III. MATERIAL ACCOUNTING POLICY

The Company has consistently applied the following accounting policies to all periods presented in the
financial statements.

1.01 PROPERTY, PLANT AND EQUIPMENT:

Property, Plant and Equipment are stated at cost, net of recoverable taxes, trade discount and rebates
less accumulated depreciation and impairment losses, if any. Such cost includes purchase price,
borrowing cost and any cost directly attributable to bringing the assets to its working condition for its
intended use. Other Indirect Expenses incurred relating to project, net of income earned during the
project development stage prior to its intended use, are considered as pre-operative expenses and
disclosed under Capital Work-in-Progress. Subsequent expenditure is capitalised only when it increases
the future economic benefits embodied in the specific asset to which it relates. Property, plant and
equipment is eliminated from the financial statements on disposal and gain or loss is recognised in
Statement of Profit and Loss. Depreciation is provided based on useful life of the assets as prescribed in
Schedule II to the Companies Act, 2013. The residual values, useful lives and methods of depreciation
of Property, Plant and Equipment are reviewed at each financial year end and adjusted prospectively,
if appropriate.

1.02 INTANGIBLE ASSETS:

Intangible assets are initially measured at cost and subsequently measured at cost less accumulated
amortisation and any accumulated impairment losses. Subsequent expenditure is capitalised only
when it increases the future economic benefits embodied in the specific asset to which it relates.
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values
over their estimated useful lives using the straight-line method, and is included in depreciation and
amortisation in Statement of Profit and Loss. The estimated useful lives for computer software is 5
years. Amortisation method, useful lives are reviewed at the end of each financial year and adjusted
if appropriate.

1.03 IMPAIRMENT:

The Company's non-financial assets other than inventories are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists, then the asset's
recoverable amount is estimated and difference is recognised as impairment losses in Statement of
Profit and Loss.

1.04 INVENTORIES:

Inventories which comprise raw materials, work-in-progress, finished goods, stores and spares are
measured at the lower of cost and net realisable value. The cost of inventories is ascertained on the
'weighted average' basis, and includes expenditure incurred in acquiring the inventories, production
or conversion costs and other costs incurred in bringing them to their present location and condition.

1.05 FINANCIAL INSTRUMENTS:

Financial assets

On initial recognition, a financial asset is classified and measured at Amortised cost or Fair value
through Profit or Loss (FVTPL) or Fair value through Other Comprehensive Income (FVTOCI). Financial
assets at FVTPL are subsequently measured at fair value. Net gains and losses, including any interest or
dividend income, are recognised in Statement of Profit and Loss. Financial assets at amortised cost are
subsequently measured at amortised cost using the effective interest rate (EIR) method. The amortised
cost is reduced by impairment losses, if any. Interest income, foreign exchange gains and losses and
impairment are recognised in Statement of Profit and Loss. Any gain or loss on derecognition is
recognised in Statement of Profit and Loss.

The Company uses 'Expected Credit Loss' (ECL) model, for evaluating impairment of Financial Assets
other than those measured at Fair Value Through Profit or Loss (FVTPL). For Trade Receivables, the
Company applies 'simplified approach' which requires provision based on historical credit loss
experience. For other assets, the Company uses 12 month ECL to provide for impairment loss where
there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL
is used.

Financial liabilities

Financial liabilities are classified and measured at amortised cost or FVTPL. Financial liabilities at FVTPL
are measured at fair value and net gains and losses are recognised in Statement of Profit and Loss
that includes derivative financial instruments entered into by the Company. Other financial liabilities
are subsequently measured at amortised cost using the effective interest rate (EIR) method. Interest
expense and foreign exchange gains and losses are recognised in Statement of Profit and Loss. Any gain
or loss on derecognition is also recognised in Statement of Profit and Loss. Interest bearing loans and
borrowings are subsequently measured at amortised cost using the EIR method. For trade and other
payables maturing within one year from the balance sheet date, the carrying amounts approximates
fair value due to the short maturity of these instruments.

Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the balance sheet
when and only when, the Company currently has a legally enforceable right to set off the amounts and
it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

Derivative financial instruments

The Company holds derivative financial instruments, such as foreign currency forward contracts to
hedge its foreign currency risk exposures. Derivatives are initially measured at fair value. Subsequent
to initial recognition, derivatives are measured at fair value, and changes therein are recognised in
Statement of Profit and Loss. Derivatives are carried as financial assets when the fair value is positive
and as financial liabilities when the fair value is negative.

1.06 REVENUE RECOGNITION:

Revenue from contracts with customers is recognised when control of the goods are transferred to
the customer at an amount that reflects the consideration entitled in exchange for those goods and
there is no unfulfilled obligation that could affect the dealer's acceptance of the products. The goods
are sold with annual volume discounts, cash discount on payment within specified period and other
promotional expenses such as tours packages to dealer. A liability (netted off with trade receivables)
is recognised for expected volume discounts, expected cash discounts to dealers in relation to sales
made until the end of the year. Payment terms agreed with the dealers are as per business practice.

1.06.01 Other Revenue Streams

Interest: 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.

Dividends: Dividend from investment is recognized when the Company in which they are
held declares the dividend and when the right to receive the same is established.

Insurance Claims: Insurance Claims are accounted for on acceptance and when there is a
reasonable certainty of receiving the same, on grounds of prudence.

Export Incentives: Benefit on account of entitlement to import goods free of duty under
the Advance Authorisation Scheme, Duty Free Import Authorisation (DFIA), are accounted for
on accrual basis at estimated realisable value, as and when exports are made

Government Grants: related to revenue are recognised in the Statement of Profit and
Loss on a systematic basis in the periods in which the Company recognises the related
costs for which the grants are intended to compensate and are netted off with the related
expenditure. If not related to a specific expenditure, it is taken as income and presented
under Other Income. Government grants relating to property, plant and equipment are
treated as deferred income and are credited to the statement of profit and loss based on
settlement of relevant obligatons attached to the grants.

1.07 FOREIGN CURRENCY TRANSACTIONS:

Transactions in foreign currencies are translated into the functional currency of the Company at the
exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated
in foreign currencies are translated into the functional currency at the exchange rate at the reporting
date. Exchange differences are recognised in the Statement of Profit and Loss in the period in which
they arise.

1.08 EMPLOYEE BENEFITS:

Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed
as the related service is provided.

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed
contributions into Employees' Provident Fund established under The Employees' Provident Fund and
Miscellaneous Provisions Act 1952 and will have no legal or constructive obligation to pay further
amounts. Obligations for contributions to defined contribution plans are recognised as an employee
benefit expense in Statement of Profit and Loss in the periods during which the related services are
rendered by employees.

Defined benefit plans and other long-term employee benefits

The liability towards gratuity and long term compensated absences is determined by independent
actuaries using the projected unit credit method. Remeasurement of defined benefit plans, comprising
of actuarial gains or losses, return on plan assets excluding interest income are recognised immediately
in Balance Sheet with corresponding debit or credit to other comprehensive income. Remeasurements
are not reclassified to profit or loss in subsequent period. Remeasurement gains or losses on long term
compensated absences that are classified as other long term benefits are recognised in profit or loss.

1.09 BORROWING COSTS:

Borrowing costs are interest and other costs (including exchange differences relating to foreign currency
borrowings to the extent they are regarded as an adjustment to interest costs) incurred in connection
with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of
an asset which necessarily take a substantial period of time to get ready for their intended use are
capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the
period in which they are incurred.

1.10 LEASES:

The Company recognises a right-of-use asset and a lease liability at the lease commencement date.
The right-of-use asset is initially measured at cost. The right-of-use assets are subsequently depreciated
over the shorter of the asset's useful life and the lease term on a straight-line basis. In addition, the
right-of-use asset is reduced by impairment losses, if any, and adjusted for certain remeasurements of
the lease liability. The lease liability is initially measured at amortised cost at the present value of the
future lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be
readily determined, using the incremental borrowing rate. The Company has elected not to recognise
right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less
and leases of low-value assets. The Company recognises the lease payments associated with these
leases as an expense on a straight-line basis over the lease term.

1.11 ACCOUNTING FOR TAXES ON INCOME:

Current tax

The Company's current tax is calculated using tax rates that have been enacted or substantively
enacted by the end of the reporting period. Current tax assets and current tax liabilities are offset, if
entity has a legally enforceable right to set off recognised amounts and intends to settle on net basis
or to realise the current tax asset and settle the current tax liabilities simultaneously.

Deferred tax

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period
in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the reporting period. The measurement of deferred
tax liabilities and assets reflects the tax consequences that would follow from the manner in which
the Company expects, at the end of the reporting period, to recover or settle the carrying amount of
its assets and liabilities. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable
right exists to set off current tax assets against current tax liabilities, and the deferred taxes relate to the
same taxable entity and the same taxation authority.