3. MATERIAL ACCOUNTING POLICIES

3.1 Revenue Recognition

The Company recognizes revenue, whenever control over
distinct goods or services is transferred to the customer;
i.e. when the customer is able to direct the use of the
transferred goods or services and obtains substantially all of
the remaining benefits, provided a contract with enforceable

rights and obligations exists and amongst others collectability
of consideration is probable taking into account customer's
creditworthiness.

Revenue is the transaction price the Company expects to be
entitled to. In determining the transaction price, the Company
considers effects of variable consideration, the existence of
significant financing contracts, noncash consideration and
consideration payable to the customer, if any. The Company
considers whether there are other promises in the contract that
are separate performance obligations to which the transaction
price needs to be allocated (e.g. warranties etc.).

Variable Consideration

If the consideration in a contract includes a variable amount,
the company estimates the amount of consideration to
which it will be entitled to in exchange for transferring goods
to the customer. The variable consideration is estimated at
contract inception and constrained until it is highly probable
that a significant reversal of revenue will not occur once
associated uncertainties are resolved. Some contracts with
the customers provide them with a right to return and volume
rebates. The right to return and volume rebates gives rise to
variable consideration.

The amount of variable consideration is calculated by either
using the expected value or the most likely amount depending
on which is expected to better predict the amount of variable
consideration. Consideration is also adjusted for the time
value of money if the period between the transfer of goods or
services and the receipt of payment exceeds twelve months
and there is a significant financing benefit either to the
customer or the Company. If a contract contains more than
one distinct good or service, the transaction price is allocated
to each performance obligation based on relative stand-alone
selling prices. If stand-alone selling prices are not observable,
the Company reasonably estimates those.

Revenue is recognized for each performance obligation either
at a point in time or over time.

Sale of goods: Revenues are recognized at a point in time
when control of the goods passes to the buyer, usually upon
either at the time of dispatch or delivery. Revenue from sale of
goods is net of taxes and recovery of charges collected from
customers like transport, packing etc.

Contract balances:

Trade Receivables:

A receivable represents the Company's right to an amount of
consideration that is unconditional (i.e. only a passage of time
is required before payment of the consideration is due).

Contract liabilities:

A contract liability is the obligation to transfer goods or
services to a customer for which the company has received

consideration (or an amount of consideration is due) from the
customer. If a customer pays consideration before the company
transfer goods and services to the customer, a contract liability
is recognised when the payment is made or the payment is
due, whichever is earlier. Contract liabilities are recognised as
revenue when the company performs under the contract.

Interest Income

Interest income is recognised using the effective interest rate,
which is the rate that exactly discounts the estimated future
cash payments or receipts through the expected life of the
financial instrument or a shorter period, where appropriate, to
the net carrying amount of the financial asset.

Dividend Income

Revenue is recognised when the right to receive the payment
is established by the reporting date.

Other Claims / Receipts

Insurance claims and other receipts including export
incentives, where quantum of accruals cannot be ascertained
with reasonable certainty, these receipts are accounted
on receipt basis.

Commission Income

When the Company Acts in the capacity of an agent rather
than as the principal in a transaction the revenue recognised is
the net amount of the commission earned by the Company.

3.2 Property, Plant and Equipment

Property, Plant and Equipment are stated at cost net of
accumulated depreciation and accumulated impairment losses,
if any. Cost comprises purchase price including import duties
and other non-refundable duties and taxes, borrowing cost if
capitalization criteria are met and other directly attributable cost
for bringing the Assets to its present location and condition.

The cost of replacing part of an item of Property, Plant and
Equipment is recognised in the carrying amount of the
item only when it is probable that future economic benefits
embodied within the part will flow to the Company and the
cost of the item/part can be measured reliably. All other repairs
and maintenance are charged to the Statement of Profit and
Loss during the period in which they are incurred.

When parts of an item of Property, Plant and Equipment have
different useful lives, they are accounted for as separate items
(major components) of Property, Plant and Equipment.

Gains or losses arising on retirement or disposal of Property,
Plant and Equipment are recognised in the Statement of
Profit and Loss.

Property, Plant and Equipment which are not ready for
intended use as on the date of Balance sheet are disclosed as
"Capital Work-in-progress".

Items of Property, Plant and Equipment acquired through
exchange of non-monetary assets are measured at fair value,
unless the exchange transaction lacks commercial substance
or the fair value of either the asset received or asset given up is
not reliably measurable, in which case the asset exchanged is
recorded at the carrying amount of the asset given up.

The Assets which are held for Sale shall be reclassified to
Current Assets only if its carrying amount will be recovered
principally through a sale transaction (within one year) rather
than through continuing use.

Depreciation and Ammortization:-

Depreciation is provided on a pro-rata basis on the straight line
method based on estimated useful life prescribed in Part - C
under Schedule II to the Companies Act, 2013.

Useful life of Plant and Machinery has been considered
25 years as against 15 years as prescribed in Shedule II of
the Companies Act, 2013 which is based on the prevailing
practices of the comparable industries and our past experience
for last 30 years.

3.3 Intangible Assets :

Separately purchased intangible assets are initially measured
at cost. Subsequently, intangible assets are carried at cost less
any accumulated amortisation and accumulated impairment
losses, if any. The useful lives of intangible assets are assessed
as either finite or indefinite. Finite-life intangible assets are
amortised on a straight-line basis over the period of their
expected useful lives. Estimated useful lives by major class of
finite-life intangible assets are as follows :-

The Intangible Assets are derecognised either when they are
being disposed off or no future economic benefit is expected
from its use or disposal, the difference net disposal proceeds
and the carrying amount of Assets is recognised in the
statement of Profit and Loss in the period of Derecognition.

3.4 Non Current Assets held for Sale

Non-current assets or disposal groups comprising assets
and liabilities are classified as 'held for sale' when all of
the following criteria are met : (i) decision has been made
to sell. (ii) the assets are available for immediate sale in
its present condition (iii) the assets are being actively
marketed and (iv) sale has been agreed or is expected to
be concluded within 12 months of the Balance Sheet date.
Subsequently, such non-current assets and disposal groups
classified as held for sale are measured at the lower of its
carrying value and fair value less costs to sell. Non-current
assets held for sale are not depreciated or amortised.

3.5 Investment Property

Investment Property comprises Free-Hold Lands that are held
for Capital Appreciation as it has been held for a currently
undetermined future use and are recognised at cost.

An Investment Property are derecognised either when they
are disposed off or when they are permanently withdrawn
from use and no future economic Benefits are expected. The
difference between the net disposal proceeds and the carrying
amount of the asset is recognised in statement of profit and
loss in the period of derecognition.

3.6 Lease

The Company as a lessee

The Company's lease asset classes primarily consist of leases for
buildings, machinery and warehouses. 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 period of
time in exchange for consideration. To assess whether a
contract conveys the right to control the use of an identified
asset, the Company assesses whether:

(i) the contract 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.

At the date of commencement of the lease, the Company
recognizes a right-of-use asset ("ROU") and a corresponding
lease liability for all lease arrangements in which it is a lessee,
except for leases with a term of twelve months or less (short¬
term leases) and low value leases. For these short-term and
low value leases, the Company recognizes the lease payments
as an operating expense on a straight-line basis over the
term of the lease.

Certain lease arrangements includes the options to extend
or terminate the lease before the end of the lease term. ROU
assets and lease liabilities includes these options when it is
reasonably certain that they will be exercised.

The right-of-use assets are initially recognized at cost, which
comprises the initial amount of the lease liability adjusted for
any lease payments made at or prior to the commencement
date of the lease plus any initial direct costs less any lease
incentives. They are subsequently measured at cost less
accumulated depreciation and impairment losses.

Right-of-use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the lease term
and useful life of the underlying asset. Right of use assets are
evaluated for recoverability whenever events or changes in
circumstances indicate that their carrying amounts may not
be recoverable. For the purpose of impairment testing, the
recoverable amount (i.e. the 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.

The lease liability is initially measured at amortized cost at the
present value of the future lease payments. The lease payments
are discounted using the interest rate implicit in the lease or,
if not readily determinable, using the incremental borrowing
rates in the country of domicile of these leases. Lease liabilities
are remeasured with a corresponding adjustment to the related
right of use asset if the Company changes its assessment if
whether it will exercise an extension or a termination option.

Lease liability and ROU asset have been separately presented
in the Balance Sheet and lease payments have been classified
as financing cash flows.

3.7 Impairment of non-financial assets

As at each balance sheet date, the Company assesses whether
there is an indication that an asset may be impaired and also
whether there is an indication of reversal of impairment loss
recognised in the previous periods. If any indication exists,
or when annual impairment testing for an asset is required,
if any, the Company determines the recoverable amount and
impairment loss is recognised when the carrying amount of an
asset exceeds its recoverable amount.

Recoverable amount is determined:-

a) In the case of an individual asset, at the higher of the fair
value less cost to sell and the value in use ; and

b) In the case of cash generating unit (a group of assets
that generates identified, independent cash flow), at the
higher of the cash generating unit's fair value less cost to
sell and the value in use.

In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discounting
rate that reflects the current market assessment of the time
value of the money and the risk specific to the asset. In
determining fair value less cost of disposal, recent market

transaction is taken into account. If no such transaction can
be identified, an appropriate valuation model is used. These
calculations are corroborated by valuation multiples, quoted
share prices for publicly traded companies or other available
fair value indicators.

3.8 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.

A) Financial Assets

Initial Recognition and measurement of Financial
Assets

All financial assets are recognised initially at fair value
plus or minus, 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.

Financial assets are classified, at initial recognition, in the
same manner as described in subsequent measurement.

Purchases or sales of financial assets that require delivery
of assets within a time frame established by regulation or
convention in the market place (regular way trades) are
recognised on the trade date, i.e. the date the Company
commits to purchase or sell the asset

Subsequent measurement

For purposes of subsequent measurement, financial
assets are classified in four categories:

(a) Financial assets at amortised cost

(b) Financial assets at fair value through other

comprehensive income (FVTOCI)

(c) Financial assets at fair value through profit

or loss (FVTPL)

(d) Equity instruments measured at fair value through
other comprehensive income (FVTOCI)

(a) Financial assets at amortised cost

A financial asset that meets the following two
conditions is measured at amortised cost (net of
any write down for impairment) unless the asset is
designated at fair value through profit or loss under
the fair value option.

i) Business model test: The objective of the
Company's business model is to hold the
financial asset to collect the contractual cash
flows (rather than to sell the instrument prior
to its contractual maturity to realize its fair
value changes).

or eliminates a measurement or recognition
inconsistency (referred to as 'accounting
mismatch') that would otherwise arise from
measuring financial assets and financial liabilities
or recognising the gains or losses on them on
different bases.

Financial assets included within the FVTPL category
are measured at fair value with all changes
recognized in the statement of profit and loss.

(d) Equity instruments measured at fair value
through other comprehensive income (FVTOCI)

Equity instruments which are held for trading are
classified Classified as 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.

If an equity investment is not held for trading, an
irrecoverable election is made at initial recognition
to measure it at fair value through other
comprehensive income with only dividend income
recognised in the statement of profit and loss.

If the Company decides to classify an equity
instrument as at FVTOCI, then all fair value
changes on the instrument, excluding dividends,
are recognized in the OCI. There is no recycling of
the amounts from other comprehensive income
to 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
recognized in the statement of profit and loss.

Derecognition

A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e. removed from
the Company's financial statement) 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:

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

(ii) 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.

Write Off

An entity shall directly reduce the gross carrying
amount of a Financial Asset when the entity has
no reasonable expectation of recovering a financial
asset in its entity or for a portion thereof.

Investment in joint ventures and subsidiaries:

The Company has accounted for its investment in
joint ventures and subsidiaries at cost.

Impairment of financial assets

The Company applies expected credit losses
(ECL) model for measurement and recognition of
impairment loss on the following financial assets:

(a) Financial assets measured at amortised cost

(b) Financial assets measured at fair value through
other comprehensive income (FVTOCI)

Expected Credit Losses are measured through
either 12 month ECL or lifetime ECL and it is
assessed as following:

For recognition of impairment loss on financial
assets, the Company determines that whether
there has been a significant increase in the credit
risk since initial recognition. If credit risk has not
increased significantly, 12-month ECL is used to
provide for impairment loss. However, if credit risk
has increased significantly, lifetime ECL is used.

If, in the subsequent period, credit quality of the
instrument improves, such that there is no longer
a significant increase in credit risk since initial
recognition, then the entity reverts to recognising
impairment loss allowance based on 12-month ECL.

Lifetime ECL are the expected credit losses resulting
from all possible default events over the expected
life of a financial instrument. The 12-month ECL
is a portion of the lifetime ECL which results from
default events that are possible within 12 months
after the reporting date.

The Company follows 'simplified approach' for
recognition of impairment loss allowance on
trade receivables.

The application of simplified approach does not
require the Company to track changes in credit risk.
Rather, it recognises impairment loss allowance
based on lifetime ECLs at each reporting date, right
from its initial recognition.

The Company follows a provision matrix to
determine impairment loss allowance on the
portfolio of trade receivables. The provision matrix
is based on its historical observed default rates
over the expected life of the trade receivables and
is adjusted for forward looking estimates. At every
reporting date, the historical observed default rates
are updated and changes in the forward looking
estimates are analysed.

For assessing increase in credit risk and impairment
loss, the Company combines financial instruments
on the basis of shared credit risk characteristics
with the objective of facilitating an analysis that is
designed to enable significant increases in credit
risk to be identified on a timely basis.

B) Financial liabilities

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 loans and
borrowings, trade and other payables and derivative
financial instruments.

Subsequent measurement

The measurement of financial liabilities depends on their
classification, as described below:

(a) Financial liabilities at fair value through profit or
loss

Financial liabilities at fair value through profit or
loss include financial liabilities held for trading

and financial liabilities designated upon initial
recognition as at fair value through profit or 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. Separated embedded derivatives are
also classified as held for trading unless they are
designated as effective hedging instruments.

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

Financial liabilities designated upon initial
recognition at fair value through profit or loss are
designated as such at the initial date of recognition,
and only if the criteria in Ind AS 109 are satisfied.

(b) Loans and borrowings

After initial recognition, interest-bearing loans
and borrowings are subsequently measured at
amortised cost using the effective interest rate
(EIR) method. Gains and losses are recognised in
statement of profit and loss when the liabilities
are derecognised as well as through the EIR
amortisation process.

Amortised cost is calculated by taking into account
any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The
EIR amortisation is included as finance costs in the
statement of profit and loss.

(c) Financial Guarantee Contracts

Financial guarantee contracts issued by the
Company are those contracts that require a
payment to be made to reimburse the holder for
a loss it incurs because the specified debtor fails
to make a payment when due in accordance with
the terms of a debt instrument. Financial guarantee
contracts are recognised initially as a liability at fair
value, adjusted for transaction costs that are directly
attributable to the issuance of the guarantee.
Subsequently, the liability is measured at the higher
of the amount of loss allowance determined as per
impairment requirements of Ind AS 109 and the
amount recognised less cumulative amortisation.

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.

Offsetting of financial instruments

Financial assets and financial liabilities are offset
and the net amount is reported in the balance
sheet if there is a currently enforceable legal right
to offset the recognised amounts and there is an
intention to settle on a net basis, to realize the
assets and settle the liabilities simultaneously.

Derivative financial instruments and hedge
accounting

The Company enters into derivative contracts such as
forward currency contract, option contract and cross
currency and interest rate swaps to hedge foreign
currency risks and interest rate risks. Such derivative
financial instruments are initially recognised 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.

Any gains or losses arising from changes in the
fair value of derivatives are taken directly to
profit or loss, except for the effective portion of
cash flow hedges, which is recognised in other
comprehensive income and later reclassified to
statement of profit and loss when the hedge item
affects profit or loss.

3.9 Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprises
cash in hand, cash at banks and short-term deposits with an
original maturity of three months or less, which are subject to
an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and cash
equivalents consist of cash in hand, cash at banks and short¬
term deposits, as defined above, net of outstanding bank
overdrafts, if any, as they are considered an integral part of the
cash management.

3.10 Foreign currency Transactions

The Company's financial statements are presented in Indian
Rupee (Rs.) which is also Company's functional currency.

Foreign currency transactions are recorded on initial
recognition in the functional currency, using the exchange
rates prevailing on the date of transaction. At each balance

sheet date, foreign currency monetary items are reported using
the closing exchange rate. Exchange rate differences that arise
on settlement of monetary items or on translating of monetary
items at each balance sheet reporting date at the closing rate
are recognised as income or expense in the period in which
they arise except exchange difference on monetary items
that qualify as a hedging instrument in a cash flow hedge are
recognised initially in OCI to the extent the hedge is effective.

Non-monetary items which are carried at historical cost
denominated in a foreign currency are reported using the
exchange rates prevailing at the date of the transaction. Non¬
monetary items measured at fair value in a foreign currency are
reported using the exchange rates prevailing at the date when
fair value is determined.

When a gain or loss on non-monetary items is recognised
in OCI any exchange component of that gain / loss shall be
recognised in OCI, Conversely when a gain or loss on a non¬
monetary item is recognised in Profit / loss any exchange
component of that gain/loss shall be recognised in Profit / Loss.

3.11 Fair Value Measurement:

The Company measures financial instruments, such as,
derivatives 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:

(a) In the principal market for the asset or liability, or

(b) 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.

A fair value measurement of a non-financial asset takes into
account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the
asset in its highest and best use.

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 categorised

within the fair value hierarchy, described as follows, based
on the lowest level input that is significant to the fair value
measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities

Level 2 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable

Level 3 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is unobservable

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.

3.12 Inventories

Raw materials : Inventories are valued at cost or net realisable
value whichever is lower. Cost is determined by using the
Weighted average method. 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.

Finished Goods and Traded Goods: Inventories are valued at
lower of cost and net realisable value. Finished goods include
cost of conversion and other cost incurred for bringing the
inventories to their present location and condition and Traded
Goods includes purchase prise and other cost incurred for
bringing the inventories to their present location and condition.

Stores & Spareparts : Store and Spare Parts are valued at Cost.

3.13 Employee Benefits

Short Term Employee Benefits

Short term employee benefits are expensed as the related
service is provided. A liability is recognised for the amount
expected to be settled wholly before twelve months after the
year end, if the Company has a present legal or constructive
obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated
reliably. It includes Salary, wages, paid annual leave.

Post Employement Benefits
Defined Contribution Plan

Retirement benefits in the form of contribution to Provident
fund are defined contribution plans. The contributions are

charged to the statement of profit and loss as and when
due monthly and are paid to the Government administered
Providend Fund towards which the Company has no further
obligation beyond its monthly contribution. Superannuation
benefit scheme is not exsisting in the Company.

Defined benefit plans:

The Company operates defined benefit plan viz., gratuity. The
costs of providing benefits under this plan are determined
on the basis of actuarial valuation at each year-end. Actuarial
valuation is carried out for the plan using the projected
unit credit method.

Defined benefit costs are comprised of:

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

b) Net interest expense or income; and

c) Re-measurement.

The Company presents the first two components of defined
benefit costs in profit or loss in the line item 'Employee benefits
expense' Curtailment gains and losses are accounted for as past
service costs. Re-measurement of net defined benefit liability/
asset pertaining to gratuity comprise actuarial gains/ losses
(i.e. changes in the present value resulting from experience
adjustments and effects of changes in actuarial assumptions)
and is reflected immediately in the balance sheet with a
charge or credit recognised in other comprehensive income
in the period in which they occur. Remeasurement recognised
in other comprehensive income is reflected immediately in
retained earnings and is not reclassified to profit or loss.

3.14 Borrowing Cost

Borrowing costs that are directly attributable to the acquisition,
construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or
sale are capitalised as part of the cost of the respective asset.
All other borrowing costs are expensed in the period in which
it is incurred.

Borrowing costs include interest expense calculated using
the effective interest rate method as described in Ind AS
109- Financial Instruments, finance charges in respect of
finance leases are recognised in accordance with Ind AS
116- Leases and exchange differences arising from foreign
currency borrowings to the extent that they are regarded as an
adjustment to interest costs.

3.15 Income Taxes

Income tax expense represents the sum of the tax currently
payable and deferred tax. It is recognised in statement of
profit and loss except to the extent that it relates to a business
combination, or items recognised directly in equity or in other
comprehensive income.

Current Tax

Current income tax represents the tax currently payable on
the taxable income for the year and any adjustment to the tax
in respect of the previous years. It is measured using tax rates
enacted or substantively enacted at the reporting date.

Deferred Tax

Deferred tax is provided using the balance sheet approach on
temporary differences at the reporting date between the tax
bases of assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date. Deferred
income tax asset 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 tax assets is reveiwed 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 tax asset to be utilised. Unrecognised
deferred tax assets are reassessed at each reporting date and
are recognised to the extent that it has become probable
that future taxable profits will allow the deferred tax asset
to be recovered.

Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the year when the asset is
realised or the liability is settled, based on tax rates ( and tax
laws) that have been enacted or substantively enacted at the
reporting date.

Deferred tax relating to items recognised outside profit
or loss is recognised outside the statement of profit and
loss. Deferred tax items are recognised in correlation to the
underlying transaction either in other comprehensive income
or directly in equity.

Deferred tax assets and liabilities are offset only if:

(i) entity has a legally enforceable right to set off current tax
assets against current tax liabilities; and

(ii) deferred tax assets and the deferred tax liabilities relate to
the income taxes levied by the same taxation authority.

Current and deferred tax is recognised in the statement of profit
and loss, except to the extent that it relates to items recognised
in the Other Comprehensive Income or directly in equity. In
this case, tax is also recognised in other comprehensive income
or directly in equity, respectively.