2.2 Summary of material accounting policies

a) Property, plant and equipment

Property, plant and equipment are stated at original cost of acquisition / installation (net of goods and service tax
credit availed), less accumulated depreciation and impairment loss, if any. The cost comprises purchase price, borrowing
costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for
the intended use and estimated cost for decommissioning of an asset.

b) Depreciation on property, plant and equipment

Depreciation for property, plant and equipment is the cost of an asset, or other amount substituted for cost, less its
estimated residual value.

Depreciation on property, plant and equipment is provided on straight-line method over the useful life of asset as
specified in Schedule II of the Companies Act, 2013.

c) Impairment of non-financial assets

The carrying amounts of non-financial assets are reviewed at each balance sheet date if there is any indication of
impairment based on internal / external factors. An asset is treated as impaired when the carrying amount exceeds its
recoverable value. The recoverable amount is the greater of the assets net selling price and value in use. In assessing
value in use, the estimated future cash flows are discounted to the present value using a pre-tax discount rate that
reflects current market assessment of the time value of money and risks specific to the assets. An impairment loss is
charged to the statement of profit and loss in the year in which an asset is identified as impaired. After impairment,
depreciation / amortisation is provided on the revised carrying amount of the asset over its remaining useful life. The
impairment loss recognised in prior accounting periods is reversed by crediting the statement of profit and loss if there
has been a change in the estimate of recoverable amount.

d) Derecognition of property, plant and equipment

The carrying amount of an item of property, plant and equipment assets is derecognized on disposal or when no future
economic benefits are expected from its use or disposal. The gain or loss arising from the derecognition of an item of
property, plant and equipment assets is measured as the difference between the net proceeds on disposal and the
carrying amount of the item and is recognised in the statement of profit and loss when the item is derecognized.

e) Cash and cash equivalents

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

f) Fair value measurement

The Company has an established control framework with respect to the measurement of fair values. The management
regularly reviews significant unobservable inputs and valuation adjustments. All financial assets and financial 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, or

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

If the inputs used to measure the fair value of an asset or a liability fall into different levels of a fair value hierarchy, then
the fair value measurement is categorized 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 the change has occurred.

g) Financial instruments

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

Initial recognition of financial assets and liabilities

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and 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 of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial
assets or financial liabilities at fair value through profit or loss are recognised immediately in the statement of profit
and loss. However, trade receivable that do not contain a significant financing component are measured at transaction
price.

i) Financial assets

A. Subsequent measurement

Financial assets are classified into the following specified categories: amortised cost, financial assets 'at fair
value through profit or loss' (FVTPL), and 'at fair value through other comprehensive income' (FVTOCI).
The classification depends on the Company's business model for managing the financial assets and the
contractual terms of cash flows.

Debt instrument

Amortised cost

A financial asset is subsequently measured at amortised cost if it is held with in a business model whose
objective is to hold the asset 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.

Fair value through other comprehensive income (FVTOCI)

A 'debt instrument' is classified as at the FVTOCI, if both of the following criteria are met:

a) The objective of the business model is achieved both by collecting contractual cash flows and selling
the financial assets, and

b) The asset's contractual cash flows represent solely payments of principle and interest.

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting
date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However,
the Company recognizes interest income, impairment losses, reversals and foreign exchange gain or loss in
the statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognised
in OCI is reclassified from the equity to statement of profit and loss. Interest earned whilst holding FVTOCI
debt instrument is reported as interest income using the Effective Interest Rate (EIR) method.

Fair value through profit and loss (FVTPL)

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria
for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may
elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL.
However, such election is considered only if doing so reduces or eliminates a measurement or recognition
inconsistency (referred to as 'accounting mismatch'). Debt instruments included within the FVTPL category
are measured at fair value with all changes recognized in the statement of profit and loss.

B. Derecognition of financial assets

The Company derecognises a financial asset when, the Company has transferred the rights to receive cash
flows from the financial asset or the rights have expired; or the Company retains the contractual rights to
receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to
one or more recipients in an arrangement.

Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially

all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized.
Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset,
the financial asset is not derecognized.

Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of
ownership of the financial asset, the financial asset is derecognised if the Company has not retained control
of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be
recognised to the extent of continuing involvement in the financial asset.

C. Impairment of financial assets

In accordance with Ind AS 109, the Company applies Expected Credit Losses ("ECL") model for measurement
and recognition of impairment loss on the following financial assets:

• Financial assets that are debt instruments, and are measured at amortised cost, e.g. loans and deposits;

• Trade receivables or any contractual right to receive cash or another financial asset that result from
transactions that are within the scope of Ind AS 115.

Expected Credit Losses are measured through a loss allowance at an amount equal to:

• The 12-months expected credit losses (expected credit losses that result from those default events on
the financial instrument that are possible within 12 months after the reporting date), if the credit risk
on a financial instrument has not increased significantly; or

• Full lifetime expected credit losses (expected credit losses that result from all possible default events
over the life of the financial instrument), if the credit risk on a financial instrument has increased
significantly.

In accordance with Ind AS 109 - Financial Instruments, the Company applies ECL model for measurement
and recognition of impairment loss on the trade receivables or any contractual right to receive cash or
another financial asset that result from transactions that are within the scope of Ind AS 115 - Revenue
from Contracts with Customers.

For this purpose, the Company follows 'simplified approach' for recognition of impairment loss allowance
on the trade receivable balances and contract assets. The application of simplified approach requires
expected lifetime losses to be recognised from initial recognition of the receivables based on lifetime ECLs
at each reporting date.

In case of other assets, the Company determines if there has been a significant increase in credit risk of the
financial asset since initial recognition. If the credit risk of such assets has not increased significantly, an
amount equal to twelve months ECL is measured and recognised as loss allowance. However, if credit risk
has increased significantly, an amount equal to lifetime ECL is measured and recognised as loss allowance.

When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating expected credit losses, the Company considers reasonable and
supportable information that is relevant and available without undue cost or effort. This includes both
quantitative and qualitative information and analysis, based on the Company's historical experience and
informed credit assessment and including forward looking information.

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 in order to comply with the Company's procedures for recovery of amounts due.

(ii) Financial liabilities and equity instruments

Debt or equity instruments issued by the Company are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangements and the definitions of a financial liability and an
equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of an entity
after deducting all of its liabilities. Equity shares are classified as equity. Incremental costs directly attributable to
the issue of new shares or options are shown in equity as a deduction, net of tax.

A. Subsequent Measurement

Financial liabilities measured at amortised cost

Financial liabilities are subsequently measured at amortized cost using the effective interest rate (EIR)
method. Gains and losses are recognized in statement of profit and loss when the liabilities are derecognized
as well as through the EIR amortization process. Amortized cost is calculated by taking into account any
discount or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortization
is included in finance costs in the statement of profit and loss."

Financial liabilities measured at FVTPL (fair value through profit or loss)

Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated
upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred
for the purpose of repurchasing in the near term. Financial liabilities at fair value through profit or loss are
carried in the financial statements at fair value with changes in fair value recognized in other income or
finance costs in the statement of profit and loss.

B. Derecognition of financial liabilities

A financial liability is derecognized 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 recognized in the statement of profit and loss.

(iii) Determination of fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction
between market participants at the measurement date. In determining the fair value of its financial instruments,
the Company uses a variety of methods and assumptions that are based on market conditions and risks existing
at each reporting date. The methods used to determine fair value include discounted cash flow analysis and
available quoted market prices. All methods of assessing fair value result in general approximation of value, and
such value may never actually be realized.

h) Borrowings and borrowing costs

Borrowings are initially recognised net of transaction costs incurred and subsequently measured at amortized cost.
Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the

statement of profit and loss over the period of the borrowings using the EIR. Borrowing costs that are attributable to
the acquisition or construction of qualifying assets till the time such assets are ready for intended use are capitalized
as part of cost of the assets. All other borrowing costs are expensed in the period they occur.