables - Initial Measurement

Financial Assets in the form of trade receivables,
are initially measured at their transaction price (as
defined in Ind AS 115).

p) Impairment

i) Financial assets (other than at fair value)

The Company assesses at each date of
balance sheet whether a financial asset or
a Company of financial assets is impaired.

Ind AS 109 requires expected credit losses
to be measured through a loss allowance.
Company performs credit assessment for
customers on an annual basis. Company
recognizes credit risk, on the basis of lifetime
expected losses and where receivables are
due for more than normal operating cycle of
the Company. For all other financial assets,
expected credit losses are measured at an
amount equal to the 12 months expected
credit losses or at an amount equal to the
life time expected credit losses if the credit
risk on the financial asset has increased
significantly since initial recognition.

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

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

ii) Non-financial assets

Property, plant and equipment and
intangible assets with finite life are evaluated
for recoverability whenever there is any
indication that their carrying amounts may
not be recoverable. If any such indication
exists, the recoverable amount (i.e. 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. If the recoverable amount of
an asset or CGU is estimated to be less than
its carrying amount, the carrying amount of
the asset or CGU is reduced to its recoverable
amount. An impairment loss is recognized in
the statement of profit and loss.

q) Cash and cash equivalents

The Company considers all highly liquid financial
instruments, which are readily convertible into
known amounts of cash that are subject to an
insignificant risk of change in value and having
original maturities of three months or less, to
be cash and cash equivalents. Cash and cash
equivalents include balances with banks which
are unrestricted for withdrawal and usage.

r) Cash flow statement

The Cash Flow Statement is prepared by the
indirect method set out in Indian Accounting
Standard (Ind AS) 7 on "Statement of Cash Flows”
and presents cash flows by operating, investing
and financing activities of the Company.

s) Investment

All investment in unqouted equity instruments
are measured at cost.

t) Current versus Non-Current Classification

The Company presents assets and liabilities in
the balance sheet based on current/non-current
classification. An asset is classified as current
when it satisfies any of the following criteria:

- It is expected to be realized or intended to be
sold or consumed in normal operating cycle

- It is expected to be realized within 12 months
after the date of reporting period, or

- Cash and cash equivalent unless restricted
from being exchanged or used to settle a
liability for at least 12 months after reporting
period

Current assets include the current portion of
non-current financial assets. All other assets are
classified as non-current.

A liability is current when it satisfies any of the
following criteria:

- It is expected to be settled in normal
operating cycle

- It is due to be settled within 12 months after
the reporting period, or

- There is no unconditional right to defer
the settlement of the liability for at least 12
months after the reporting period

Current liabilities include the current portion
of long term financial liabilities. The Company
classifies all other liabilities as non-current.

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

The operating cycle is the time between the
acquisition of assets and their realization in cash
and cash equivalents. The Company has identified
12 months as its operating cycle.

u) Research and development costs:

Research and development costs are expensed
as incurred.

Development expenditures on an individual
project are recognized as an intangible asset
when the Company can demonstrate:

- The technical feasibility of completing the
intangible asset so that the asset will be
available for use or sale

- Its intention to complete and its ability and
intention to use or sell the asset

- How the asset will generate future economic
benefits

- The availability of resources to complete the
asset

- The ability to measure reliably the
expenditure during development

Following initial recognition of the development
expenditure as an asset, the asset is carried at
cost less any accumulated amortization and
accumulated impairment losses. Amortization
of the asset begins when development is
complete, and the asset is available for use. It is
amortized over the period of expected future
benefit. Amortization expense is recognized
in the statement of profit and loss unless such
expenditure forms part of carrying value of
another asset. During the period of development,
the asset is tested for impairment annually.”