Material accounting policies

2 BASIS OF PREPARATION

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

The financial statements have been prepared on a
historical cost basis, except for certain financial assets
and liabilities measured at fair value (refer accounting
policy regarding financial instruments). The financial
statements are presented in Indian Rupees "INR"
which is also the company's functional currency and
all values are rounded to the nearest Millions (Rupees
Millions) up to two Decimals, except when otherwise
indicated.

2.01 PROPERTY, PLANT AND EQUIPMENT

All items of property, plant and equipment are stated
at historical cost less accumulated depreciation
and accumulated impairment losses. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items. Cost includes its purchase price
including non-refundable taxes and duties, directly

attributable costs of bringing the asset to its present
location and condition.

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 the
statement of profit or loss during the reporting period
in which they are incurred.

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.

The residual values and useful lives of property, plant
and equipment are reviewed at each financial year
end and changes, if any, are accounted in the line with
revisions to accounting estimates.

Depreciation on property, plant and equipment is
provided on straight line method, which is in line with
the estimated useful life as specified in Schedule II of
the Companies Act, 2013.

Depreciation commences when the assets are ready
for their intended use. The assets residual values and
useful lives are reviewed, and adjusted if appropriate, at
the end of each reporting period.

Gains and losses on disposals are determined by
comparing net disposal proceeds with carrying amount.
These are included in the statement of profit and loss.

2.02 IMPAIRMENT OF PROPERTY, PLANT AND
EQUIPMENT

Consideration is given at each balance sheet date
to determine whether there is any indication of

impairment of the carrying amount of the company
each class of the property, plant and equipment. If
any indication exists, an asset's recoverable amount is
estimated. An impairment loss is recognised whenever
the carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is the greater of the
net selling price and value in use. In assessing value in
use, the estimated future cash flows are discounted to
their present value based on an appropriate discount
factor.

2.03 CURRENT VERSUS NON-CURRENT CLASSIFICATION

The company presents 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 realized or intended to be sold or
consumed in normal operating cycle

* Held primarily for the purpose of trading

* 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

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

* 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

The company classifies all other liabilities 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 processing and their realisation in cash and
cash equivalents. The company has identified twelve
months as its operating cycle.

2.04 FAIR VALUE MEASUREMENT

The company measures financial instruments at fair
value at each balance sheet date. 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 economic best 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.

For financial assets and liabilities maturing within one
year from the balance sheet date and which are not
carried at fair value, the carrying amount approximates
fair value to due to short term maturity of these
instruments.

The company recognises the transfer between the levels
of fair value hierarchy at the end of the reporting period
during which the changes has occurred.

For the purpose of fair value disclosures, the company
has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset
or liability and the level of the fair value hierarchy as
explained above.

This note summaries accounting policy for fair value.
Other fair value related disclosures are given in the
relevant notes.

* Quantitative disclosures of fair value measurement
hierarchy (Note 32)

* Financial instruments (including those carried at
amortised cost) (Note 32)

2.05 REVENUE FROM CONTRACT WITH CUSTOMERS

Revenue from contracts with customers is recognised
when control of the goods is transferred to the customer
at an amount that reflects the consideration entitled in
exchange for those goods. The company is generally
the principal as it typically controls the goods before
transferring them to the customer.

Generally, control is transferred upon shipment of goods
to the customer or when the goods is made available to
the customer, provided transfer of title to the customer
occurs and the company has not retained any significant
risks of ownership or future obligations with respect to
the goods shipped.

Revenue from inter-company arrangement is
recognised based on transaction price which is at arm's
length arrangement. Revenue towards satisfaction of
a performance obligation is measured at the amount
of transaction price (net of variable consideration)
allocated to that performance obligation. The
transaction price of goods sold and services rendered
is net of variable consideration on account of various
discounts and schemes offered by the Company as part
of the contract.

Generally, the credit period varies as per the
contractually agreed period from the shipment or
delivery of goods as the case may be. The company
does not adjust short-term advances received from
the customer for the effects of significant financing
component if it is expected at the contract inception
that the promised good or service will be transferred to
the customer within a period of one year.

2.06 OTHER INCOME
Interest income:

Interest income is accrued on time basis, by reference
to the principal outstanding and at the effective interest
rate applicable, which is the rate that exactly discounts
estimated future cash receipts through the expected life
of the financial asset to that asset’s net carrying amount
on initial recognition.

Profit/ (Loss) on derivatives:

Profit/ (Loss) on derivatives contracts on account of
fair value changes are recognised as either income
or expenses as the case may be through Profit and
loss.

Duty drawback/Export incentives:

Duty drawback income is recognised when right to
receive such benefits is established. Further, in cases
where there is uncertainty of such benefits, revenue is
recognised when benefits are received.

2.07 INVENTORIES

Inventories are valued at the lower of cost or net
realisable value.

Costs incurred in bringing each product to its present
location and condition are accounted for as follows:

* Finished goods and work in progress: cost
includes cost of direct materials and labour and
a proportion of manufacturing overheads based
on the normal operating capacity but excluding
borrowing costs. Cost is determined on first in,
first out basis.

* Traded goods: cost includes cost of purchase and
other costs incurred in bringing the inventories
to their present location and condition. Cost is
determined on weighted average basis.

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.

* Stock in Transit: cost comprises the purchase
price and other costs incurred to bring the
inventory to its present location and condition.

The company accounts for agricultural produce which
is harvested produce of the biological asset

1. Initial recognition and measurement

The entity recognizes a biological asset or
agricultural produce when, and only when

* the entity controls the asset as a result of
past events;

* it is probable that future economic benefits
associated with the asset will flow to the
entity; and

* the fair value or cost of the asset can be
measured reliably.

Agricultural produce harvested from an entity’s
biological assets is measured at its fair value
less costs to sell at the point of harvest. Such
measurement value is the cost at that date when
applying Ind AS

2. Inventories. The carrying amounts of

agricultural produce is carried at cost when the
company expects the impact of the biological
transformation on price to be not material.

2.08 TAXES

Current income tax assets and liabilities are measured
at the amount expected to be recovered from or paid to
the taxation authorities in accordance with the Income
Tax Act 1961. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively
enacted, at the reporting date.

Current income tax relating to items is recognised
outside profit or loss (either in other comprehensive
income or in equity). 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.

Current tax assets and current tax liabilities are offset
when there is a legally enforceable right to set off the
recognised amounts and there is an intention to settle
the asset and the liability on a net basis.

Deferred Tax

Deferred tax is recognised using balance sheet approach
at the reporting date between the tax bases of assets
and liabilities and their carrying amounts for financial

reporting purpose at the reporting date.

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 profits 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 assets to be
recovered.

Deferred tax assets and liabilities are measured using
the tax rates that are expected to apply in a year when
asset is realized or the liability is expected to be settled
based on the tax rates and tax laws that have been
enacted or substantively enacted by the reporting
date.

Deferred tax assets and deferred tax liabilities are offset
when there is a legally enforceable right to set off assets
against liabilities representing current tax where the
deferred tax assets and deferred tax liabilities relate to
taxes on income levied by the same governing taxation
laws.

2.09 CURRENT AND DEFERRED TAX FOR THE YEAR

Current and deferred tax are recognised in the statement
of profit or loss, 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.

2.10 FOREIGN CURRENCY TRANSLATION
Functional and Presentation currency

Items included in the financial statements of the company
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 (INR), which is functional and presentation
currency of the company.

Transaction and balances

Transactions in foreign currencies are initially
recognised in the financial statements using exchange
rates prevailing on the date of transaction. Monetary
assets and liabilities denominated in foreign currencies
are translated to the functional currency at the
exchange rates prevailing at the reporting date and
foreign exchange gain or loss 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.