1.2 Summary of Material accounting policies

(a) Property, Plant and Equipment:

The cost of an item of Property, Plant and Equipment
(‘PPE’) is recognised as an asset if, and only if, it is
probable that the future economic benefits associated
with the item will flow to the Company and the cost can
be measured reliably.

PPE are initially recognised at cost. The initial cost of PPE
comprises its purchase price (including import duties and
non-refundable purchase taxes but excluding any trade
discount and rebates), and any directly attributable costs
of bringing the asset to its working condition and location
for its intended use.

Subsequent to initial recognition, PPE are stated at
cost less accumulated depreciation and accumulated
impairment losses, if any. Subsequent expenditure
relating to PPE is capitalized only when it is probable that
future economic benefits associated with these will flow
to the Company and the cost of the item can be measured
reliably. When an item of PPE is replaced, then its carrying
amount is derecognised and the cost of the new item of
PPE is recognised. Further, in case the replaced part was
not depreciated separately, the cost of the replacement
is used as an indication to determine the cost of the
replaced part at the time it was acquired. All other repair
and maintenance cost are recognised in Statement
of profit and 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.

An item of PPE and any significant part initially recognised
is derecognized upon disposal or when no future
economic benefits are expected from its use or disposal.
Any gains or losses arising from de-recognition of PPE
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
PPE is derecognised.

The Company identifies and determines cost of each
component/part of the asset separately, if the component/
part has a cost which is significant to the total cost of the
asset and has useful life that is materially different from
that of the remaining asset.

Depreciation:

Depreciation on PPE (other than free hold and lease hold
land) has been provided based on useful life of the assets
in accordance with Schedule II of the Companies Act,
2013, on Written Down Value Method.

Freehold land is not depreciated. Leasehold land and
leasehold improvements are amortized over the primary
period of lease. Depreciation methods, useful lives and
residual value are reviewed at each reporting date and
adjusted prospectively, if appropriate.

The useful life as estimated by the management for the
different category of assets recognized in the books are as
under:

(b) Intangible Assets:

Intangible Assets are stated at historical cost less
accumulated amortisation and accumulated impairment
loss, if any. Profit or Loss on disposal of intangible assets
is recognised in the Statement of Profit and Loss.

Amortization:

Intangible assets are amortized on a systematic basis over
their useful life, on Written Down Value Method.

Depreciation methods, useful lives and residual value are
reviewed at each reporting date and adjusted prospectively, if
appropriate.

The useful life as estimated by the management for intangible
assets recognized in the books is as under:

(c) Capital Work in Progress & Capital Advances:

Capital work-in-progress comprises the cost of assets
that are yet not ready for their intended use at the balance
sheet date. Advances given towards acquisition of fixed
assets outstanding at each balance sheet date are
classified as Capital Advances under Other Non-Current
Assets.

(d) Revenue Recognition:

Revenue is measured at the transaction price of
consideration received or receivable. Amounts disclosed
as revenue are net of returns, trade discount or rebates
and applicable taxes and duties collected on behalf of the
government and which are levied on such sales.

The Company recognises revenue when the amount of
revenue can be reliably measured and it is probable that
future economic benefits will flow to the Company.

i. Revenue from sale of goods is recognised when
goods are supplied and control over the goods sold
is transferred to the buyer which is on dispatch/
delivery as per the terms of contracts and no
significant uncertainty exists regarding the amount of
the consideration that will be derived from the sales
of the goods. This is considered the appropriate point
where the performance obligations in the contracts
are satisfied as the company no longer has control
over the inventory.

ii. Revenue from services is recognised on pro-rata
as and when services are rendered over a specified
period of time. The company collects goods and
service tax on behalf of the government and therefore
it is not an economic benefit flowing to the company.
Hence it is excluded from the revenue. Interest
income is recognised using effective interest method
on time proportion basis taking in to account the
amount outstanding.

iii. Dividend income from investment is recognised when
the Company’s right to receive is established by the
reporting date, which is generally when shareholders
approve the dividend.

(e) Lease:

The Company assesses whether a contract contains a
lease, at inception of a contract. A contract is, or contains,
a lease if the contract conveys the right to control the
use of an identified asset for a define period of time in
exchange for consideration. To assess whether a contract
conveys the right to control the use of an identified
assets, the Company assesses whether: (i) the contact
involves the use of an identified asset (ii) the Company
has substantially all of the economic benefits from use
of the asset through the period of the lease and (iii) the
Company has the right to direct the use of the asset.

Company as a lessee

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 re¬
measurement 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 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.
Refer to the accounting policy on " (g) Impairment of
assets".

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 include fixed payments less any lease
incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected
to be paid under residual value guarantees. The lease
payments also include the exercise price of a purchase
option reasonably certain to be exercised by the Company
and payments of penalties for terminating the lease, if the
lease term reflects the Company exercising the option to
terminate. Variable lease payments that do not depend
on an index or a rate are recognised as expenses (unless
they are incurred to produce inventories) in the period in
which the event or condition that triggers the payment
occurs.

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.

The Company has elected not to recognise right-of-use
assets and lease liabilities for short-term leases that have
a lease term of 12 months or less and leases of low-value
assets. The Company recognises the lease payments
associated with these leases as an expense on a straight¬
line basis over the lease term.

Company as a lessor

Rental income from operating lease is generally
recognised on a straight-line basis over the term of the
relevant lease. Where the rentals are structured solely
to increase in line with expected general inflation to
compensate for the Company’s expected inflationary
cost increases, such increases are recognised in the year
in which such benefits accrue. 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.

Amounts due from lessees under finance leases are
recorded as receivables at the Company’s net investment
in the leases. Finance lease income is allocated to
accounting periods so as to reflect a constant periodic rate
of return on the Company’s net investment outstanding in
respect of the leases.

(f) Inventories:

Inventories are valued at lower of the cost determined
on weighted average basis or net realisable value. The
comparison of cost and net realisable value is made on
an item-by-item basis. Damaged, unserviceable and inert
stocks are valued at net realizable value.

Determination Cost of raw materials, packing materials
and stores spares and consumables Stocks is determined
so as to exclude from the cost, taxes and duties which are
subsequently recoverable from the taxing authorities.

Cost of finished goods and work-in-progress includes the
cost of materials, an appropriate allocation of overheads
and other costs incurred in bringing the inventories to
their present location and condition.

(g) Impairment of assets:

Intangible assets that have an indefinite useful life are
not subject to amortisation and are tested annually for
impairment, or more frequently if event or changes are
indicative in circumstances indicate that they might
be impaired. Assets that have a definite useful life are
tested for impairment whenever events or changes in
circumstances that indicate that the carrying amount may
not be recoverable. Management periodically assesses
using external and internal sources, whether there is an
indication that an asset may be impaired. An Impairment
loss is recognised for the amount by which the assets
carrying amount exceeds its recoverable amount. An

impairment loss is charged to the Profit and Loss Account
in the year in which an asset is identified as impaired. An
impairment loss recognized in prior accounting periods is
reversed if there has been change in the estimate of the
recoverable amount.

(h) Financial Instruments:

A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity. Financial instruments
also include derivative contracts such as foreign currency
foreign exchange forward contracts, futures and currency
options.

1. Financial assets
Classification

The Company shall classify financial assets as
subsequently measured at amortised cost, fair value
through other comprehensive income (FVOCI) or fair
value through profit and loss (FVTPL) on the basis of
its business model for managing the financial assets
and the contractual cash flow characteristics of the
financial asset.

Initial recognition and measurement

All financial assets are recognised initially at fair value
plus, in the case of financial assets not recorded at fair
value through profit or loss, transaction costs that are
attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require
delivery of assets within a time frame established by
regulation or convention in the marketplace (regular
way trades) are recognised on the trade date, i.e., the
date that the Company commits to purchase or sell
the asset.

Debt instruments

• A ‘debt instrument’ is measured at the amortised
cost if both the following conditions are met:

a) The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and

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

• 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 and fees or costs that are an integral part of
the EIR. The EIR amortisation is included in finance
income in the profit and loss.

• Debt instruments included within the fair value
through profit and loss (FVTPL) category are
measured at fair value with all changes recognized in
the statement of profit and loss.

Investments in subsidiaries, associates and joint

venture

• Investments in subsidiaries and joint venture are
carried at cost less accumulated impairment losses,
if any. Where an indication of impairment exists, the
carrying amount of the investment is assessed and
written down immediately to its recoverable amount.
On disposal of investments in subsidiaries and
joint venture, the difference between net disposal
proceeds and the carrying amounts are recognized in
the statement of profit and loss.

Equity instruments

• The Company subsequently measures all equity
investments in Companies/Mutual funds other than
equity investments in subsidiaries, at fair value
through profit and loss account. Dividends from
such investments are recognised in profit and loss
as other income when the Company’s right to receive
payments is established.

De-recognition

A financial asset derecognized only when:

• The rights to receive cash flows from the asset have
expired, or

• The Company has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under a ‘pass¬
through’ arrangement; and either

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

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

• When the Company has transferred its rights to
receive cash flows from an asset or has entered
into a pass-through arrangement, it evaluates if and
to what extent it has retained the risks and rewards

of ownership. When it has neither transferred nor
retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, the
Company continues to recognise the transferred
asset to the extent of the Company’s continuing
involvement. In that case, the Company also
recognises an associated liability. The transferred
asset and the associated liability are measured on a
basis that reflects the rights and obligations that the
Company has retained.

• Continuing involvement that takes the form of a
guarantee over the transferred asset is measured
at the lower of the original carrying amount of the
asset and the maximum amount of consideration
that the Company could be required to repay.

Impairment of financial assets

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

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

b) Trade receivables or any contractual right to
receive cash or another financial asset that result
from transaction that are within the scope of Ind
AS 115- The Company applies the simplified
approach prescribed under Ind AS 109, which
requires recognition of lifetime expected credit
losses from the date of initial recognition of
the receivables. The Company determines
impairment allowance using historical default
rates, adjusted for forward-looking information
and estimates. Such estimates and assumptions
are reviewed at each reporting date.

2. Financial liabilities

Initial recognition and measurement

All financial liabilities are recognised initially at fair
value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.

The Company’s financial liabilities include trade and other
payables, loans and borrowings including bank overdrafts.

Financial liabilities at fair value through profit and loss

Financial liabilities at fair value through profit and loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value
through profit and loss. Financial liabilities are classified
as held for trading if they are incurred for the purpose of
repurchasing in the near term. This category also includes
derivative financial instruments entered into by the
Company that are not designated as hedging instruments
in hedge relationships as defined by Ind-AS 109.

Gains or losses on liabilities held for trading are recognised
in the profit and loss.

Derecognition

A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified,
such an exchange or modification is treated as the
derecognition of the original liability and the recognition
of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit and loss.

(i) Fair Value Measurement:

The Company’s measures Financial Instruments at fair
value at each Balance sheet date.

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.

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 based on inputs to valuation techniques that are
used to measure fair value that are either observable
or unobservable and consists of the following three
levels:

- Level 1: Inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities. This
includes quoted equity instruments, government
securities and mutual funds (includes FMP) that have
quoted price.

- Level 2: Inputs are other than quoted prices included
within Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices) such as derivative financial
instruments.

- Level 3: Inputs are not based on observable
market data (unobservable inputs). Fair values are
determined in whole or in part using a valuation model
based on assumptions that are neither supported by
prices from observable current market transactions
in the same instrument nor are they based on
available market data. This includes unquoted equity
shares which are valued at cost.

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.

For the purpose of fair value disclosures, the Company
has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset
or liability and the level of the fair value hierarchy as
explained above.

(j) Foreign Currency and Translation balances:

The functional currency of the Company (i.e. the currency
of the primary economic environment in which the
Company operates) is the Indian Rupee (^). The financial
statements have been rounded off to the nearest ^ Lakhs.

On initial recognition, all foreign currency transactions are
recorded at exchange rates prevailing on the date of the
transaction. Monetary assets and liabilities, denominated
in a foreign currency, are translated at the exchange rate
prevailing on the balance sheet date and the resultant
exchange gains or losses are recognised in the Standalone

Statement of Profit and Loss. Non monetary assets and
liabilities that all are measured in terms of historical cost
in foreign currencies are not retranslated.

(k) Trade Receivables:

Trade receivables that do not contain a significant
financing component are measured at transaction price
Refer accounting policy on "(g) Impairment of Financial
Assets" for the Company’s approach towards recognition
and assessment of Expected Credit Loss (ECL).

(l) Trade Payables:

These amounts represent liabilities for goods and services
provided to the Company prior to the end of financial year
which are unpaid. The amounts are usually unsecured.
Trade and other payables are presented as current
liabilities unless payment is not due within twelve months
after the reporting period. They are recognised initially at
their fair value.

(m) Income Taxes:

Income tax expenses comprises of current and deferred
tax expense and is recognised in the statement of profit or
loss except to the extent that it relates to items recognized
directly in equity or in OCI, in which case, the tax is also
recognised in directly in equity or OCI respectively.

Current tax:

Current tax is the amount expected tax payable or
recoverable on the taxable profit or loss for the year
and any adjustment to the tax payable or recoverable in
respect of previous years. It is measured using tax rates
enacted or substantively enacted by the end of reporting
period. Management periodically evaluates positions
taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation
and establishes provisions where appropriate.

Deferred tax:

Deferred Income Tax is recognised using the Balance
sheet approach. Deferred income tax assets and liabilities
are recognised for deductible and taxable temporary
differences arising between the tax base of assets and
their carrying amount, except when the deferred income
tax arises from the initial recognition of an assets or
liability in a transaction that is not a business combination
and affects neither accounting nor taxable profit or loss at
the time of the transaction.

Deferred income 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.

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 utilised.

Deferred tax assets and liabilities are measured using
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 to settles its
current tax assets and liabilities on a net basis.

(n) Cash and Cash Equivalents

For the purpose of presentation in the statement of cash
flows, cash and cash equivalents includes cash in hand,
demand deposits with banks, other short term highly
liquid investments with 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, and bank overdrafts. Bank overdrafts are shown
in current liabilities in the balance sheet.

(o) Employee Benefits
Short-term Employee Benefits

All employee benefits payable wholly within twelve
months of rendering the service are classified as short
term employee benefits and they are recognized in the
period in which the employee renders the related service.
The Company recognizes the undiscounted amount of
short term employee benefits expected to be paid in
exchange for services rendered as a liability (accrued
expense) after deducting any amount already paid.

Post Employment Benefits

I. Defined Contribution Plan

Defined contribution plans are employee state
insurance scheme and Government administered
pension fund scheme for all applicable employees
and superannuation scheme for eligible employees.

Recognition and measurement of defined
contribution plans:

The Company recognizes contribution payable to
a defined contribution plan as an expense in the
Statement of Profit and Loss when the employees
render services to the Company during the reporting
period. If the contributions payable for services
received from employees before the reporting date
exceeds the contributions already paid, the deficit
payable is recognized as a liability after deducting
the contribution already paid. If the contribution
already paid exceeds the contribution due for
services received before the reporting date, the
excess is recognized as an asset to the extent that the
prepayment will lead to, for example, a reduction in
future payments or a cash refund.

Provident Fund scheme

The Company makes specified monthly contributions
towards Employee Provident Fund scheme in accordance
with the statutory provisions

Pension Scheme:

The Company operates a defined contribution pension
plan for certain specified employees and is payable upon
the employee satisfying certain conditions, as approved
by the Board of Directors.

II. Defined Benefit plans:

Gratuity scheme

The Company operates a defined benefit gratuity
plan for employees. The Company contributes to
two separate funds administered by LIC and HDFC,
towards meeting the Gratuity obligation.

Recognition and measurement of Defined Benefit
plans:

The cost of providing defined benefits is determined
using the Projected Unit Credit method with actuarial
valuations being carried out at each reporting date. The
defined benefit obligations recognized in the Balance
Sheet represent the present value of the defined benefit
obligations as reduced by the fair value of plan assets, if
applicable. Any defined benefit asset (negative defined
benefit obligations resulting from this calculation) is
recognized representing the present value of available
refunds and reductions in future contributions to the plan.

All expenses represented by current service cost, past
service cost, if any, and net interest on the defined benefit
liability / (asset) are recognized in the Statement of Profit
and Loss. Remeasurements of the net defined benefit
liability / (asset) comprising actuarial gains and losses
and the return on the plan assets (excluding amounts

included in net interest on the net defined benefit
liability/asset), are recognized in Other Comprehensive
Income. Such remeasurements are not reclassified to the
Statement of Profit and Loss in the subsequent periods.

The Company presents the above liability/(asset) as
current and non-current in the Balance Sheet as per
actuarial valuation by the independent actuary.

Other Long Term Employee Benefits:

The Company does not allow encashment of leave
balance.

(p) Research and Development

Revenue expenditure on Research and Development
is charged to Profit and Loss Account as incurred.
Capital expenditure on assets acquired for Research
and Development is added to PPE and depreciated in
accordance with the policies stated for Property, Plant
and Equipment and Intangible Assets.

(q) Borrowing Cost

Borrowing costs, that are, attributable to the acquisition,
construction or production of qualifying are capitalized
as part of the costs of such assets. A qualifying asset is
one that necessarily takes a substantial period of time to
get ready for its intended use or sale. All other borrowing
costs are expensed in the period in which they occur.
Borrowing cost also includes exchange differences to the
extent regarded as an adjustment to the borrowing costs.

(r) Earnings per share

The Company presents basic and diluted earnings per
share ("EPS") data for its equity shares. Basic EPS is
calculated by dividing the profit or loss attributable to
equity shareholders of the Company by the weighted
average number of equity shares outstanding during
the period. Diluted EPS is determined by adjusting the
profit or loss attributable to equity shareholders and the
weighted average number of equity shares outstanding
for the effects of all dilutive potential ordinary shares,
which includes all stock options granted to employees.

The number of equity shares and potentially dilutive
equity shares are adjusted retrospectively for all periods
presented for any share splits and bonus shares issues
including for changes effected prior to the approval of the
financial statements by the Board of Directors.

(s) Current / Non-Current Classification:

The Company presents assets and liabilities in the balance
sheet based on current/non-current classification as per
IND AS 1

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, or

(iv) 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:

(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, or

(iv) 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 ither liabilities as non-current.

Deferred tax assets and liabilities are classified as non¬
current assets and liabilities respectively.

The operating cycle is the time between the acquisition
of assets for processing and their realisation in cash and
cash equivalents. The company has identified twelve
months as its normal operating cycle.