2. MATERIAL ACCOUNTING POLICIES

2.1 Basis of preparation of financial statements

a) Statement of Compliance with Ind AS

These financial statements have been prepared
in accordance with Indian Accounting Standards
"(Ind AS)" notified under Section 133 of the
Companies Act, 2013 (the "Act") read with the
Companies (Indian Accounting Standards)
Rules, 2015 (as amended from time to time)
and presentation requirements of Division II of
Schedule III to the Act (Ind AS compliant Schedule
III), as applicable to the financial statements.

The financial statements have been prepared
on accrual & going concern basis. Accounting
policies have been consistently applied to all
the years presented except where a newly
issued accounting standard is initially adopted
or a revision to an existing accounting standard
requires a change in the accounting policy
hitherto in use.

b) Basis of measurement

The financial statements have been prepared
on a historical cost convention on accrual basis,
except for defined benefit plans -plan assets
measured at fair value and certain financial assets
and financial liabilities.

c) Current / non-current classification

The Company has ascertained its operating cycle
as twelve months for the purpose of current/
non-current classification of its assets and
liabilities. The Company presents its assets and
liabilities in the balance sheet based on current/
non-current classification.

An asset is treated as current when it is:

• 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 current when:

• It is expected to be settled in normal
operating cycle

• It is held primarily for the purpose of trading

• I t 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

d) Use of estimates

The preparation of financial statements in
conformity with Ind AS requires the management
to make estimate and assumptions that affect the
reported amount of assets and liabilities as at the
balance sheet date, reported amount of revenue
and expenses for the year and disclosures of
contingent liabilities as at the balance sheet
date. The estimates and assumptions used in
the accompanying financial statements are

based upon the Management's evaluation of
the relevant facts and circumstances as at the
date of the financial statements. Actual results
could differ from these estimates. Estimates
and underlying assumptions are reviewed on a
periodic basis. Revisions to accounting estimates,
if any, are recognised in the year in which the
estimates are revised and in any future years
affected. Refer Note 3 for detailed discussion on
estimates and judgements.

e) Rounding off of amounts

The financial statements are reported in Indian
Rupee which is functional currency of the
Company and all the values are rounded to the
nearest crores (Rs. 00,00,000).

2.2 Property, plant and equipment

Freehold land is carried at acquisition cost and is
not depreciated. All other items of property, plant
and equipment are stated at acquisition cost less
accumulated depreciation and impairment, if any.
Acquisition cost includes expenditure that is directly
attributable to the acquisition of the items.

Spare parts are recognised when they meet the
definition of property, plant and equipment, otherwise,
such items are classified as inventory.

Subsequent costs are included in the asset's
carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will
flow to the Company and the cost of the item can
be measured reliably. The carrying amount of any
component accounted for as a separate asset is
derecognised when replaced. All other repairs and
maintenance are charged to Statement of Profit and
Loss during the year in which they are incurred.

Advances paid towards the acquisition of property,
plant and equipment outstanding at each balance
sheet date is classified as capital advances under
other non-current assets and the cost of assets which
are not ready for intended use before such date are
disclosed under 'Capital work-in-progress'.

Depreciation methods, estimated useful lives

The Company depreciates property, plant and
equipment over their estimated useful lives prescribed
under Schedule II of Companies Act, 2013 using the
straight-line method. The estimated useful lives of
assets are as follows'
*Leasehold improvements are amortised over the
lease period, which corresponds with the useful lives
of the assets.

Based on the technical expert's assessment of useful
life, certain items of property plant and equipment
are being depreciated over useful lives different from
the prescribed useful lives under Schedule II to the
Companies Act, 2013. Management believes that
such estimated useful lives are realistic and reflect fair
approximation of the period over which the assets are
likely to be used.

Depreciation on addition to property plant and
equipment is provided on pro-rata basis from the date
when assets are ready for intended use. Depreciation
on sale from property plant and equipment is provided
up to the date preceding the date of sale, deduction
as the case may be. Gains and losses on disposals
are determined by comparing proceeds with carrying
amount. These are included in Statement of Profit and
Loss under 'Other Income'.

Depreciation methods, useful lives and residual values
are reviewed periodically at each financial year end
and adjusted prospectively, if any, as appropriate.

2.3 Other intangible assets

Other intangible assets are stated at cost of
acquisition net of recoverable taxes less accumulated
amortisation/ depletion and impairment loss, if any.
The cost comprises of purchase price and any cost
directly attributable to bringing the asset to its working
condition for the intended use.

Expenditure incurred on acquisition of intangible
assets which are not ready to use at the reporting
date is disclosed under "Intangible assets under
development".

Amortisation method and periods

Amortisation is charged on a straight-line basis over
the estimated useful lives. The estimated useful lives
and amortisation method are reviewed at the end of
each annual reporting period, with the effect of any
changes in the estimate being accounted for on a
prospective basis.

The Company amortised intangible assets over their
estimated useful lives using the straight-line method.
The estimated useful lives of intangible assets are as
follows'

2.4 Impairment of non-financial assets

Property, plant and equipment and intangible assets
with finite life are evaluated for recoverability whenever
there is any indication that their carrying amounts
may not be recoverable. If any such indication exists,
the recoverable amount (i.e. higher of the fair value
less cost to sell and the value-in-use) is determined
on an individual asset basis unless the asset does not
generate cash flows that are largely independent of
those from other assets. In such cases, the recoverable
amount is determined for the cash generating unit
(CGU) to which the asset belongs.

If such assets are considered to be impaired, the
impairment to be recognised in the Statement of
Profit and Loss is measured by the amount by which
the carrying value of the assets exceeds the estimated
recoverable amount of the asset. An impairment loss

is reversed in the statement of profit and loss if there
has been a change in the estimates used to determine
the recoverable amount. The carrying amount of the
asset is increased to its revised recoverable amount,
provided that this amount does not exceed the
carrying amount that would have been determined
(net of any accumulated amortisation or depreciation)
had no impairment loss been recognised for the asset
in prior years.

For non-financial assets, an assessment is made at
each reporting period end or whenever triggering
event occurs as to whether there is any indication
that previously recognised impairment losses may no
longer exist or may have decreased. If such indication
exists, the Company makes an estimation of the
recoverable amount.

A previously recognised impairment loss is reversed
only if there has been a change in the estimations
used to determine the asset's recoverable amount
since the last impairment loss was recognised. If
that is the case the carrying amount of the asset is
increased to its recoverable amount. That increased
amount cannot exceed the carrying amount that
would have been determined, net of depreciation, or
had no impairment loss been recognised for the asset
in prior years.

2.5 Foreign currency transactions

a) Functional and presentation currency

Items included in the financial statements are
measured using the currency of the primary
economic environment in which the entity
operates ('the functional currency'). The financial
statements are presented in Indian rupee
(Rs.), which is the Company's functional and
presentation currency.

b) Transactions and balances

On initial recognition, all foreign currency
transactions are recorded by applying to the
foreign currency amount the exchange rate
between the functional currency and the foreign
currency at the date of the transaction. Gains/
losses arising out of fluctuation in foreign
exchange rate between the transaction date and

Export Incentives under various schemes are
accounted in the year of export on accruaL basis.

2.6 Taxes

Tax expense for the year, comprising current tax and

deferred tax, are incLuded in the determination of the

net profit or Loss for the year.

a) Current income tax

Current tax assets and LiabiLities are measured at
the amount expected to be recovered or paid
to the taxation authorities. The tax rates and tax
Laws used to compute the amount are those that
are enacted or substantively enacted, at the year-
end date. Current tax assets and tax LiabiLities are
offset where the entity has a LegaLLy enforceabLe
right to offset and intends either to settle on a net
basis, or to reaLise the asset and settLe the LiabiLity
simultaneously.

b) Deferred tax

Deferred income tax is provided in full, using
the baLance sheet approach, on temporary
differences arising between the tax bases of
assets and liabilities and their carrying amounts
in financial statements. Deferred income tax
is also not accounted for if it arises from initial
recognition of an asset or liability in a transaction
other than a business combination that at the
time of the transaction affects neither accounting
profit nor taxable profit (tax loss). Deferred
income tax is determined using tax rates (and
laws) that have been enacted or substantially
enacted by the end of the year and are expected
to apply when the related deferred income
tax asset is realised or the deferred income tax
liability is settled.

Deferred tax assets are recognised for all
deductible temporary differences and unused
tax losses only if it is probable that future
taxable amounts will be available to utilise those
temporary differences and losses.

Management periodically evaluates positions
taken in tax returns with respect to situations

in which applicable tax regulation is subject to
interpretation. It establishes provisions where
appropriate on the basis of amounts expected to
be paid to the tax authorities.

Deferred tax assets and liabilities are offset when
there is a legally enforceable right to offset
current tax assets and liabilities and when the
deferred tax balances relate to the same taxation
authority.

Current and deferred tax is recognised in
Statement of Profit and Loss, except to the
extent that it relates to items recognised in other
comprehensive income or directly in equity.
In this case, the tax is also recognised in other
comprehensive income or directly in equity,
respectively.

2.7 Leases

The Company's lease asset classes primarily consist of
leases for Land and Buildings and Plant & Machinery.
The Company assesses whether a contract is or
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:

(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 recognises 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 leases
of low value assets. For these short-term and leases of
low value assets, the Company recognises the lease
payments as an operating expense on a straight-line
basis over the term of the lease.

The right-of-use assets 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, if any. Right-of-
use assets 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 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. The lease
liability is subsequently remeasured by increasing
the carrying amount to reflect interest on the lease
liability, reducing the carrying amount to reflect the
lease payments made.

A lease liability is remeasured upon the occurrence of
certain events such as a change in the lease term or
a change in an index or rate used to determine lease
payments. The remeasurement normally also adjusts
the leased assets.

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

2.8 Inventories

Inventories are valued at lower of cost and net
realisable value after providing cost of obsolescence,
if any. However, materials and other items held for use
in the production of inventories are not written down
below cost if the finished products in which they will
be incorporated are expected to be sold at or above
cost. The comparison of cost and net realisable value
is made on an item-by-item basis. Costs incurred in
bringing each product to its present location and
condition are accounted for as follows:

Cost includes purchase price, (excluding those
subsequently recoverable by the enterprise from the
concerned revenue authorities), freight inwards and
other expenditure incurred in bringing such inventories
to their present location and condition. In determining
the cost, weighted average cost method is used.

Manufactured finished goods and traded goods are
valued at the lower of cost and net realisable value.
Cost of work in progress and manufactured finished
goods is determined on the weighted average basis
and comprises direct material, cost of conversion and
other costs incurred in bringing these inventories to
their present location and condition. Cost of traded
goods is determined on a weighted average basis.

Provision of obsolescence on inventories is
considered on the basis of management's estimate
based on demand and market of the inventories.

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

The comparison of cost and net realisable value is
made on item by item basis.

2.9 Investments in subsidiaries

Investments in Subsidiaries are carried at cost less
accumulated impairment losses, if any. Where an
indication of impairment exists, the carrying amount
of the investment is assessed and written down
immediately to its recoverable amount. On disposal
of investments in subsidiaries, the difference between
net disposal proceeds and the carrying amounts are
recognised in the Statement of Profit and Loss.