that price is directly observable or estimated using
another valuation technique. In estimating the fair
value of an asset or a liability, the Company takes
into account the characteristics of the asset or
liability if market participants would take those
characteristics into account when pricing the asset
or liability at the measurement date. Fair value for
measurement and/or disclosure purposes in these
financial statements is determined on such a basis,
except for leasing transactions that are within the
scope of Ind AS 116- Leases, and measurements
that have some similarities to fair value but are
not fair value, such as net realisable value in Ind
AS 2 - Inventories or value in use in Ind AS 36 -
Impairment of Assets.

Current/Non-Current Classification
All Assets and Liabilities have been classified
as current or non-current as per the Company’s
normal operating cycle

An asset is treated as current when any of the
below conditions are satisfied:

• 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 treated as current when any of the
below conditions are satisfied:

• 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.

Based on the nature of products and the time
between acquisition of assets for processing and
their realisation in cash and cash equivalents, the

Company has ascertained its operating cycle as 12
months for the purpose of current or non-current
classification of assets and liabilities. Deferred tax
assets and liabilities are classified as non-current
assets and liabilities. All the current assets and
current liabilities are expected to be realised/
settled within the period of 12 months from the
reporting date.

The principal accounting policies are set out below

c) Revenue Recognition

Revenue from contract with customers is
recognised when the Company satisfies
performance obligation by transferring promised
goods to the customer. Performance obligations
are satisfied at the point of time when the customer
obtains control of the asset.

Revenue is measured based on transaction
price, stated net of discounts, returns & goods
and service tax. Transaction price is recognised
based on the price specified in the contract, net
of the estimated sales incentives/ discounts.
Accumulated experience is used to estimate and
provide for the discounts/ right of return, using the
expected value method.

Other Income

Dividend income from investments is recognised
when the shareholder’s right to receive dividend
has been established.

Interest income from a financial asset is recognised
when it is probable that the economic benefits will
flow to the Company and the amount of income
can be measured reliably. Interest income is
accrued on a time basis, by reference to the
principal outstanding and at the effective interest
rate applicable, which is the rate that exactly
discounts estimated future cash receipts through
the expected life of the financial asset to that
asset’s net carrying amount on initial recognition.

d) Property, Plant and Equipment and
Capital Work in Progress

Property, Plant and Equipment are stated at cost
of acquisition or construction less accumulated
depreciation and impairment losses, if any. The
cost of Property, Plant and Equipment comprises
its purchase price net of any trade discounts and
rebates, any import duties and other taxes (other
than those subsequently recoverable from the tax

authorities), any directly attributable expenditure
on making the asset ready for its intended use,
other incidental expenses, decommissioning
costs, if any and interest on borrowings attributable
to acquisition of qualifying asset up to the date the
asset is ready for its intended use. Subsequent
expenditure on fixed assets after its purchase /
completion is capitalised only if such expenditure
results in an increase in the future benefits from
such asset beyond its previously assessed
standard of performance and cost can be
measured reliably.

Machinery spares that meet the definition of
property, plant and equipment are capitalised.

Property, Plant and Equipment which are not ready
for intended use as on date of Balance Sheet are
disclosed as “Capital work-in-progress”. Projects
are carried at cost comprising of direct cost and
related incidental expenses and attributable
borrowing costs, if any.

Advances given towards acquisition or construction
of property, plant and equipment outstanding
at each reporting date are disclosed as Capital
Advances under “Other non-current assets”.

An item of Property, Plant and Equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from
the continued use of asset. Any gain or loss
arising on the disposal or retirement of an item of
property, plant and equipment is determined as
the difference between the sales proceeds and the
carrying amount of the asset and is recognised in
the Statement of Profit and Loss.

Depreciation on these assets commences when
assets are ready for their intended use which is
generally on commissioning. Items of Property,
Plant and Equipment are depreciated in a
manner that amortises the cost of the assets after
commissioning less its residual value, over their
useful lives as specified in Schedule II of the Act
on a straight line basis.

Depreciation on additions/deletions during the year
is provided on pro-rata basis from/up to the date of
such addition/deletion.

Property, Plant and Equipment’s residual values
and useful lives are reviewed at each Balance
Sheet date and changes, if any, are treated as
changes in accounting estimate.

e) Intangible Assets

Intangible assets with finite useful lives that
are acquired separately are carried at cost less
accumulated amortisation and accumulated
impairment losses. Amortisation is recognised on
a straight-line basis over their estimated useful
lives so as to reflect the pattern in which the assets
economic benefits are consumed. The estimated
useful life and amortisation method are reviewed
at the end of each reporting period, with the effect
of any changes in estimate being accounted for on
a prospective basis. The amortisation of intangible
asset is included in Depreciation and Amortisation
expense in the Statement of Profit and Loss.

Software

The expenditure incurred is amortised over the
five years equally commencing from the date
of acquisition.

Technical Know-how

The expenditure incurred on Technical Know-how
is amortised over the estimated period of benefit,
not exceeding ten years commencing from the
date of acquisition.

Research & Development

Revenue expenditure pertaining to research
is charged to the Statement of Profit and Loss.
Development costs of products are also charged
to the Statement of Profit and Loss unless a
product’s technical and economic feasibility and
marketability has been established, in which
case such expenditure is capitalised. The amount
capitalised comprises expenditure that can be
directly attributed or allocated on a reasonable and
consistent basis to creating, producing and making
the asset ready for its intended use. Property,
Plant and Equipment utilised for research and
development are capitalised and depreciated in
accordance with the policies stated for Property,
Plant and Equipment.

f) Inventories

Inventories comprise all costs of purchase,
conversion and other costs incurred in bringing the
inventories to their present location and condition.

Raw materials and bought out components are
valued at the lower of cost or net realisable value.
Cost is determined on the basis of the weighted
average method.

Finished goods produced and purchased for sale,
manufactured components and work-in-progress
are carried at cost or net realisable value whichever
is lower.

Stores, spares and tools other than obsolete and
slow moving items are carried at cost. Obsolete
and slow moving items are valued at cost or
estimated net realisable value, whichever is lower.

g) Equity Investments in Subsidiaries

Equity Investments in Subsidiaries are carried
individually at cost less accumulated impairment,
if any.

h) Leases

The Company as a lessee

The Company’s lease asset classes primarily
comprise of lease for land and building. The
Company assesses whether contract contains a
lease, at inception of a contract. A contract is, or
contains, a lease if the contract conveys 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 (ROU) Asset
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 over the term of the lease.

The Right of use Asset are initially recognised 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 Asset 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. 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 liability and Right of use asset have been
separately presented in the Balance Sheet and
lease payments have been classified as financing
cash flows.

i) Foreign exchange transactions and
translations

Transactions in foreign currencies i.e. other than the
Company’s functional currency of Indian Rupees
are recognised at the rates of exchange prevailing
at the dates of the transactions. At the end of each
reporting period, monetary items denominated in
foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items
carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing
at the date when the fair value was determined.
Non-monetary items that are measured in terms
of historical cost in a foreign currency are not
retranslated. Exchange differences on revaluation
are recognised in the Statement of Profit and Loss
in the period in which they arise.

j) Employee Benefits

Employee benefits include provident fund,
employee state insurance scheme, gratuity and
compensated absences.

Defined contribution plans

The Company’s contribution to provident fund and
employee state insurance scheme are considered
as defined contribution plans and are charged as
an expense based on the amount of contribution
required to be made.

Defined benefit plans

For defined benefit plans in the form of gratuity,
the cost of providing benefits is determined using
the Projected Unit Credit method, with actuarial
valuations being carried out at each balance sheet
date. Service cost and net interest expenses or
income is recognised in the Statement of Profit
and Loss. Remeasurement, comprising actuarial
gains and losses and the return on plan assets
(excluding net interest), 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.

Short term employee benefits

A liability is recognised for benefits accruing
to employees in respect of wages and salaries,
annual leave and sick leave in the period the
related service is rendered at the undiscounted
amount of the benefits expected to be paid in
exchange for that service.

Long term Compensated absences

The employees of the Company are entitled to
compensated absences for which the Company
records the liability based on actuarial valuation
computed using projected unit credit method.
These benefits are unfunded.

k) Borrowing Costs

Borrowing costs consist of interest and other costs
incurred in connection with the borrowing of funds.
Borrowing costs also include exchange differences
to the extent regarded as an adjustment to the
borrowing costs.

All borrowing costs are charged to the Statement
of Profit and Loss except:

• Borrowing costs that are attributable to the
acquisition or construction of qualifying
tangible and intangible assets that
necessarily take a substantial period of time
to get ready for their intended use, which are
capitalised as part of the cost of such assets.

• Expenses incurred on raising long term
borrowings are amortised using effective
interest rate method over the period
of borrowings.

I nvestment Income earned on the temporary
investment of funds of specific borrowings pending
their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation.

l) Taxes on Income

Taxes on income comprises of current taxes and
deferred taxes.

Current tax is the amount of tax payable on the
taxable income for the year as determined in
accordance with the provisions of the Income Tax
Act, 1961. Current tax assets and tax liabilities are
offset where the entity has a legally enforceable
right to offset and intends either to settle on
net basis, or to realize the asset and settle the
liability simultaneously.

Deferred tax is recognised on temporary
differences, being differences between the
carrying amount of assets and liabilities and
corresponding tax bases used in the computation
of taxable profit. Deferred tax is measured
using the tax rates and the tax laws enacted or
substantively enacted as at the reporting date.
Deferred tax liabilities are recognised for all
temporary differences. Deferred tax assets are
generally recognised for all deductible temporary
differences to the extent that it is probable that
taxable profits will be available against which those
deductible temporary differences can be utilised.
Deferred tax assets and liabilities are offset if such
items relate to taxes on income levied by the same
governing tax laws and the Company has a legally
enforceable right for such set off. Deferred tax
assets are reviewed at each balance sheet date
for their realisability.

Current and deferred tax are recognised in
profit or loss, except when they relate to items
that are recognised in Other Comprehensive
Income or directly in equity, in which case, the
current and deferred tax are also recognised
in Other Comprehensive Income or directly in
equity respectively.

m) Impairment of Property, Plant and
Equipment and Intangible Assets

The carrying values of assets / cash generating
units at each balance sheet date are reviewed
for impairment. If any indication of impairment
exists, the recoverable amount of such assets is
estimated and impairment is recognised, if the
carrying amount of these assets exceeds their
recoverable amount. The recoverable amount is
the greater of the net selling price and their value
in use. Value in use is arrived at by discounting the
future cash flows to their present value based on
an appropriate pre-tax discount rate to determine
whether there is any indication that those assets
have suffered any impairment loss. When there is
indication that an impairment loss recognised for
an asset in earlier accounting periods no longer

exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of
Profit and Loss, except in case of revalued assets.