2. MATERIAL ACCOUNTING POLICIES

Material accounting policies adopted by the company
are as under:

2.1 Basis of Preparation of Financial Statements

(a) . Statement of Compliance with Ind AS

These financial statements have been prepared
in accordance with Indian Accounting Standards
(Ind AS) notified under Section 133 of the
Companies Act, 2013 (the "Act") read with the
Companies (Indian Accounting Standards)
Rules, 2015 (as amended from time to time) and
presentation requirements of Division II of
Schedule III to the Companies Act, 2013, (Ind AS
compliant Schedule III).

Accounting policies have been consistently
applied to all the years presented except where a
newly issued accounting standard is initially
adopted or a revision to an existing accounting
standard requires a change in the accounting
policy hitherto in use.

(b) . Basis of measurement

The financial statements have been prepared on
a historical cost convention on accrual basis,
except for the following:

i) certain financial assets and liabilities that is
measured at fair value.

ii) defined benefit plans -plan assets measured
at fair value.

(cl. Current / non current classification

"The Company has ascertained its operating
cycle as twelve months for the purpose of
Current/ Non-Current classification of its Assets
and Liabilities. The Company presents assets
and liabilities in the balance sheet based on
current/ non-current classification."

"An asset is treated as current when it is:

• Expected to be realised or intended to be sold
or consumed in normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realised within twelve months
after the reporting period, or

• 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:

• It is expected to be settled in normal operating
cycle

• It is held primarily for the purpose of trading

• It is due to be settled within twelve months
after the reporting period, or

• There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period"

All other liabilities are classified as non-current.
(d). Use of estimates

The preparation of financial statements in
conformity with Ind AS requires the
Management to make estimate and
assumptions that affect the reported amount of
assets and liabilities as at the Balance Sheet
date, reported amount of revenue and expenses
for the year and disclosures of contingent
liabilities as at the Balance Sheet date. The
estimates and assumptions used in the
accompanying financial statements are based
upon the Management's evaluation of the
relevant facts and circumstances as at the date
of the financial statements. Actual results could
differ from these estimates. Estimates and
underlying assumptions are reviewed on a
periodic basis. Revisions to accounting
estimates, if any, are recognized in the year in
which the estimates are revised and in any future
years affected. Refer Note 3 for detailed
discussion on estimates and judgments.

(e). Rounding off of amounts

AH amounts disclosed in the financial
statements and notes have been rounded off to
the nearest million as per the requirement of
Schedule III, unless otherwise stated.

2.2 Property, plant and equipment

Freehold land is carried at historical cost. All
other items of property, plant and equipment are
stated at historical cost less depreciation and
impairment if any. Historical cost includes
expenditure that is directly attributable to the
acquisition of the items.

Subsequent costs are included in the asset's
carrying amount or recognized as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with
the item will flow to the Company and the cost of
the item can be measured reliably. The carrying
amount of any component accounted for as a
separate asset is derecognized when replaced.
All other repairs and maintenance are charged
to Statement of Profit and Loss during the year in
which they are incurred.

Advances paid towards the acquisition of
property, plant and equipment outstanding at
each balance sheet date is classified as capital
advances under other non-current assets and
the cost of assets not put to use before such date
are disclosed under 'Capital work-in-progress'.

Depreciation methods, estimated useful lives

The Company depreciates property, plant and
equipment over their estimated useful lives
using the straight line method. The estimated
useful lives of assets are as follows:

Gains and losses on disposals are determined by
comparing proceeds with carrying amount.
These are included in Statement of Profit and
Loss under 'Other Income'.

Depreciation methods, useful lives and residual
values are reviewed periodically at each
financial year end and adjusted prospectively, as
appropriate.

2.3 Intangible assets

"Intangible assets are stated at cost of
acquisition net of recoverable taxes less
accumulated amortisation/ depletion and
impairment loss, if any. The cost comprises of
purchase price, borrowing costs and any cost
directly attributable to bringing the asset to its
working condition for the intended use.

Expenditure incurred on acquisition of
intangible assets which are not ready to use at
the reporting date is disclosed under "Intangible
assets under development".

Amortisation method and periods

"Amortisation is charged on a straight-line basis
over the estimated useful lives. The estimated
useful lives and amortization method are
reviewed at the end of each annual reporting
period, with the effect of any changes in the
estimate being accounted for on a prospective
basis. "

The Company amortized intangible assets over
their estimated useful lives using the straight
line method. The estimated useful lives of
intangible assets are as follows:

- management intends to complete the asset to
use it or sell it

- there is an ability to use or sell the asset

- it can be demonstrated how the asset will
generate probable future economic benefits

- adequate technical, financial and other
resources to complete the development and to
use or sell the asset are available and

- the expenditure attributable to the asset during
its development can be reliably measured"

Directly attributable costs that are capitalised as
part of the asset include employee cost and
appropriate portion of relevant overheads.
Capitalised development costs are recorded as
intangible assets and amortised from the point
at which the asset is available for future use.

Development expenditure that do not meet the
above criteria are recognised as expense as
incurred. Development costs previously
recognised as expense are not recognised as an
asset in the subsequent period.

2.5 Impairment of non financial assets

Property, plant and equipment and intangible
assets with finite life are evaluated for
recoverability whenever there is any indication
that their carrying amounts may not be
recoverable. If any such indication exists, the
recoverable amount (i.e. higher of the fair value
less cost to sell and the value-in-use) is
determined on an individual asset basis unless
the asset does not generate cash flows that are
largely independent of those from other assets.
In such cases, the recoverable amount is
determined for the cash generating unit (CGU) to
which the asset belongs.

If such assets are considered to be impaired, the
impairment to be recognized in the Statement of
Profit and Loss is measured by the amount by
which the carrying value of the assets exceeds
the estimated recoverable amount of the asset.
An impairment loss is reversed in the statement
of profit and loss if there has been a change in
the estimates used to determine the recoverable
amount. The carrying amount of the asset is
increased to its revised recoverable amount,
provided that this amount does not exceed the
carrying amount that would have been
determined (net of any accumulated
amortization or depreciation) had no
impairment loss been recognized for the asset in
prior years.

For non financial assets, an assessment is made
at each reporting period end or whenever
triggering event occurs as to whether there is

any indication that previously recognised
impairment losses may no longer exist or may
have decreased. If such indication exists, the
Company makes an estimation of the
recoverable amount.

A previously recognised impairment loss is
reversed only if there has been a change in the
estimations used to determine the asset's
recoverable amount since the last impairment
loss was recognised. If that is the case the
carrying amount of the asset is increased to its
recoverable amount. That increased amount
cannot exceed the carrying amount that would
have been determined, net of depreciation, or
had no impairment loss been recognised for the
asset in prior years.

2.6 Foreign currency transactions

(a) . Functional and presentation currency

Items included in the financial statements are
measured using the currency of the primary
economic environment in which the entity
operates ('the functional currency'). The
financial statements are presented in Indian
rupee (INR), which is the Company's functional
and presentation currency.

(b) . Transactions and balances

Foreign currency transactions are translated
into the functional currency using the exchange
rates prevailing at the dates of the transactions.
All exchange differences arising on reporting on
foreign currency monetary items at rates
different from those at which they were initially
recorded are recognised in the Statement of
Profit and Loss except to the extent of exchange
differences which are regarded as an
adjustment to interest costs on foreign currency
borrowings that are directly attributable to the
acquisition or construction of qualifying assets
which are capitalized as cost of assets.

In respect of foreign exchange differences
arising on restatement or settlement of long
term foreign currency monetary items
attributable to depreciable assets, the Company
has availed the option available in Ind AS 101 to
continue the policy adopted for accounting for
exchange differences arising from translation of
long-term foreign currency monetary items,
wherein foreign exchange differences on
account of depreciable asset, are adjusted in the
cost of depreciable asset and would be
depreciated over the balance life of asset.

Non-monetary items that are measured at
historical cost in a foreign currency, are
translated using the exchange rate at the date of

the transaction. Non-monetary items that are
measured at fair value in a foreign currency, are
translated using the exchange rates at the date
when the fair value is measured.

2.7 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:

? 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 accessible to the Company."

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair
value, maximizing the use of relevant observable
inputs and minimizing the use of unobservable
inputs. The Company's management
determines the policies and procedures for fair
value measurement such as derivative
instrument.

"All assets and liabilities for which fair value is
measured or disclosed in the financial
statements are categorized 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"

2.8 Revenue recognition

Revenue from Sale of Goods and Services

Revenue from sale of goods is recognised when
control of the products being sold is transferred
to customers and when there are no longer any
unfulfilled obligations. The Performance
Obligations in contracts are fulfilled at the time
of dispatch, delivery or upon formal customer

acceptance depending on customer terms.

Revenue from irrevocable bill and hold contracts
is recognised when the customer has the ability
to direct the use of, and obtain substantially all of
the remaining benefits from, the product even
though the customer has decided not to exercise
its right to take physical possession of that
product.

Revenue is measured at fair value of the
consideration received or receivable, after
deduction of any trade discounts, volume
rebates and any taxes or duties collected on
behalf of the government such as goods and
services tax, etc. Revenue is only recognised to
the extent that it is highly probable a significant
reversal will not occur.

Income from services rendered is recognised
based on agreements/arrangements with the
customers as the service is performed and there
are no unfulfilled obligations.

Export benefits

"Duty free imports of raw materials under
Advance License for imports as per the Import
and Export Policy are matched with the exports
made against the said licenses and the net
benefit / obligation is accounted by making
suitable adjustments in raw material
consumption.

The benefit accrued under the Duty Drawback,
Focus Market Scheme, Merchandise Exports
from India Scheme and other schemes as per
the Import and Export Policy in respect of
exports made under the said schemes are
accounted in the year of export and included
under the head 'Other operating revenue'."

Interest income

Interest Income is recognised on a basis of
effective interest method as set out in Ind AS 109,
Financial Instruments, and where no significant
uncertainty as to measurability or collectability
exists.

2.9 Taxes

Tax expense for the year, comprising current tax
and deferred tax, are included in the
determination of the net profit or loss for the
year.

(a). Current income tax

Current tax assets and liabilities are measured
at the amount expected to be recovered or paid
to the taxation authorities. The tax rates and tax
laws used to compute the amount are those that
are enacted or substantively enacted, at the year

end date. Current tax assets and tax liabilities
are offset where the entity has a legally
enforceable right to offset and intends either to
settle on a net basis, or to realize the asset and
settle the liability simultaneously.

(b). Deferred tax

"Deferred income tax is provided, using the
balance sheet approach, on all temporary
differences arising between the tax bases of
assets and liabilities and their carrying amounts
in financial statements. Deferred income tax is
not accounted for if it arises from initial
recognition of an asset or liability in a
transaction other than a business combination
that at the time of the transaction affects neither
accounting profit nor taxable profit (tax loss).
Deferred income tax is determined using tax
rates (and laws) that have been enacted or
substantially enacted by the end of the year and
are expected to apply when the related deferred
income tax asset is realised or the deferred
income tax liability is settled.

Deferred tax assets are recognised for all
deductible temporary differences and unused
tax losses only if it is probable that future taxable
amounts will be available to utilize those
temporary differences and losses.

Management periodically evaluates positions
taken in tax returns with respect to situations in
which applicable tax regulation is subject to
interpretation. It establishes provisions where
appropriate on the basis of amounts expected to
be paid to the tax authorities

Deferred tax assets and liabilities are offset
when there is a legally enforceable right to offset
current tax assets and liabilities and when the
deferred tax balances relate to the same
taxation authority."

Current and deferred tax is recognized in
Statement of Profit and Loss, except to the
extent that it relates to items recognised in other
comprehensive income or directly in equity. In
this case, the tax is also recognised in other
comprehensive income or directly in equity,
respectively.

Minimum Alternate Tax credit is recognised as
deferred tax asset only when and to the extent
there is convincing evidence that the Company
will pay normal income tax during the specified
period. Such asset is reviewed at each Balance
Sheet date and the carrying amount of the MAT
credit asset is written down to the extent there is
no longer a convincing evidence to the effect that
the Company will pay normal income tax during
the specified period.

2.10 Leases
As a lessee

"Leases are recognised as a right-of-use asset
and a corresponding liability at the date at which
the leased asset is available for use by the
Company. Contracts may contain both lease and
non-lease components. The Company allocates
the consideration in the contract to the lease and
non-lease components based on their relative
stand-alone prices.

Assets and liabilities arising from a lease are
initially measured on a present value basis.
Lease liabilities include the net present value of
fixed payments (including in-substance fixed
payments), less any lease incentives receivable.

Lease payments to be made under reasonably
certain extension options are also included in
the measurement of the liability. The lease
payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily
determined, which is generally the case for
leases in the company, the lessee's incremental
borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar
value to the right-of-use asset in a similar
economic environment with similar terms,
security and conditions."

Lease payments are allocated between principal
and finance cost. The finance cost is charged to
profit or loss over the lease period so as to
produce a constant periodic rate of interest on
the remaining balance of the liability for each
period.

"Right-of-use assets are measured at cost
comprising the following:

• the amount of the initial measurement of lease
liability

• any lease payments made at or before the
commencement date less any lease incentives
received

• any initial direct costs, and

• restoration costs.

"Right-of-use assets are generally depreciated
over the shorter of the asset's useful life and the
lease term on a straight-line basis. If the
Company is reasonably certain to exercise a
purchase option, the right-of-use asset is
depreciated over the underlying asset's useful
life.

Payments associated with short-term leases of
equipment and all leases of low-value assets are
recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are

leases with a lease term of 12 months or less."

2.11 Inventories

Raw materials, stores, consumables, work in
progress, traded goods and finished goods are
valued at the lower of cost and net realisable
value.

Cost of raw materials, stores, consumables and
traded goods includes purchase price,
(excluding those subsequently recoverable by
the Company from the concerned revenue
authorities), freight inwards and other
expenditure incurred in bringing such
inventories to their present location and
condition. In determining the cost, weighted
average cost method is used.

Cost of work in progress and manufactured
finished goods is determined on the weighted
average basis and comprises direct material,
cost of conversion and other costs incurred in
bringing these inventories to their present
location and condition.

Provision of obsolescence on inventories is
considered on the basis of management's
estimate based on demand and market of the
inventories. Net realizable value is the
estimated selling price in the ordinary course of
business, less the estimated cost of completion
and the estimated costs necessary to make the
sale.

The comparison of cost and net realizable value
is made on item by item basis.