Note 2: Material Accounting Policies Accounting
Judgements, Estimates and Assumptions:

(A) Material Accounting Policies:

2.1 Statement of Compliance

The Ind-AS financial statements of the Company
have been prepared in accordance with the relevant
provisions of the Companies Act, 2013, the Indian
Accounting Standards (Ind AS) notified under the
Companies (Indian Accounting Standards) Rules,
2015 as amended and the Guidance Notes and other
authoritative pronouncements issued by the Institute
of Chartered Accountants of India (ICAI).

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

2.2 Basis of preparation presentation of Ind-AS
Financial Statements:

2.2.1 Historical cost convention

These financial statements of the Company have
been prepared in all material aspects in accordance
with the recognition and measurement principles laid
down in Indian Accounting Standards (hereinafter
referred to as the ‘Ind AS’) as notified under section
133 ofthe Companies Act, 2013 (‘The Act’) read with

Companies (Indian Accounting Standards) Rules,
2015 as amended and other relevant provisions of
the Act and accounting principles generally accepted
in India.

The Ind-AS financial statements have been prepared
on a historical cost basis, except for certain financial
assets and financial liabilities (refer accounting
policy no. 2.9 and under defined benefit plans refer
accounting policy no. 2.16 measured at fair value).
Historical cost is generally based on the fair value of
the consideration given in exchange for goods and
services.

All amounts disclosed in the financial statements and
notes have been rounded off to the nearest Lakhs.

2.2.2 Presentation of Financial Statements

The Balance Sheet and the Statement of Profit
and Loss are prepared and presented in the format
prescribed in the Schedule Ill to the Act, as amended.
The disclosure requirements with respect to items
in the Balance Sheet and Statement of Profit and
Loss, as prescribed in the Schedule Ill to the Act
as amended, are presented by way of notes forming
part of the financial statements along with the other
notes required to be disclosed under the notified
Indian Accounting Standards.

2.2.3 Functional and Presentation Currency

The financial statements are presented in Indian
Rupees (‘INR’ or ‘Rupees’ or ‘Rs.) which is the
functional currency for the Company.

2.2.4 Fair Value Measurement

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

The principal or the most advantageous market must
be accessible by the Company.

The fair value of an asset or a liability is measured
using the assumptions that market participants would
use when pricing the asset or liability, assuming
that market participants act in their best economic
interest.

A fair value measurement of a non-financial asset
takes into account a market participant’s ability to
generate economic benefits by using the asset in its
highest and best use or by selling it to another market
participant that would use the asset in its highest and
best use.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.

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

2.2.5 Current and Non-Current Classification of Assets
and Liabilities and Operating Cycle:

All assets and liabilities have been classified as
current or non-current as per the Company’s normal
operating cycle (twelve months) and other criteria
set out in the Schedule Ill to the Act and Ind AS 1
Presentation of financial statements.

Based on the nature of products and the time
between the acquisition of assets for processing
and their realisation, the Company has ascertained
its operating cycle as 12 months for the purpose
of current / non-current classification of assets and
liabilities.

Assets:

An asset is classified as current when it satisfies any
of the criteria:

• it is expected to be realised in, or is intended
for sale or consumption in, the Company’s
normal operating cycle;

• it is held primarily for the purpose of being
traded;

• it is expected to be realised within twelve
months after the reporting date; or

• it is cash or cash equivalent unless it is
restricted from being exchanged or used to
settle a liability for at least twelve months after
the reporting date.

Liabilities:

A liability is classified as current when it satisfies
any of the criteria:

• it is expected to be settled in the Company’s
normal operating cycle;

• it is held primarily for the purpose of being
traded;

• it is due to be settled within twelve months
after the reporting date; or

• the Company does not have an unconditional
right to defer settlement of the liability for at
least twelve months after the reporting date.
Terms of a liability that could, at the option
of the counterparty, result in its settlement by
the issue of equity instruments do not affect its
classification.

All other assets/ liabilities are classified as non¬
current.

Deferred tax assets and liabilities are classified as
non-current assets and liabilities.

The Operating Cycle is the time between the
acquisition of assets for business purposes and their
realisation into cash and cash equivalents.

2.3 Property, Plant and Equipment (PPE):

Property, Plant and Equipment are recorded at their
cost of acquisition, net of refundable taxes or levies,
less accumulated depreciation and impairment
losses, if any. Cost includes purchase price,
borrowing costs if capitalisation criteria are met and
any other directly attributable cost of bringing the
asset to its working condition for the intended use.
Such cost includes the cost of replacing part of the
plant and equipment if the recognition criteria are
met.

These are depreciated over the useful economic
life and assessed for impairment whenever there is
an indication that the asset may be impaired. The
depreciation period and the depreciation method
for an asset 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 depreciation period or
method, as appropriate, and are treated as changes in
accounting estimates. The amortisation expense on
assets with finite lives is recognised in the Statement
of Profit and Loss.

When significant parts of plant and equipment are
required to be replaced at intervals, the Company
depreciates these components separately based on
their specific useful lives. Likewise, when a major
inspection is performed, its cost is recognised in the
carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied.
All other repair and maintenance costs are recognised
in the Statement of Profit or Loss as incurred.

Capital work-in-progress in respect of assets which
are not ready for their intended use are carried at
cost, comprising of direct costs, related incidental
expenses and attributable borrowing costs (refer
accounting policy 2.5), if any.

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. Any gain or
loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in
the income statement when the asset is derecognised.

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.

An asset’s carrying amount is written down
immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated
recoverable amount. Advances given towards
acquisition of property, plant and equipment
outstanding at each balance sheet date are disclosed
as Capital Advance under Other non-current assets.

Machinery Spares which can be used only in
connection with a particular item of Fixed Asset and
the use of which is irregular, are capitalised at cost.
The cost thereof comprises of its purchase price,
including import duties and other non-refundable
taxes or levies and any directly attributable cost for
bringing the asset to its working condition for its
intended use.

2.4 Depreciation:

Depreciation is recognised on the cost of Property,
Plant & Equipments (other than freehold land and
Capital work-in-progress) less their residual values
on Written down value method over the useful lives
as prescribed under Schedule II to the Companies
Act, 2013, or as per technical assessment, except
Plant & Equipments and Leasehold Improvements
in Textile division which is depreciated on straight
line basis. Depreciation methods, useful lives and
residual values are reviewed at the end of each
reporting period, with the effect of any changes in
estimate accounted for on a prospective basis.

2.4.2 The Management believes that these estimated useful
lives are realistic and reflect fair approximation of
the period over which the assets are likely to be used.

2.4.3 Depreciation on additions to Fixed Assets is provided
on pro-rata basis from the date of acquisition or
installation, and in case of new project from the date
of commencement of commercial production.

2.4.4 Depreciation on Assets sold, discarded, demolished
or scrapped, is provided upto the date on which
the said Asset is sold, discarded, demolished or
scrapped.

2.4.5 Refer Note 2.16 on Accounting of leases as per Ind
As 116 for right to use of assets.

2.5 Capital Work in Progress and Capital Advances:

Costs incurred for acquisition of capital assets
outstanding at each balance sheet date are disclosed
under capital work-in-progress. Advances given
towards the acquisition of fixed assets are shown
separately as capital advances under the head Other
Non-Current Assets.

2.6 Impairment of Property Plant and Equipment,
Investment Property and Intangible Assets

At the end of each reporting period, the Company
reviews the carrying amounts of its tangible and
intangible assets to determine whether there is

any indication that those assets have 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 (if any). When it is not possible to estimate
the recoverable amount of an individual asset, the
Company estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
When a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated
to individual cash-generating units, or otherwise they
are allocated to the smallest cash-generating units
for which a reasonable and consistent allocation
basis can be identified.

Recoverable amount is the higher of fair value less
costs of disposal and value in use. 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 for
which the estimates of future cash flows have not
been adjusted.

If the recoverable amount of an asset (or cash¬
generating unit) is estimated to be less than its
carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised
immediately in profit or loss.

When an impairment loss subsequently reverses,
the carrying amount of the asset (or a cash¬
generating unit) is increased to the revised estimate
of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying
amount that would have been determined had no
impairment loss been recognised for the asset (or
cash-generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in the
Statement of Profit or Loss.

.7 Non-current assets held for sale / distribution to
owners and discontinued operations :

The Company classifies non-current assets and
disposal groups as held for sale / distribution if
their carrying amounts will be recovered principally
through a sale / distribution rather than through

continuing use. Actions required to complete the sale
/ distribution should indicate that it is unlikely that
significant changes to the sale will be made or that
the decision to sell will be withdrawn. Management
must be committed to the sale / distribution expected
within one year from the date of classification.

For these purposes, sale transactions include
exchanges of non-current assets for other non¬
current assets when the exchange has commercial
substance. The criteria for held for sale / distribution
classification is regarded to be met only when the
assets or disposal group is available for immediate
sale / distribution in its present condition, subject
only to terms that are usual and customary for sales
/ distribution of such assets (or disposal groups),
its sale / distribution is highly probable; and it will
genuinely be sold, not abandoned. The Company
treats sale / distribution of the asset or disposal group
to be highly probable when:

• The appropriate level of Management is
committed to a plan to sell the asset (or disposal
group),

• An active programme to locate a buyer
and complete the plan has been initiated (if
applicable),

• The asset (or disposal group) is being actively
marketed for sale at a price that is reasonable
in relation to its current fair value,

• The sale is expected to qualify for recognition
as a completed sale within one year from the
date of classification and

• Actions required to complete the plan indicate
that it is unlikely that significant changes to
the plan will be made or that the plan will be
withdrawn.

Non-current assets held for sale / for distribution
to owners and disposal groups are measured at the
lower of their carrying amount and the fair value
less costs to sell / distribute. Assets and liabilities
classified as held for sale / distribution are presented
separately in the balance sheet.

Property, plant and equipment and intangible assets
once classified as held for sale / distribution are not
depreciated or amortised.

A disposal group qualifies as discontinued operation
if it is a component of an entity that either has been
disposed of, or is classified as held for sale, and:

• Represents a separate major line of business or
geographical area of operations,

• Is part of a single co-ordinated plan to
dispose of a separate major line of business or
geographical area of operations.

Discontinued operations are excluded from the
results of continuing operations and are presented
as a single amount as profit or loss after tax from
discontinued operations in the Statement of Profit
and Loss.

Additional disclosures are provided in Note 32
(XVIII). All other notes to the financial statements
mainly include amounts for continuing operations,
unless otherwise mentioned.

2.8 Financial Instruments:

A financial instrument is any contract that gives
rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.

Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of
financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from
the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition.

2.8.1 Financial Assets:

2.8.1.1 Initial Recognition and Measurement:

All financial assets are recognised initially at fair
value plus, in the case of financial assets not recorded
at fair value through profit or loss, transaction
costs that are attributable to the acquisition of the
financial asset. Purchases or sales of financial assets
that require delivery of assets within a time frame
established by regulation or convention in the market
place (regular way trades) are recognised on the
trade date, i.e., the date that the Company commits
to purchase or sell the asset.

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

• Financial Assets at amortised cost

• Financial Assets at fair value through other
comprehensive income (FVTOCI)

• Financial Assets including derivatives and
equity instruments at fair value through profit
or loss (FVTPL)

Financial assets are not reclassified subsequent to
their initial recognition, except if and in the period
the Company changes its business model for
managing financial assets.

Financial Assets at amortised cost

A ‘Financial instrument’ 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.

After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method. Amortised cost
is calculated by taking into account any discount or
premium on acquisition and fees or costs that are
an integral part of the EIR. The EIR amortisation is
included in other income in the profit or loss. The
losses arising from impairment are recognised in
the profit or loss. This category generally applies to
trade and other receivables, loans and other financial
assets.

Financial instrument at FVTOCI

A ‘Financial instrument’ is classified as at the
FVTOCI if both of the 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. Fair value movements are
recognized in the other comprehensive income (OCI).
However, the Company recognizes interest income,
impairment losses & reversals and foreign exchange
gain or loss in the Statement of Profit & Loss. On
derecognition of the asset, cumulative gain or loss
previously recognised in OCI is reclassified from
the equity to the Statement of Profit or Loss. Interest
earned whilst holding FVTOCI debt instrument is
reported as interest income using the EIR method.

Financial instrument at FVTPL:

FVTPL is a residual category for Financial
instruments. Any Financial instrument, which does
not meet the criteria for categorization as at amortized
cost or as FVTOCI, is classified as at FVTPL.

In addition, the Company may elect to classify
a Financial instrument, which otherwise meets
amortized cost or FVTOCI criteria, as at FVTPL.
However, such election is allowed only if doing so
reduces or eliminates a measurement or recognition
inconsistency (referred to as ‘accounting mismatch’).

Financial instruments included within the FVTPL
category are measured at fair value with all changes
recognized in the Statement of Profit & Loss.

Equity investments

All equity investments in scope of Ind-AS 109 are
measured at fair value. Equity instruments which are
held for trading are classified as at FVTPL. For all
other equity instruments, the Company decides to
classify the same either as at FVTOCI or FVTPL.
The Company makes such election on an instrument-
by-instrument basis. The classification is made on
initial recognition and is irrevocable.

If the Company decides to classify an equity
instrument as at FVTOCI, then all fair value
changes on the instrument, excluding dividends, are
recognized in the OCI. There is no recycling of the
amounts from OCI to Statement of Profit & Loss,
even on sale of investment. However, the Company
may transfer the cumulative gain or loss within
equity, on such sale.

Equity instruments included within the FVTPL
category are measured at fair value with all changes
recognized in the Statement of Profit & Loss.

2.8.1.3 Effective interest method:

The effective interest method is a method
of calculating the amortised cost of a debt
instrument and of allocating interest income
over the relevant period. The effective interest
rate is the rate that exactly discounts estimated
future cash receipts (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 debt instrument, or,
where appropriate, a shorter period, to the net
carrying amount on initial recognition.

Income is recognised on an effective interest
basis for debt instruments other than those
financial assets classified as at FVTPL. Interest
income is recognised in profit or loss and is
included in the "Other Income" line item.

2.8.1.4 Derecognition:

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 balance sheet)
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’
arrangement; 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

When the Company has transferred its rights to
receive cash flows from an asset or has entered
into a pass-through arrangement, it evaluates
if and to what extent it has retained the risks
and rewards of ownership. When it has neither

transferred nor retained substantially all of the
risks and rewards of the asset, nor transferred
control of the asset, the Company continues
to recognise the transferred asset to the extent
of the Company's continuing involvement.
In that case, the Company also recognises an
associated liability. The transferred asset and
the associated liability are measured on a basis
that reflects the rights and obligations that the
Company has retained.

Continuing involvement that takes the form
of a guarantee over the transferred asset is
measured at the lower of the original carrying
amount of the asset and the maximum amount
of consideration that the Company could be
required to repay.

2.8.1.5 Impairment of financial assets

In accordance with Ind-AS 109, the Company
applies expected credit loss (ECL) model for
measurement and recognition of impairment
loss on the financial assets and credit risk
exposure:

(a) Financial assets that are debt instruments,
and are measured at amortised cost e.g.,
loans, debt securities, deposits, trade
receivables and bank balance

(b) Financial assets that are equity
instruments and are measured as at

fvtoci

(c) Financial guarantee contracts which are
not measured as at FVTPL

(d) Lease receivables under Ind AS 116

(e) 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.

The Company follows ‘simplified approach’
for recognition of impairment loss allowance
on:

• Trade receivables and

• All lease receivables resulting from
transactions within the scope of Ind AS
116

The application of simplified approach does
not require the Company to track changes in
credit risk. Rather, it recognises impairment
loss allowance based on lifetime ECLs at each
reporting date, right from its initial recognition.

For recognition of impairment loss on
other financial assets and risk exposure, the
Company determines that whether there has
been a significant increase in the credit risk
since initial recognition. If credit risk has not
increased significantly, 12-month ECL is used
to provide for impairment loss. However, if
credit risk has increased significantly, lifetime
ECL is used. If, in a subsequent period, credit
quality of the instrument improves such that
there is no longer a significant increase in
credit risk since initial recognition, then the
entity reverts to recognising impairment loss
allowance based on 12-month ECL.

Lifetime ECL are the expected credit losses
resulting from all possible default events over
the expected life of a financial instrument. The
12-month ECL is a portion of the lifetime ECL
which results from default events on a financial
instrument that are possible within 12 months
after the reporting date.

ECL is the difference between all contractual
cash flows that are due to the Company in
accordance with the contract and all the cash
flows that the entity expects to receive (i.e., all
cash shortfalls), discounted at the original EIR.
When estimating the cash flows, an entity is
required to consider:

• All contractual terms of the financial
instrument (including prepayment,
extension, call and similar options)
over the expected life of the financial
instrument. However, in rare cases
when the expected life of the financial
instrument cannot be estimated reliably,
then the entity is required to use the
remaining contractual term of the
financial instrument

• Cash flows from the sale of collateral
held or other credit enhancements that
are integral to the contractual terms

As a practical expedient, the Company
uses a provision matrix to determine
impairment loss allowance on portfolio
of its trade receivables. The provision
matrix is based on its historically
observed default rates over the expected
life of the trade receivables and is
adjusted for forward-looking estimates.
At every reporting date, the historical
observed default rates are updated and
changes in the forward-looking estimates
are analysed.

ECL impairment loss allowance (or
reversal) recognized during the period
is recognized as income/ expense in
the statement of profit and loss (P & L).
This amount is reflected under the head
‘other expenses’ in the P&L. The balance
sheet presentation for various financial
instruments is described below:

• Financial assets measured as at
amortised cost, contract assets and
lease receivables: ECL is presented as
an allowance, i.e. as an integral part of
the measurement of those assets in the
balance sheet. The allowance reduces
the net carrying amount. Until the asset
meets write-off criteria, the Company
does not reduce impairment allowance
from the gross carrying amount.

• Loan commitments and financial

guarantee contracts: ECL is presented as
a provision in the balance sheet, i.e. as a
liability.

• Equity instruments measured at

FVTOCI: Since financial assets are
already reflected at fair value, impairment
allowance is not further reduced from its
value. Rather, ECL amount is presented
as ‘accumulated impairment amount’ in
the OCI.

For assessing increase in credit risk and
impairment loss, the Company combines
financial instruments on the basis of shared
credit risk characteristics with the objective
of facilitating an analysis that is designed to
enable significant increases in credit risk to be
identified on a timely basis.

The Company does not have any purchased
or originated credit-impaired (POCI) financial
assets, i.e., financial assets which are credit
impaired on purchase/ origination.

2.8.2 Financial Liabilities:

2.8.2.1 Initial Recognition and Measurement:

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.

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

2.8.2.2 Subsequent Measurement:

The measurement of financial liabilities
depends on their classification, as described
below:

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 are classified
as held for trading if they are incurred for the
purpose of repurchasing in the near term.

Gains or losses on liabilities held for trading
are recognised in the profit or loss.

Financial liabilities designated upon initial
recognition at fair value through profit or loss
are designated 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 recognized in OCI. These
gains/ loss are not subsequently transferred
to Statement of Profit & Loss. 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 or Loss.

Loans and Borrowings:

After initial recognition, interest-bearing loans
and borrowings are subsequently measured at
amortised cost using the EIR method. Gains
and losses are recognised in profit or loss
when the liabilities are derecognised as well as
through the EIR amortisation process.

Amortised cost is calculated by taking
into account any discount or premium on
acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation
is included as finance costs in the Statement of
Profit and Loss.

2.8.2.3 Derecognition:

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.

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.
The Company does not restate any previously
recognised gains, losses (including impairment
gains or losses) or interest.

2.8.3 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.

2.9 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:

(i) Raw materials and Packing Material :
weighted average cost in case of Textile
and for ECK purchase cost on a first in,
first out basis.

(ii) Finished goods and work in progress:
cost of direct materials and labour and a
proportion of manufacturing overheads
based on the normal operating capacity,
but excluding borrowing costs.

(iii) Traded goods are valued at purchase cost
on First in First out basis.

(iv) Stores and Spares are valued at weighted
average cost.

(v) Waste Material are valued at net
realisable value.

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

The factors that the Company considers in
determining the allowance for slow moving,
obsolete and other non-saleable inventory
include estimated shelf life, planned product
discontinuances, price changes, ageing of
inventory and introduction of competitive new
products, to the extent each of these factors
impact the Company’s business and markets.
The Company considers all these factors and
adjusts the inventory provision to reflect its
actual experience on a periodic basis.

Goods and materials in transit are valued at
actual cost incurred up to the date of balance
sheet. Materials and other items held for use
in production of inventories are not written
down, if the finished products in which they
will be used are expected to be sold at or above
cost.

2.10 Cash and Cash Equivalent:

Cash and Cash Equivalents comprise of cash
on hand and cash at bank including fixed
deposit/highly liquid investments with original
maturity period of three months or less that are
readily convertible to known amounts of cash
and which are subject to an insignificant risk of
changes in value.

For the purpose of the statement of cash flows,
cash and cash equivalents consist of cash and
short-term deposits, as defined above, net
of outstanding bank overdrafts as they are
considered an integral part of the Company’s
cash management.

2.11 Statement of Cash Flow:

The statement of cash flows has been prepared
and presented as per the requirements of
Ind AS 7 “Statement of Cash flows”. Cash
flows are reported using the indirect method,
whereby net profit before tax is adjusted
for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or
future operating cash receipts or payments and
item of income or expenses associated with
investing or financing cash flows. The cash
flow from operating, investing and financing
activities of the Company are segregated.

2.12 Foreign Currency Transactions:

The functional currency of the Company
is determined on the basis of the primary
economic environment in which it operates.
The functional currency of the Company is
Indian National Rupee (INR). All amounts
have been rounded off to the nearest Lakhs,
except share data and as stated otherwise.

The transactions in currencies other than
the Company's functional currency (foreign
currencies) 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. Differences arising on
settlement or translation of monetary items are
recognised in profit or loss.

Non-monetary items that are measured in terms
of historical cost in a foreign currency are
translated using the exchange rates at the dates
of the initial transactions. Non-monetary items
measured at fair value in a foreign currency are
translated using the exchange rates at the date
when the fair value is determined. The gain
or loss arising on translation of non-monetary
items measured at fair value is treated in line
with the recognition of the gain or loss on the
change in fair value of the item (i.e., translation
differences on items whose fair value gain
or loss is recognised in OCI or profit or loss
are also recognised in OCI or profit or loss,
respectively).

2.13 Revenue Recognition:

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 the Company expects to be entitled
in exchange for those goods or services. The
Company has generally concluded that it is the
principal in its revenue arrangements, because
it typically controls the goods or services
before transferring them to the customer.

Further, revenue from sale of goods is
recognized based on a 5-Step Methodology
which is as follows:

• Identify the contract(s) with a customer

• Identify the performance obligation in
contract

• Determine the transaction price

• Allocate the transaction price to the
performance obligations in the contract.

• Recognise revenue when (or as) the
entity satisfies a performance obligation.

Goods and Service Tax (GST) is not received
by the Company in its own account. Rather, it is
tax collected on value added to the commodity
by the seller on behalf of the government.
Accordingly, it is excluded from revenue.

2.13.1 Sale of Goods:

Revenue from sale of goods is recognised
when a promise in a customer contract
(performance obligation) have been satisfied
by transferring control over the promised
goods to the customer. Control of goods is
transferred upon the shipment of the goods to
the customer or when goods is made available
to the customer or as per the terms agreed
with the customers. The amount of revenue
to be recognised is based on the consideration
expected to be received in exchange for
goods, excluding discounts, sales returns and
any taxes or duties collected on behalf of the
government which are levied on sales such as

sales tax, value added tax, goods and services
tax, etc., wherever applicable. Any additional
amounts based on terms of agreement entered
into with customers, is recognised in the period
when the collectability becomes probable and
a reliable measure of the same is available.

The transaction price is documented on the
sales invoice and payment is generally due
as per agreed credit terms with customer.
In determining the transaction price, the
Company considers the effects of variable
consideration, the existence of significant
financing components, noncash consideration,
and consideration payable to the customer
(if any). The Company estimates variable
consideration at contract inception until it
is highly probable that a significant revenue
reversal in the amount of cumulative revenue
recognised will not occur when the associated
uncertainty with the variable consideration is
subsequently resolved.

Discounts

Discounts includes target and growth rebates,
price reductions, incentives to customers or
retailers. To estimate the amount of discount,
the Company applies accumulated experience
using the most likely method. The Company
determines that the estimates of discounts
are not constrained based on its historical
experience, business forecast and the current
economic conditions. The Company then
applies the requirements on constraining
estimates of variable consideration and
recognises a refund liability for the expected
discount. No element of financing is deemed
present as the sales are made with credit terms
largely ranging between 0 days to 90 days.

Contract balances

Contract assets

A contract asset is the right to consideration
in exchange for goods or services transferred
to the customer. If the Company performs by
transferring goods 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

Trade receivables are amounts due from
customers for goods sold or services performed
in the ordinary course of business. If the
receivable is expected to be collected within a
period of 12 months or less from the reporting
date (or in the normal operating cycle of the
business, if longer), they are classified as
current assets otherwise as non-current assets.

Trade receivables are measured at their
transaction price unless it contains a significant
financing component inaccordance with Ind
AS 115 for pricing adjustments embedded in
the contract.

Loss allowance for expected lifetime credit
loss is recognised on initial recognition.

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.

Refund liabilities

A refund liability is the obligation to refund
some or all of the consideration received (or
receivable) from the customer and is measured
at the amount the Company ultimately expects
it will have to return to the customer. The
Company updates its estimates of refund
liabilities (and the corresponding change in the
transaction price) at the end of each reporting
period.

on a systematic basis over the periods that
the related costs, for which it is intended to
compensate, are expensed. When the grant
relates to an asset, it is recognised as income in
equal amounts over the expected useful life of
the related asset.

When the Company receives grants of non¬
monetary assets, the asset and the grant are
recorded at fair value amounts and charged
to the Statement of Profit and Loss over the
expected useful life in a pattern of consumption
of the benefit of the underlying asset i.e. by
equal annual instalments.

Government grants such as sales tax incentive,
export benefit schemes are recognized in the
Statement of Profit and Loss as a part of other
operating revenues whereas grants related to
royalty, power incentives and interest subsidies
are netted of from the related expenses.

2.15 Employee Benefits:

2.15.1 Short Term Employee Benefits

All employee benefits payable wholly within
twelve months of rendering the service are
classified as short term employee benefits and
they are recognized in the period in which
the employee renders the related service. The
Company recognizes the undiscounted amount
of short term employee benefits expected to
be paid in exchange for services rendered as a
liability (accrued expense) after deducting any
amount already paid. Benefits such as salaries,
wages, short-term compensated absences,
performance incentives etc., and the expected
cost of bonus, exgratia are recognised during
the period in which the employee renders
related service.

2.15.2 Post-Employment Benefits:

Defined Contribution plans:

Employee benefit in the form of Provident fund,
Employees State Insurance Contribution and
Labour Welfare fund are defined contribution
plans. The Company has no obligation, other
than the contribution payable to the respective

fund. The Company recognizes contribution
payable to the provident fund scheme as
an expense, when an employee renders the
related service. If the contribution payable
to the scheme for service received before the
balance sheet date exceeds the contribution
already paid, the deficit payable to the scheme
is recognized as a liability after deducting the
contribution already paid. If the contribution
already paid exceeds the contribution due for
services received before the balance sheet
date, then excess is recognized as an asset to
the extent that the pre-payment will lead to, for
example, a reduction in future payment or a
cash refund.

Defined Benefit plans:

The Company provides for retirement benefit
in the form of gratuity. The Company’s liability
towards this benefit is determined on the basis
of actuarial valuation using Projected Unit
Credit Method at the date of balance sheet.

The obligation towards defined benefit plans is
measured at the present value of the estimated
future cash flows using a discount rate based
on the market yield on government securities
of a maturity period equivalent to the weighted
average maturity profile of the defined benefit
obligations at the Balance Sheet date.

Remeasurement, comprising actuarial gains
and losses, the effect of the changes to the asset
ceiling (if applicable) and the return on plan
assets (excluding interest), is reflected in the
balance sheet with a charge or credit recognised
in other comprehensive income (OCI) in the
period in which they occur. Remeasurement
recognised in other comprehensive income is
reflected immediately in retained earnings and
will not be reclassified to the statement of profit
and loss. Past service cost is recognised in the
statement of profit and loss in the period of a
plan amendment. Net interest is recognised in
OCI. The Company determines the net interest
expense (income) on the net defined benefit
liability (asset) for the period by applying
the discount rate used to measure the defined

benefit obligation at the beginning of the annual
period to the then-net defined benefit liability
(asset), taking into account any changes in the
net defined benefit liability (asset) during the
period as a result of contributions and benefit
payments. Net interest expense and other
expenses related to defined benefit plans are
recognised in profit or loss.

Defined benefit costs are categorised as
follows:

• service cost (including current service
cost, past service cost, as well as gains and
losses on curtailments and settlements);

• net interest expense or income; and

• remeasurement of net defined benefit
liability.

In case of funded plans, the fair value of the
plan assets is reduced from the gross obligation
under the defined benefit plans to recognise the
obligation on a net basis.

The defined benefit obligation recognised
in the balance sheet represents the actual
deficit or surplus in the Company’s defined
benefit plans. Any surplus resulting from this
calculation is limited to the present value of
any economic benefits available in the form of
refunds from the plans or reductions in future
contributions to the plans.

Other long-term employee benefits :

Accumulated leave, which is expected to be
utilized within the next 12 months, is treated
as short-term employee benefit and this is
shown under current provision in the Balance
Sheet. The Company measures the expected
cost of such absences as the additional amount
that it expects to pay as a result of the unused
entitlement that has accumulated at the
reporting date.

The Company has accumulating and non
accumulating leave. The Company treats
accumulated leave expected to be carried
forward beyond twelve months, as long¬

term employee benefit for measurement
purposes and this is shown under long term
provisions in the Balance Sheet. Such long¬
term compensated absences are provided for
based on the actuarial valuation using the
projected unit credit method at the year-end.
Actuarial gains / losses are immediately taken
to the Statement of Profit and Loss and are not
deferred. The Company presents the leave as
a current liability in the balance sheet, to the
extent it does not have an unconditional right
to defer its settlement for 12 months after the
reporting date. Where the Company has the
unconditional legal and contractual right to
defer the settlement for a period beyond 12
months, the same is presented as non-current
liability. Expense on non-accumulating
compensated absences is recognized in the
period in which the absences occur.

2.16 Leases:

The Company assesses whether a contract
contains a lease, at inception of a contract.
A contract is, or contains, a lease if the
contract conveys the 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: (1) the contract involves the use
of an identified asset (2) the Company has
substantially all of the economic benefits from
use of the asset through the period of the lease
and (3) 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 asset (“ROU”) 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
on a straight-line basis over the term of the
lease. Certain lease arrangements includes the
options to extend or terminate the lease before

the end of the lease term. ROU assets and lease

liabilities includes these options when it is

reasonably certain that they will be exercised.

As a Lessee:

(i) Right-of-use assets

The Company recognises right-of-use
(ROU) 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 shorter of the lease term and the
estimated useful lives of the assets.

(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 insubstance 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. 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.

Lease liability and ROU asset have been
separately presented in the Balance Sheet
and lease payments have been classified
as financing cash flows.

(iii) Short term leases and leases of low
value of assets

The Company applies the short-term
lease recognition exemption to its short¬
term leases. It also applies the lease of
low value assets recognition exemption
that are 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.

As a lessor:

Leases in which the Company does
not transfer substantially all the risks
and rewards of ownership of an asset
are classified as operating leases.
Rental income from operating lease is
recognised on a straight-line basis over
the term of the relevant lease. Initial
direct costs incurred in negotiating and
arranging an operating lease are added to
the carrying amount of the leased asset
and recognised over the lease term on the
same basis as rental income. Contingent

rents are recognised as revenue in the
period in which they are earned.

Leases are classified as finance leases
when substantially all of the risks and
rewards of ownership transfer from the
Company to the lessee. Amounts due
from lessees under finance leases are
recorded as receivables at the Company’s
net investment in the leases. Finance lease
income is allocated to accounting periods
so as to reflect a constant periodic rate of
return on the net investment outstanding
in respect of the lease.

2.17 Taxes :

Current Taxes:

Current income tax assets and liabilities
are measured at the amount expected to
be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to
compute the amount are those that are enacted
by the end of the reporting period.

Current income tax relating to items recognised
outside profit or loss is recognised outside
profit or loss. Current tax items are recognised
in correlation to the underlying transaction
either in OCI or directly in equity. Management
periodically evaluates positions taken in the
tax returns with respect to situations in which
applicable tax regulations are subject to
interpretation and establishes provisions where
appropriate.

Deferred Taxes:

Deferred tax is provided using the liability
method on temporary differences between
the tax bases of assets and liabilities and
their carrying amounts for financial reporting
purposes at the reporting date. Deferred tax is
recognised on temporary differences between
the carrying amounts of assets and liabilities in
the financial statements and the corresponding
tax bases used in the computation of taxable
profit. Deferred tax liabilities are recognised

for all taxable 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. Such
deferred tax assets and liabilities are not
recognised if the temporary difference arises
from the initial recognition of assets and
liabilities in a transaction that affects neither
the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced
to the extent that it is no longer probable that
sufficient taxable profit will be available to
allow all or part of the deferred tax asset to
be utilised. Unrecognised deferred tax assets
are re-assessed at each reporting date and are
recognised to the extent that it has become
probable that future taxable profits will allow
the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured
at the tax rates that are expected to apply in the
year when the asset is realised or the liability
is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at
the reporting date.

Deferred tax relating to items recognised
outside profit or loss is recognised outside
profit or loss. Deferred tax items are recognised
in correlation to the underlying transaction
either in OCI or directly in equity.

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.

Current and deferred tax for the year

Current and deferred tax are recognised in
profit or Ioss, 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.

2.18 Earnings Per Share:

Basic earnings per share is computed by
dividing the profit / (loss) after tax by the
weighted average number of equity shares
outstanding during the year. The weighted
average number of equity shares outstanding
during the year is adjusted for treasury shares,
bonus issue, bonus element in a rights issue to
existing shareholders, share split and reverse
share split (consolidation of shares).

Diluted earnings per share is computed by
dividing the profit / (loss) after tax as adjusted
for dividend, interest and other charges to
expense or income (net of any attributable
taxes) relating to the dilutive potential equity
shares, by the weighted average number of
equity shares considered for deriving basic
earnings per share and the weighted average
number of equity shares which could have
been issued on the conversion of all dilutive
potential equity shares including the treasury
shares held by the Company to satisfy the
exercise of the share options by the employees.

2.19 Segment Reporting:

Operating segments are reported in a manner
consistent with the internal reporting provided
to the chief operating decision maker.

The Board of Directors of the Company has
been identified as being the Chief Operating
Decision Maker (CODM) by the management
of the Company. CODM for management
purposes organises the Company into business
units based on its products and services.

Further details about segment information are
given in Note 32 (I).

2.20 Impairment of non-financial assets:

The Company assesses, at each reporting date,
whether there is an indication that an asset
may be impaired. If any indication exists, or
when annual impairment testing for an asset
is required, the Company estimates the asset’s
recoverable amount. An asset’s recoverable
amount is the higher of an asset’s or cash¬
generating units (CGU) fair value less costs
of disposal and its value in use. 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 group of assets. When the
carrying amount of an asset or 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. In determining fair value less costs of
disposal, recent market transactions are taken
into account. If no such transactions can be
identified, an appropriate valuation model is
used. These calculations are corroborated by
valuation multiples, quoted share prices for
publicly traded companies or other available
fair value indicators.

The Company bases its impairment calculation
on detailed budgets and forecast calculations,
which are prepared separately for each of the
Company CGUs to which the individual assets
are allocated. These budgets and forecast
calculations generally cover a period of five
years. For longer periods, a long-term growth
rate is calculated and applied to project future
cash flows after the fifth year. To estimate cash

flow projections beyond periods covered by the
most recent budgets/forecasts, the Company
extrapolates cash flow projections in the
budget using a steady or declining growth rate
for subsequent years, unless an increasing rate
can be justified. In any case, this growth rate
does not exceed the long-term average growth
rate for the products, industries, or country or
countries in which the entity operates, or for
the market in which the asset is used.

Impairment loss of continuing operations,
including impairment on inventories is
recognised in the statement of profit and loss.