2. Material accounting policies

2A. Basis of preparation

i) Statement of compliance

The financial statements have been prepared in accordance
with the Indian Accounting Standards (referred to as "Ind
AS”) prescribed under Section 133 of the Companies Act,
2013 (the Act) read with Companies (Indian Accounting
Standards) Rules, 2015, as amended from time to time and
other relevant provisions of the Act.

ii) Historical cost convention

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

• certain financial assets and liabilities (including derivative
instruments) are measured at fair value

• defined benefit plans

• Equity settled ESOP at grant date fair value

iii) New and amended standards adopted by the
Company

The Ministry of Corporate Affairs vide notification dated
September 28, 2024, notified Companies (Indian Accounting
Standards) Amendment Rules, 2023 which amended certain
accounting standards, and are effective from the date of
notification. These amendments did not have any material
impact on the amounts recognised in prior periods and
are not expected to significantly affect the current or
future periods.

iv) New and amended standards issued but not
effective

There are no standards that are notified and not yet effective
as on the date.

2B. Summary of material accounting policies

a) Current versus non-current classification

The Company segregates assets and liabilities into current
and non-current categories for presentation in the balance
sheet after considering its normal operating cycle and
other criteria set out in Ind AS 1, "Presentation of Financial
Statements”. For this purpose, current assets and liabilities
include the current portion of non-current assets and
liabilities respectively. Deferred tax assets and liabilities
are always classified as non-current.

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 period up to
twelve months as its operating cycle.

b) Property plant & equipment

Property, plant and equipment are stated at cost, net of
accumulated depreciation and accumulated impairment
losses, if any. The cost comprises purchase price, borrowing
costs if capitalisation criteria are met and directly
attributable cost of bringing the qualifying asset to its
working condition for the intended use. Any trade discounts
and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to an item of property,
plant and equipment is included in asset's carrying amount
or recognised 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 cost of the item can
be measured reliably. All other repairs and maintenance are
charged to the Statement of Profit and Loss for the period
during which they are 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.

Cost incurred on property, plant and equipment not ready for
their intended use is disclosed as Capital Work-in-Progress
and is stated at cost, net of accumulated impairment loss,
if any. Advances paid towards the acquisition of property,
plant and equipment outstanding at each balance sheet
date are classified as capital advances under other non¬
current assets.

An item of property, plant and equipment and any significant
part initially recognised is derecognised upon disposal or
when no future economic benefits are expected from its
use or disposal. Gains or losses arising from derecognition
of property, plant and equipment are measured as the

The assets' residual values, useful lives and methods of
depreciation are reviewed at each reporting period and
adjusted prospectively for any change in estimate, if
appropriate. Changes in expected useful lives are treated
as change in accounting estimate.

c) Intangible assets

Intangible assets acquired separately are measured on initial
recognition at cost. The useful lives of intangible assets are
assessed as either finite or indefinite.

Following, initial recognition, intangible assets with finite
lives are carried at cost less accumulated amortisation and
accumulated impairment losses, if any. Internally generated
intangible assets, excluding capitalised development costs,
are not capitalised and expenditure is reflected in the
Statement of Profit and Loss in the period/year in which
the expenditure is incurred.

Intangible assets with finite lives are amortised over the
useful economic life and assessed for impairment whenever
there is an indication that the intangible asset may be
impaired. The amortisation period and the amortisation
method for an intangible asset with a finite useful life
are reviewed at least at the end of each reporting period.
Changes in the expected useful life or the expected pattern
of consumption of future economic benefits embodied in
the asset are considered to modify the amortisation period
or method, as appropriate, and are treated as changes
in accounting estimates. The amortisation expense on
intangible assets with finite lives is recognised in the
Statement of Profit and Loss unless such expenditure forms
part of carrying value of another asset.

Intangible assets with indefinite useful lives are not amortised,
but are tested for impairment annually, either individually
or at the cash-generating unit level. The assessment of

Research and development costs

Research costs are expensed as incurred. Development
expenditures on an individual project are recognised as an
intangible asset when the Company can demonstrate:

• The technical feasibility of completing the intangible
asset so that the asset will be available for use or sale

• Its intention to complete and its ability and intention to
use or sell the asset

• How the asset will generate future economic benefits

• The availability of resources to complete the asset

• The ability to measure reliably the expenditure
during development.

Following initial recognition of the development expenditure
as an asset, the asset is carried at cost less any accumulated
amortisation and accumulated impairment losses.
Amortisation of the asset begins when development is
complete, and the asset is available for use. It is amortised
over the period of expected future benefit. Amortisation
expense is recognised in the Statement of Profit and Loss
unless such expenditure forms part of carrying value of
another asset. During the period of development, the asset
is tested for impairment annually.

d) Impairment of non-financial assets

The carrying amounts of assets are reviewed at each balance
sheet date. If there is any indication of impairment based on
internal/external factors, an impairment loss is recognised,

i.e. wherever the carrying amount of an asset exceeds
its recoverable amount. The recoverable amount is the
greater of the assets net fair value and value in use. A
recoverable amount is determined for an individual asset,
unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups
of assets. When the carrying amount of an asset or Cash
Generating Unit (CGU) exceeds its recoverable amount,
the asset is considered impaired and is written down to its
recoverable amount.

In assessing value in use, the estimated future cash flows are
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 asset. After
impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.

The Company bases its impairment calculation on most
recent budgets and forecast calculations, which are prepared
for the Company's CGUs to which the individual assets are
allocated. These budgets and forecast calculations generally
cover a period of five years. A long-term growth rate is
calculated and applied to project future cash flows after
the fifth year.

Impairment losses are recognised in the Statement of Profit
and Loss.

An assessment is made at each reporting date to determine
whether there is an indication that previously recognised
impairment losses no longer exist or have decreased. If
such indication exists, the Company estimates the asset's
or CGU's recoverable amount. A previously recognised
impairment loss is reversed only if there has been a change in
the assumptions used to determine the asset's recoverable
amount since the last impairment loss was recognised. The
reversal is limited so that the carrying amount of the asset
does not exceed its recoverable amount, nor exceed the
carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for
the asset in prior years. Such reversal is recognised in the
Statement of Profit or Loss unless the asset is carried at a
revalued amount, in which case, the reversal is treated as
a revaluation increase.

e) Inventories

Inventories are valued at the lower of cost and net
realisable value.

Costs incurred in bringing each product to its present
location and condition are accounted for as follows:

• Raw materials: Cost includes cost of purchase and other
costs incurred in bringing the inventories to their present
location and condition. Cost is determined on first in,
first out basis.

• Finished goods and work-in-progress (Manufactured
Goods): Cost includes cost of direct materials and labour,
and a proportion of manufacturing overheads based on
the normal operating capacity but excluding borrowing
costs. Cost is determined on first in, first out basis.

• Stock in trade (Traded Goods): Cost includes cost of
purchase and other costs incurred in bringing the
inventories to their present location and condition. Cost
is determined on first in, first out basis.

Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs of
completion necessary to make the sale.

An inventory provision is recognised for cases where the net
realisable value is estimated to be lower than the inventory
carrying value. The net realisable value is estimated taking
into account various factors, including obsolescence
of material due to design change, process change etc.,
unserviceable items i.e. items which cannot be used due
to deterioration in quality or due to shelf life or damaged in
storage and ageing of material i.e. slow moving/non-moving
prevailing sales prices of inventory.

f) Leases

The Company assesses at contract inception whether a
contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset
for a period of time in exchange for consideration.

Company as a lessee:

The Company applies a single recognition and measurement
approach for all leases, except for short-term leases and
leases of low-value assets. The Company recognises lease
liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.

i. Right of use assets (ROU asset)

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 remeasurement 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 primary lease term.

The right of use assets are also subject to impairment.
Refer to the accounting policies in section (e)
impairment of non-financial 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.

ii. Lease liabilities:

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 (including
in-substance 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.

iii. Short-term leases and leases of low value
assets:

The Company applies the short-term lease recognition
exemption to its short-term leases of property (i.e.,
those leases that have a lease term of 12 months or
less from the commencement date and do not contain
a purchase option). It also applies the lease of low-
value assets recognition exemption to leases where
the underlying asset is considered to be low value.

Lease payments on short-term leases and leases
of low-value assets are recognised as expense on a
straight-line basis over the lease term.

I. Initial recognition and measurement:

All Financial assets and liabilities are classified, at initial
recognition, as subsequently measured at amortised
cost, fair value through other comprehensive income
(OCI), and fair value through profit or loss.

Financial Assets

The classification of financial assets at initial recognition
depends on the financial asset's contractual cash flow
characteristics and the Company's business model
for managing them. With the exception of trade
receivables that do not contain a significant financing
component or for which the Company has applied the
practical expedient, the Company initially measures a
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 that do not contain a significant
financing component or for which the Company has
applied the practical expedient are measured at the
transaction price as disclosed in section 2B(i) Revenue
from contracts with customers.

In order for a financial asset to be classified and
measured at amortised cost or fair value through OCI, it
needs to give rise to cash flows that are 'solely payments
of principal and interest (SPPI)' on the principal amount
outstanding. This assessment is referred to as the
SPPI test and is performed at an instrument level.
Financial assets with cash flows that are not SPPI are
classified and measured at fair value through profit or
loss, irrespective of the business model.

The Company's business model for managing financial
assets refers to how it manages its financial assets
in order to generate cash flows. The business
model determines whether cash flows will result
from collecting contractual cash flows, selling the
financial assets, or both. Financial assets classified
and measured at amortised cost are held within a
business model with the objective to hold financial
assets in order to collect contractual cash flows while
financial assets classified and measured at fair value
through OCI are held within a business model with the
objective of both holding to collect contractual cash
flows and selling.

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.

Financial Liabilities

Financial liabilities are classified, at initial recognition,
as financial liabilities at fair value through profit or
loss, loans and borrowings, payables, or as derivatives
designated as hedging instruments in an effective
hedge, as appropriate.

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.

Subsequent measurement:
i. Financial assets

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

• Financial assets at amortised cost (debt
instruments)

• Financial assets at fair value through other
comprehensive income (FVTOCI) with
recycling of cumulative gains and losses (debt
instruments)

• Financial assets designated at fair value
through OCI with no recycling of cumulative
gains and losses upon derecognition (equity
instruments)

• Financial assets at fair value though profit
or loss.

Financial assets at amortised cost (debt
instruments)

A 'financial asset' 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.

Financial assets at amortised cost are subsequently
measured using the effective interest (EIR) method
and are subject to impairment. Gains and losses
are recognised in profit or loss when the asset is
derecognised, modified, or impaired.

The Company's financial assets at amortised cost
includes trade and other receivables, loans to
employees and loan to subsidiaries.

Financial assets at fair value through
other comprehensive income (FVTOCI)
(debt instruments)

A 'financial asset' 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 SPPI.

Debt instruments included within the FVTOCI category
are measured initially as well as at each reporting date
at fair value. For debt instruments, at fair value through
OCI, interest income, foreign exchange revaluation and
impairment losses or reversals are recognised in the
profit or loss and computed in the same manner as
for financial assets measured at amortised cost. The
remaining fair value changes are recognised in OCI.

Upon derecognition, the cumulative fair value changes
recognised in OCI is reclassified from the equity to
profit or loss.

Financial Assets designated at fair value
through OCI (equity instruments)

Upon initial recognition, the Company can elect to
classify irrevocably its equity investments as equity
instruments designated at fair value through OCI when
they meet the definition of equity under Ind AS 32
Financial Instruments: Presentation and are not held
for trading. The classification is determined on an
instrument-by-instrument basis. Gains and losses on
these financial assets are never recycled to profit
or loss. Dividends are recognised as other income
in the Statement of Profit and Loss when the right
of payment has been established, except when the
Company benefits from such proceeds as a recovery
of part of the cost of the financial asset, in which case,
such gains are recorded in OCI. Equity instruments
designated at fair value through OCI are not subject to
impairment assessment. The Company has elected to
classify irrevocably its non-listed equity investments
under this category.

Financial assets at fair value through
profit or loss (FVTPL)

Financial assets are measured at fair value through
profit or loss unless it measured at amortised cost
or fair value through other comprehensive income
on initial recognition. The transaction cost directly
attributable to the acquisition of financial assets
and liabilities at fair value through profit or loss are

immediately recognised in the Statement of Profit
and Loss.

ii. Financial liabilities

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
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. For liabilities designated as FVTPL, fair
value gains/ losses attributable to changes in own
credit risk are recognised in OCI. These gains/ losses
are not subsequently transferred to P&L. However,
the Company may transfer the cumulative gain or
loss within equity. All other changes in fair value of
such liability are recognised in the Statement of Profit
and Loss.

Financial liabilities at amortised cost
(loans and borrowings)

Financial liabilities are measured at amortised cost at
the end of subsequent accounting periods. The carrying
amounts of financial liabilities that are subsequently
measured at amortised cost are determined based on
the effective interest method.

The effective interest method is a method of
calculating the amortised cost of a financial liability
and of allocating interest expense over the relevant
period. The effective interest rate is the rate that
exactly discounts estimated future cash payments
(including all fees and points paid or received that
form an integral part of the effective interest rate,
transaction costs and other premiums or discounts)
through the expected life of the financial liability, or
(where appropriate) a shorter period, to the net carrying
amount on initial recognition.

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 when appropriate, the

cumulative amount of income recognised in accordance
with the principles of Ind AS 115.

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

Derecognition
Financial Assets

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 statement of financial position) 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' arrangements 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.

On derecognition of a financial asset, the difference
between the asset's carrying amount and the sum
of the consideration received and receivable and the
cumulative gain or loss that had been recognised in
other comprehensive income and accumulated in
equity is recognised in Statement of Profit and Loss if
such gain or loss would have otherwise been recognised
in Statement of Profit and Loss on disposal of that
financial asset.

Financial Liabilities

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 or Loss.

II. Impairment of financial assets:

In accordance with Ind AS 109, the Company applies
simplified Expected Credit Loss (ECL) model for
measurement and recognition of impairment loss for
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
and do not contain significant financing components.

The Company applies general approach for recognition
of expected credit losses on all other financial assets.

The Company assesses on a forward-looking basis
the expected credit losses associated with its assets
carried at amortised cost and FVOCI debt instruments.
The impairment methodology applied depends on
whether there has been a significant increase in
credit risk.

Trade receivables are written off when there is no
reasonable expectation of recovery.

III. 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 realise the assets and settle
the liabilities simultaneously.

Reclassification of financial assets

The Company determines classification of financial
assets and liabilities on initial recognition. After
initial recognition, no reclassification is made for
financial assets which are equity instruments and
financial liabilities. For financial assets which are debt
instruments, a reclassification is made only if there is
a change in the business model for managing those
assets. Changes to the business model are expected
to be infrequent. The Company's senior management
determines change in the business model as a result
of external or internal changes which are significant to
the Company's operations. Such changes are evident to
external parties. A change in the business model occurs
when the Company either begins or ceases to perform
an activity that is significant to its operations. If the
Company reclassifies financial assets, it applies the
reclassification prospectively from the reclassification
date which is the first day of the immediately next
reporting period following the change in business
model. The Company does not restate any previously
recognised gains, losses (including impairment gains
or losses) or interest.

IV. Investment in subsidiaries and associates

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

h) Revenue recognition:

I. Revenue from contracts with customers

Revenue from contracts with customers is recognised
when control of the goods or services are transferred
to the customer at an amount that reflects the
consideration to which an entity expects to be entitled
in exchange for transferring goods or services to
a customer.

Revenue towards satisfaction of a performance
obligation is measured at the amount of transaction
price (net of variable consideration) allocated to that
performance obligation. The transaction price of
goods sold, and services rendered is net of variable
consideration on account of discounts offered by
the Company as part of the contract. This variable
consideration is estimated based on the expected value
of outflow. Revenue (net of variable consideration) is
recognised only to the extent that it is highly probable
that the amount will not be subject to significant
reversal when uncertainty relating to its recognition
is resolved.

The Company identifies the performance obligations in
its contracts with customers and recognises revenue
as and when the performance obligations are satisfied.
The specific recognition criteria described below must
also be met before revenue is recognised.

Sale of products:

Revenue is recognised upon transfer of control of
promised products to customer in an amount that
reflects the consideration which the Company expects

to receive in exchange for products. Revenue from
the sale of products is recognised when products are
delivered to customer. Revenue is measured based
on the transaction price, which is the consideration,
adjusted for volume discounts, rebates, scheme
allowances, price concessions, incentives, and returns,
if any, as specified in the contracts with the customers.

Contacts where the Company's obligation is to arrange
for the provision of goods and services by another
party, the Company recognises revenue in the amount
of the commission to which it expects to be entitled
in exchange for arranging for the provision of goods
and services.

Revenue excludes taxes collected from customers
on behalf of the government. Accruals for discounts/
incentives and returns are estimated (using the most
likely method) based on accumulated experience and
underlying schemes and agreements with customers.
Due to the short nature of credit period given to
customers, there is no financing component in
the contract.

ii. Contract balances
Contract assets

A contract asset is the right to consideration in exchange
for products or services transferred to the customer.
If the Company performs by transferring products
or services to a customer before the customer pays
consideration or before payment is due, a contract
asset is recognised for the earned consideration that
is conditional.

Trade receivables

A receivable represents the Company's right to an
amount of consideration that is unconditional (i.e., only

the passage of time is required before payment of the
consideration is due). Refer to accounting policies of
financial assets in section - Financial instruments -
initial recognition and subsequent measurement.

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 transfers goods
or 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.

II. Interest income:

Interest income is accrued on time basis, by reference
to the principle outstanding and using the effective
interest rate method. Interest income is included under
the head "Other income” in the Statement of Profit
and Loss.