2. Material accounting policy information

Following material accounting policy information are
used in the preparation of the standalone financial
statements.

a. Measurement of fair values

Company's certain accounting policies and
disclosures require the measurement of fair
values, for financial assets and financial liabilities.

Fair values are categorised into different levels
in a fair value hierarchy based on the inputs used
in the valuation techniques as follows.

- Level 1: quoted prices (unadjusted) in active
markets for identical assets or liabilities.

- Level 2: inputs other than quoted prices
included in Level 1 that are observable for the
asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices).

- Level 3: inputs for the asset or liability that are
not based on observable market data
(unobservable inputs).

The finance team has overall responsibility for
overseeing all significant fair value
measurements, including Level 3 fair values and
reports directly to the board of directors.

The finance team regularly reviews significant
unobservable inputs and valuation adjustments.
If third party information, such as broker quotes
or pricing services, is used to measure fair values,
then the valuation team assesses the evidence
obtained from the third parties to support the
conclusion that these valuations meet the
requirements of Ind AS, including the level in the

fair value hierarchy in which the valuations,
should be classified.

When measuring the fair value of an asset or a
liability, the Company uses observable market
data as far as possible. If the inputs used to
measure the fair value of an asset or a liability
fall into different levels of the fair value hierarchy,
then the fair value measurement is categorised
in its entirety in the same level of the fair value
hierarchy as the lowest level input that is
significant to the entire measurement.

The Company recognises transfers between
levels of the fair value hierarchy at the end of
the reporting period during which change has
occurred.

b. Property, Plant and equipment

Recognition and measurement

The cost of an item of property, plant and
equipment shall be recognized as an asset if, and
only if: (a) it is probable that future economic
benefits associated with the item will flow to the
entity; and (b) the cost of the item can be
measured reliably.

Items of property, plant and equipment are
measured at cost, which includes capitalised
borrowing costs, less accumulated depreciation
and accumulated impairment losses, if any.

Cost of an item of property, plant and equipment
comprises its purchase price, including import
duties and non-refundable purchase taxes, after
deducting trade discounts and rebates, any
directly attributable cost of bringing the item to
its working condition for its intended use. The
cost of self-constructed assets includes the cost
of materials, direct labour, and any other costs
directly attributable to bringing the assets to a
working condition and location for their intended
use.

The carrying amount of an item of property, plant
and equipment shall be derecognized: (a) on
disposal; or (b) when no future economic benefits
are expected from its use or disposal.

When parts of an item of property, plant and
equipment having significant cost have different
useful lives, then they are accounted for as
separate items (major components) of property,
plant and equipment.

Gains or losses on disposal of an item of property,
plant and equipment is recognised in the
statement of profit or loss.

All spare parts which are expected to be used
for more than one accounting period are
capitalised as property, plant and equipment.

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

The cost of replacing part of an item of property,
plant and equipment is recognised in the
carrying amount of the cost of the item if it is
probable that the future economic benefits
embodied within the part will flow to the
Company and its cost can be measured reliably.
The carrying amount of the replaced part is
derecognised. The costs of the day-to-day
servicing of property, plant and equipment are
recognised in the statement of profit and loss as
incurred.

Depreciation is provided on cost of items of
property, plant and equipment less their
estimated residual values over their estimated
useful lives using straight line method.

On assets sold, discarded, etc., during the year,
depreciation is provided up to the date of sale/
discard. Depreciation has been calculated on a
pro-rata basis in respect of acquisition/
installation during the year. Freehold land is not
depreciated.

The depreciation charged on all property, plant
a nd equipment is on the basis of useful life
specified in Part "C" of Schedule II to the
Companies Act, 2013 which represents useful
lives of the assets.

Depreciation methods, useful lives and residual
values are reviewed at least at each financial year
end and changes, if any, are accounted for
prospectively.

c. Inventories

Inventories are valued at lower of cost or net
realisable value. Cost of raw material comprise
cost of purchase and is determined after rebate
and discounts. Cost of work-in-progress and
finished goods comprises direct material, direct
labour and an appropriate proportion of variable
and fixed overhead expenditure, the latter being
allocated on the basis of normal operating
capacity.

Cost of inventories also include all other cost
incurred in bringing the inventories to their
present location and condition. Costs are
determined on weighted average cost basis.

Waste material is valued at net realisable value.

Net realisable value is the estimated selling price
in the ordinary course of business less the
estimated costs of completion and the estimated
costs necessary to make the sale. When a decline
in the price of materials indicates that the cost
of finished products exceeds net realisable value,
the materials are written down to net realisable
value. Net realisable value of raw material is
determined with reference to the replacement
cost of the raw materials.

d. Financial instruments

A financial instrument is any contract that gives
rise to a financial asset of one entity and a
financial liability of equity instrument of another
entity.

Recognition and initial measurement

(i) Financial assets

Financial assets are classified at initially
recognised as subsequently measured at
amortised cost, fair value through other
comprehensive income (FVOCI) and fair
value through profit or loss (FVTPL)

With the exception of trade receivable that
do not contain a significant financing
component, the Company initially
measures financial asset at its fair value
plus, in the case of a financial asset not at
fair value through profit or loss, transaction
costs. Trade receivables do not contain a
significant financing component and are
measured at the transaction price
determined under Ind AS 115, Refer to the
accounting policies in section (j) Revenue
recognition.

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.

Classification and subsequent
measurement

Financial assets are not reclassified
subsequent to their initial recognition,
except if and in the period the Company
changes its business model for managing
financial assets.

A financial asset is measured at amortised
cost if it meets both of the following
conditions and is not designated as at
FVTPL:

- the asset is held within a business
model whose objective is to hold
assets 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.

All equity investment in scope of Ind AS
109 are measured at fair value. Equity
instruments which are held for trading and
contingent consideration recognised by an
acquirer in a business combination to which
Ind AS 103 applied are classified as at
FVTPL. For all other equity instruments, the
Company may make an irrevocable election
to present in other comprehensive income
subsequent changes in the fair value. The
Company makes such election on an
instrument-by-instrument basis. The
classification is made on initial recognition
and is irrevocable. The Company elected
to classify irrevocably its non-listed equity
investments under this category. If the
Company decides to classify an equity
instrument as at FVOCI, then all fair value
changes on the instruments, excluding
dividends, are recognised in the OCI. There
is no recycling of the amounts from OCI to
the Statement of profit and loss, even on
sale of investment. However, the Company
may transfer the cumulative gain or loss
within equity. Equity instruments included
within the FVTPL category are measured at
fair value with all changes recognised in the
statement of profit and loss.

All financial assets not classified as
measured at amortised cost or FVOCI are
measured at FVTPL. This includes all
derivative financial assets. On initial
recognition, the Company may irrevocably
designate a financial asset that otherwise
meets the requirements to be measured at
amortised cost or at FVOCI as at FVTPL if
doing so eliminates or significantly reduces
a n accounting mismatch that woul d
otherwise arise.

Impairment

The Company recognises loss allowance
using the expected credit loss (ECL) model
for the financial assets which are not fair
valued through profit or loss. Loss
allowance for trade receivables is measured
at an amount equal to lifetime ECL. For all
financial assets with contractual cash flows
other than trade receivable, ECLs are
measured at an amount equal to the 12-
month ECL, unless there has been a
significant increase in credit risk from initial
recognition in which case those are
measured at lifetime ECL. The amount of
ECLs (or reversal) that is required to adjust
the loss allowance at the reporting date to
the amount that is required to be
recognised as an impairment gain or loss
in the statement of profit and loss.

(ii) Financial liabilities

Financial liabilities are classified as
measured at amortised cost or FVTPL. A
financial liability is classified as at FVTPL if
it is classified as held-for-trading, or it is a
derivative or it is designated as such on
initial recognition. Financial liabilities at
FVTPL are measured at fair value and net
gains and losses, including any interest
expense, are recognised in profit or loss.
Other financial liabilities are subsequently
measured at amortised cost using the
effective interest method. Interest expense
and foreign exchange gains and losses are
recognised in the statement of profit and
loss. Any gain or loss on derecognition is
also recognised in the statement profit or
loss.

(iii) Offsetting

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 realise the assets and settle
the liabilities simultaneously.

Derecognition

(i) Financial assets

The Company derecognises a financial
asset when the contractual rights to the
cash flows from the financial asset expire,
or it transfers the rights to receive the
contractual cash flows in a transaction in
which substantially all of the risks and
rewards of ownership of the financial asset
are transferred or in which the Company
neither transfers nor retains substantially
all of the risks and rewards of ownership
and does not retain control of the financial
asset.

If the Company enters into transactions
whereby it transfers assets recognised on
its balance sheet, but retains either all or
substantially all of the risks and rewards of
the transferred assets, the transferred
assets are not derecognised.

(ii) Financial liabilities

The Company derecognises a financial
liability when its contractual obligations are
discharged or cancelled or expired.

The Company also derecognises a financial
liability when its terms are modified and
the cash flows under the modified terms
are substantially different. In this case, a
new financial liability based on the modified
terms is recognised at fair value. The
difference between the carrying amount of
the financial liability extinguished and the
new financial liability with modified terms
is recognised in statement of profit or loss.

e. Investment in subsidiary

Investments in subsidiary 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 these investments, the difference
between net disposal proceeds and the carrying
amounts are recognised in the statement of
profit and loss.

f. Impairment of non-financial assets

The Company's non-financial assets, other than
inventories and deferred tax assets, are reviewed
at each reporting date to determine whether

there is any indication of impairment. If any such
indication exists, then the asset's recoverable
amount is estimated.

For impairment testing, assets that do not
generate independent cash inflows are grouped
together into cash-generating units (CGUs). Each
CGU represents the smallest group of assets that
generates cash inflows that are largely
independent of the cash inflows of other assets
or CGUs.

The recoverable amount of a CGU (or an
individual asset) is the higher of its value in use
and its fair value less costs to sell. Value in use is
based on the estimated future cash flows,
discounted to their present value using a pre¬
tax discount rate that reflects current market
assessments of the time value of money and the
risks specific to the CGU (or the asset).

An impairment loss is recognised if the carrying
amount of an asset or CGU exceeds its estimated
recoverable amount. Impairment losses are
recognised in the statement of profit and loss.
Impairment loss recognised in respect of a CGU
is allocated first to reduce the carrying amount
of any goodwill allocated to the CGU, and then
to reduce the carrying amounts of the other
assets of the CGU (or group of CGUs) on a pro
rata basis.

An impairment loss in respect of goodwill is not
subsequently reversed. In respect of other assets
for which impairment loss has been recognised
in prior periods, the Company reviews at each
reporting date whether there is any indication
that the loss has decreased or no longer exists.
An impairment loss is reversed if there has been
a change in estimate used to determine the
recoverable amount. Such a reversal is made only
to the extent that the asset's carrying amount
does not exceed the carrying amount that would
have been determined, net of depreciation or
amortisation, if no impairment loss had been
recognised.