2.3 Summary of Material Accounting Policies

2.3.1 Classification of Assets and Liabilities as Current or Non-Current

The Company presents current and non-current assets, and current and non-current liabilities, as
separate classifications in its statement of financial position on the basis of realization of assets.

An asset is classified as current when it is:

• expected to be realized or intended to be sold or consumed in the normal operating cycle, or

• held primarily for the purpose of trading, or

• expected to be realized 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

A liability is classified as current when:

• it is expected to be settled in the normal operating cycle

• it is held primarily for the purpose of trading

• it is due to be settled within twelve months after the reporting period, or

• there is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period

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

2.3.2 Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Company and the revenue can be reliably measured, regardless of when the payment is being
made. Revenue is measured at the fair value of the consideration received or receivable, taking
into account contractually defined terms of payment and excluding taxes or duties collected on
behalf of the government. The Company has concluded that it is the principal in all of its revenue
arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude
and is also exposed to inventory and credit risks.

The specific recognition criteria described below must also be met before revenue is recognized.
Sale of goods and scrap

The Company derives revenues primarily from sale of Tin Cans, Printed/Lacquered Sheet, Components
of tin cans and trading of Tin Plates.

Revenue is recognized at the point in time when the performance obligation is satisfied and control
of the goods is transferred to the customer in accordance with the terms of customer contracts. In
case of domestic customers, generally revenue recognition take place when goods are dispatched
and in case of export customers when goods are shipped onboard based on bill of lading as per the
terms of contract. Revenue is measured based on the transaction price, which is the consideration,
adjusted for trade discounts, if any, as specified in the contract with the customer. Revenue also
excludes taxes collected from customers.

A contract liability is the obligation to transfer goods to the customer for which the Company has
received consideration from the customer. Contract liabilities are recognized as revenue when the
Company performs under the contract.

The Company does not expect to have any contracts where the period between the transfer of the
promised goods to the customer and payment by the customer exceed one year. As a consequence,
the Company does not adjust any of the transaction prices for the time value of money.

Interest Income

For all financial assets measured at amortized cost interest income is recorded using the effective
interest rate (EIR). The EIR is the rate that exactly discounts the estimated future cash receipts through
the expected life of the financial asset or a shorter period, where appropriate, to the net carrying
amount of the financial asset.

2.3.3 Property, Plant and Equipment

Property, plant and equipment is recorded at cost less accumulated depreciation and impairment (if
any). Cost includes all related costs directly attributable to the acquisition or construction of the asset.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the
total cost of the item is depreciated separately. Except for land, property, plant and equipment is
depreciated using the straight-line method over the useful lives of the related assets as presented in
Schedule 2 of Companies Act, 2013.

The estimated useful lives are as mentioned below:

Major improvements, which add to productive capacity or extend the life of an asset, are capitalized,
while repairs and maintenance are expensed as incurred. Where a property, plant and equipment
comprise major components having different useful lives, these components are accounted for
as separate items. The depreciation expense is recognized in the statement of profit or loss in the
expense category consistent with the function of the property, plant and equipment.

Property, plant and equipment under construction is recorded as capital work- in-progress until it
is ready for its intended use; thereafter it is transferred to the related class of property, plant and
equipment and depreciated over its estimated useful life. Interest incurred during construction is
capitalized if the borrowing cost is directly attributable to the construction.

Gains or losses arising from de-recognition of a property, plant and equipment are measured as
the difference between the net disposal proceeds and the carrying amount of the asset and are
recognized in the statement of profit or loss when the asset is derecognized.

The residual values and useful lives of property, plant and equipment are reviewed at each reporting
date and adjusted if expectations differ from previous estimates. Depreciation methods applied
to property, plant and equipment are reviewed at each reporting date and changed if there has
been a significant change in the expected pattern of consumption of the future economic benefits
embodied in the asset.

2.3.4 Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost less accumulated amortization and accumulated
impairment losses, if any. Internally generated intangible assets, excluding capitalized development
costs, are not capitalized and expenditure is recognized in the statement of profit or loss when it is
incurred.

The useful lives of intangible assets are assessed as finite. Intangible assets are amortized over their
useful economic lives and assessed for impairment whenever there is an indication that the intangible
asset may be impaired. The amortization period and the amortization method 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 accounted for by changing
the amortization period or method, as appropriate, and are treated as changes in accounting
estimates. The amortization expense is recognized in the statement of profit or loss in the expense
category consistent with the function of the intangible assets.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference
between the net disposal proceeds and the carrying amount of the asset and are recognized in the
statement of profit or loss when the asset is derecognized.

2.3.5 Impairment of 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 Unit (CGU)'s fair value less costs of disposal and its value in use. It 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. Where 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 forecasts which are
prepared separately for each of the Company's CGU to which the individual assets are allocated.
These budgets and forecast calculations are generally covering a period of five years. A long-term
growth rate is calculated and applied to project future cash flows after the fifth year.

Impairment losses are recognized in the statement of profit or loss in those expense categories
consistent with the function of the impaired asset.

2.3.6 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.

i. Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as financial assets at fair value through profit
or loss, fair value through OCI or at amortized cost as appropriate. The Company determines
the classification of its financial assets at initial recognition.

All financial assets are recognised initially at fair value plus, in the case of assets not at fair value
through profit or loss, transaction costs that are attributable to the acquisition of the financial
asset.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as described
below:

Financial assets at FVTPL or FVTOCI

Financial assets at fair value through profit or loss include financial assets held for trading and
financial assets designated upon initial recognition at fair value through profit or loss. Financial
assets are classified as held-for-trading if they are acquired for the purpose of selling or
repurchasing in the near term. Financial assets at fair value through profit and loss are carried
in the statement of financial position at fair value with net changes in fair value presented as
finance income (positive net changes in fair value) or finance costs (negative net changes
in fair value) in the statement of profit or loss. The Company has not designated any financial
assets upon initial recognition as at fair value through profit or loss.

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 P&L, even on sale of investment. However, the Company may transfer the
cumulative gain or loss within equity.

Financial assets at amortised cost

This category is the most relevant to the Company. All Trade and Other Receivables, Loans
and Advances fall under this category. After initial measurement, such financial assets are
subsequently measured at amortised cost using the effective interest rate (EIR) method, less
impairment. 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 finance income in the statement of profit or loss. The losses arising from impairment are
recognised in the statement of profit or loss in finance costs for loans and in cost of sales or
other operating expenses for receivables. This category generally applies to trade and other
receivables.

De-recognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is derecognised 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 the Company has transferred substantially
all the risks and rewards of the asset, or transferred control of the asset.

Impairment of Financial Assets

The objective of the company in recognising the impairment allowance is to recognise lifetime
expected credit losses for all financial instruments for which there have been significant increases
in credit risk since initial recognition — whether assessed on an individual or collective basis —
considering all reasonable and supportable information, including that which is forward-looking.

Credit Losses are 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 company expects to receive
(i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted
effective interest rate for purchased or originated credit-impaired financial assets). Expected
Credit Losses are the weighted average of credit losses with the respective risks of a default
occurring as the weights.

The Company recognises a loss allowance for expected credit losses on a financial asset that
is measured at amortized cost at each reporting date, at an amount equal to the lifetime
expected credit losses if the credit risk on that financial instrument has increased significantly
since initial recognition. When making the assessment, the company uses the change in the risk
of a default occurring over the expected life of the financial instrument instead of the change
in the amount of expected credit losses. To make that assessment, the company compares
the risk of a default occurring on the financial instrument as at the reporting date with the
risk of a default occurring on the financial instrument as at the date of initial recognition and
consider reasonable and supportable information, that is available without undue cost or effort,
that is indicative of significant increases in credit risk since initial recognition. The Company
assumes that the credit risk on a financial instrument has not increased significantly since initial
recognition if it is determined to have low credit risk at the reporting date.

If, at the reporting date, the credit risk on a financial instrument has not increased significantly
since initial recognition, the company measures the loss allowance for that financial instrument
at an amount equal to 12-month expected credit losses. For Trade receivables the company
always measure the loss allowance at an amount equal to lifetime expected credit losses.

Evidence of impairment may include indications that the debtors or a group of debtors
is experiencing significant financial difficulty, default or delinquency in interest or principal
payments, the probability that they will enter bankruptcy or other financial reorganisation and
where observable data indicate that there is a measurable decrease in the estimated future
cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For financial assets carried at amortised cost, the Company first assesses whether impairment
exists individually for financial assets that are individually significant, or collectively for financial
assets that are not individually significant. If the Company determines that no objective
evidence of impairment exists for an individually assessed financial asset, whether significant or
not, it includes the asset in a group of financial assets with similar credit risk characteristics and
collectively assesses them for impairment. Assets that are individually assessed for impairment
and for which an impairment loss is, or continues to be, recognised are not included in a
collective assessment of impairment.

The Company measures expected credit losses of a financial instrument in a way that reflects
an unbiased and probability-weighted amount that is determined by evaluating a range of
possible outcomes, the time value of money; and the reasonable and supportable information
that is available without undue cost or effort at the reporting date about past events, current
conditions and forecasts of future economic conditions.

The carrying amount of the asset is reduced through the use of an allowance account and the
amount of the loss is recognised in the statement of profit or loss. Interest income continues to
be accrued on the gross carrying amount using the effective rate of interest unless the financial
instrument is credit-impaired in which case the interest income is recognised on reduced
carrying amount. The interest income is recorded as part of finance revenue in the statement
of profit or loss.

Loans, together with the associated allowance are written off when there is no realistic prospect
of future recovery and all collateral has been realised or has been transferred to the Company.
If, in a subsequent year, the amount of the estimated impairment loss increases or decreases
because of an event occurring after the impairment was recognised, the previously recognised
impairment loss is increased or reduced by adjusting the allowance account. If a write-off is
later recovered, the recovery is credited to profit or loss.

ii. Financial Liabilities

The Company has the following financial liabilities in its statement of financial position

• Borrowings

• Trade payables

• Other Financial Liabilities

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.

Subsequent measurement

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

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 acquired for the purpose of selling
in the near term. Gains or losses on liabilities held-for-trading are recognised in the statement
of 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 AS109 are
satisfied. The Company has not designated any financial liabilities as at fair value through profit
or loss.

Financial liabilities at amortised cost

This is the category most relevant to the Company. After initial recognition, financial liabilities are
subsequently measured at amortised cost using the effective interest rate method. Gains and
losses are recognised in the statement of profit or loss when the liabilities are derecognised as
well as through the effective interest rate method (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 in finance
costs in the statement of profit or loss.

This category generally applies to notes payable, short-term loans and overdrafts.

iii. Offsetting of financial instruments

Financial assets and financial liabilities are offset with the net amount reported in the consolidated
statement of financial position only if there is a current enforceable legal right to offset the
recognised amounts and an intent to settle on a net basis, or to realise the assets and settle the
liabilities simultaneously.

iv. Fair Value of Financial Instruments

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 values of the
financial instruments are not materially different at the reporting date.

2.3.7 Cash and Bank Balances

Cash and bank balances in the statement of financial position comprise cash at banks and on hand
and fixed deposits with banks, 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, bank
balances and short-term deposits with original maturity of less than 3 months, net of outstanding bank
overdrafts as they are considered an integral part of the Company's cash management.

2.3.8 Leases

The Company as a lessee

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 assets, 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.

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, which comprises the initial amount of the
lease liability adjusted for any lease payments made at or before the commencement date, plus
any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying
asset or to restore the underlying asset or the site on which it is located, less any lease incentives
received.

The right-of-use asset is subsequently depreciated using the straight-line method from the
commencement date to the shorter of the end of the useful life of the right of- use asset or the end
of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis
as those of PPE. In addition, the right-of-use asset is periodically reduced by impairment losses, if any,
and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid
at the commencement date, discounted using the interest rate implicit in the lease or, if that rate
cannot be readily determined, the Company's incremental borrowing rate. Generally, the Company
uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the fixed payments,
including in substance fixed payments. The lease liability is measured at amortised cost using the
effective interest method.

The Company has used number of practical expedients when applying Ind AS 116:- Short-term
leases, leases of low-value assets and single discount 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. The Company applied a single discount rate to a portfolio of leases of similar
assets in similar economic environment with a similar end date.

The Company's leases mainly comprise land and buildings and Plant and equipment. The Company
leases land and buildings for warehouse facilities. The Company also has leases for equipment.

The Company as lessor

Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever
the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the
contract is classified as a finance lease. All other leases are classified as operating leases.

The Intermediate lessor

For operating leases, rental income is recognized on a straight-line basis over the term of the relevant
lease.

2.3.9 Borrowing Cost

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing
of funds. Borrowing costs directly attributable to the acquisition, construction or production of an
asset that necessarily takes a substantial period of time to get ready for its intended use or sale are
capitalised as part of the cost of the respective asset. All other borrowing costs are expensed in the
period in which they occur.