2 SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION

2.01 Property, plant and equipment

An item of property, plant and equipment that qualifies as an asset is measured on initial recognition at cost.
Following initial recognition, items of property, plant and equipment are carried at its cost less accumulated
depreciation and accumulated impairment losses.

The cost of an item of property, plant and equipment comprises of its purchase price including import duties
and other non-refundable purchase taxes or levies, directly attributable cost of bringing the asset to its
working condition for its intended use and the initial estimate of decommissioning, restoration and similar
liabilities, if any. Any trade discounts and rebates are deducted in arriving at the purchase price. Cost
includes cost of replacing a part of a plant and equipment if the recognition criteria are met. Items such as
spare parts, stand-by equipment and servicing equipment that meet the definition of property, plant and
equipment are capitalized at cost and depreciated over their useful life. Costs in nature of repairs and
maintenance are recognized in the Statement of Profit and Loss as and when incurred.

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.

Subsequent cost

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that the future economic benefits associated with expenditure will flow to
the Company and the cost of the item can be measured reliably. All other subsequent cost are charged to
Statement of profit and loss at the time of occurrence.

Impairment

At each Salance Sheet date, the Company reviews the carrying amounts of its Property, Plant & Equipment
to determine whether there is any indication that those assets suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss. The recoverable amount is the higher of an asset’s net selling price and value in use. In
assessing the value in use, the estimated future cash flows expected from the continuing use of the asset
and from its ultimate disposal are discounted to their present values using a pre-determined discount rate
that reflects the current market assessments of the time value of money and risks specific to the asset.

Derecognition

Property, Plant & Equipment is derecognised on disposal or when no future economic benefits are expected
from use or disposals. Gains or losses arising from derecognition of an Property, Plant & Equipment ,
measured at the difference between the net disposal proceeds and the carrying amount of the asset are
recognised in the statement of Profit and Loss when the asset is derecognised.

2.02 Other Intangible Assets

Other Intangible Assets that the Company controls and from which it expects future economic benefits are
capitalised upon acquisition and measured initially:

a. for assets acquired in a business combination, at fair value on the date of acquisition.

b. for separately acquired assets, at cost comprising the purchase price (including import duties and non¬
refundable taxes) and directly attributable costs to prepare the asset for its intended use.

After initial recognition, an intangible asset is carried at its cost less accumulated amortization and/or
impairment losses.

The useful life of an intangible asset is considered finite where the rights to such assets are limited to a
specified period of time by contract or law or the likelihood of technical, technological obsolescence or
commercial obsolescence . If, there are no such limitations, the useful life is taken to be indefinite.

Intangible assets that have finite lives are amortized over their estimated useful lives by the straight-line
method unless it is practical to reliably determine the pattern of benefits arising from the asset. An intangible
asset with an indefinite useful life is not amortized. However, it is annually tested for impairment. Amortization
expenses and impairment losses and reversal of impairment losses are included in the ‘Depreciation and
amortization expense’ in the Statement of Profit and Loss.

The estimated useful lives of intangible assets of the Company with finite lives are as follows:

Computer Software 3 Years

The useful lives of intangible assets are reviewed annually to determine if a reset of such useful life is
required for assets with finite lives and to confirm that business circumstances continue to support an
indefinite useful life assessment for assets so classified. Based on such review, the useful life may change or
the useful life assessment may change from indefinite to finite. The impact of such changes is accounted for
as a change in accounting estimate.

2.03 Leases

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

Right-of-use (ROU) assets are recognised at inception of a contract or arrangement for significant lease
components at cost less lease incentives, if any. ROU assets are subsequently measured at cost less
accumulated depreciation and accumulated impairment losses, if any. The cost of ROU assets includes the
amount of lease liabilities recognised, initial direct cost incurred and lease payments made at or before the
lease commencement date. ROU assets are generally depreciated over the shorter of the lease term and
estimated useful lives of the underlying assets on a straight-line basis. Lease term is determined based on
consideration of facts and circumstances that create an economic incentive to exercise an extension option,
or not to exercise a termination option. Lease payments associated with short-term leases (i.e., those leases
that leases that have a lease term of 12 months or less from the commencement date and do not contain a
purchase option) and low value leases (i.e., where the value of the underlying asset, when new, in order of
magnitude is Rs. 1 lakhs or less) are charged to the Statement of Profit and Loss on a straight-line basis over
the term of the relevant lease.

The Company recognises lease liabilities measured at the present value of lease payments to be made on
the date of recognition of the lease. Such lease liabilities do not include variable lease payments (that do not
depend on an index or a rate), which are recognised as expense in the periods in which they are incurred.
Interest on lease liability is recognised using the effective interest method. Lease liabilities are subsequently
increased to reflect the accretion of interest and reduced for the lease payments made. The carrying amount
of lease liabilities is also remeasured upon modification of lease arrangement or upon change in the
assessment of the lease term. The effect of such remeasurements is adjusted to the value of the Right of
Use assets.

2.04 Financial Instruments, Financial Assets, Financial Liabilities and Equity Instruments

Financial Assets and financial liabilities are recognised when the company becomes a party to the contractual
provisions of the relevant instrument and are initially measured at fair value except for trade receivable that
do not contain a significant financing component, which are measured at transaction price.

Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities measured at fair value through profit or loss) are
added to or deducted from the fair value on initial recognition of financial asset or financial liabilities.
Purchase or sale of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place are recognised on trade date i.e. date when the company
commits to purchase or sell.

Financial Assets

Recognition

Financial Asset includes Investments, Trade Receivable, Advances, Security Deposits, Cash and Cash
equivalent, Loans and others. Such assets are initially recognised at fair value or transaction price, as
applicable, when the company becomes party to contractual obligations. The transaction price includes
transaction cost unless the asset is being fair value through statement of profit & loss.

Classification

Management determines the classification of an asset at initial recognition depending on the purpose for
which assets were acquired. The subsequent measurement of financial asset depends upon such
classification.

Financial Assets are classified as those measured at :

(a) amortised cost, where the financial assets are held solely for collection of cash flows arising from
payments of principal and/or interest.

(b) fair value through other comprehensive income (FVTOCI), where the financial assets are held not only for
collection of cash flows arising from payments of principal and interest but also from sale of such assets.
Such assets are subsequently measured at fair value , with unrealised gains and losses arising from changes
in the fair value being recognised in other income.

('c) fair value through profit or loss (FVTPL), where the assets are managed in accordance with an approved
investment strategy that triggers purchase and sale decisions based on fair value of such assets. Such
assets are subsequently measured at fair value. Unrealised gains and losses arising from changes in the fair
value, including interest and dividend income, if any, are recognised in other income, if any, are recognised in
"Other Income" in the statement of Profit & Loss in the period in which they arise.

Trade Receivables, Advances, Security deposits, cash and cash equivalents are classified for measurement
at amortised cost while investment may fall under any of the aforesaid classes. However , in respect of
particular investment in equity instruments that would otherwise be measured at fair value through profit and
loss, an irrevocable election at initial recognition may be made to present subsequent changes in fair value
through other comprehensive income.

Impairment

The Company assesses at each reporting date whether a financial asset (or a group of financial assets) such
as investments, trade receivables, advances and security deposits held at amortised cost and financial
assets that are measured at fair value through other comprehensive income are tested for impairment based
on evidence or information that is available without undue cost or effort. Expected credit losses are assessed
and loss allowances recognised if the credit quality of the financial asset has deteriorated significantly since
initial recognition

Reclassification

When and only when the business model is changed, the Company shall reclassify all affected financial
assets prospectively from the reclassification date as subsequently measured at amortised cost, fair value
through other comprehensive income or fair value through profit or loss without restating the previously
recognised gains, losses or interest and in terms of the reclassification principles laid down in the Ind AS
relating to Financial Instruments.

Derecognition

Financial assets are derecognised when the right to receive cash flows from the assets has expired, or has
been transferred, and the Company has transferred substantially all of the risks and rewards of ownership.
Concomitantly, if the asset is one that is measured at: (a) amortised cost, the gain or loss is recognised in the
Statement of Profit and Loss; (b) fair value through other comprehensive income, the cumulative fair value
adjustments previously taken to reserves are reclassified to the Statement of Profit and Loss unless the asset
represents an equity investment, in which case the cumulative fair value adjustments previously taken to
reserves are reclassified within equity.

Income Recognition

Interest Income is recognised in the statement of profit and loss using the effective interest method. Dividend
Income is recognised in the statement of profit and loss when right to receive dividend is established.

Financial Liabilities

Borrowings, trade payables and other financial liabilities are initially recognised at fair value and are
subsequently measured at amortised cost. Any discount or premium on redemption / settlement is recognised
in the Statement of Profit and Loss as finance cost over the life of the liability using the effective interest
method and adjusted to the liability figure disclosed in the Balance Sheet.

Financial liabilities are derecognised when the liability is extinguished, that is, when the contractual obligation
is discharged, cancelled or on expiry.

Offsetting Financial Instruments

Financial assets and liabilities are offset and the net amount is included in the Balance Sheet where there is
a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis
or realise the asset and settle the liability simultaneously.