SIGNIFICANT ACCOUNTING POLICIES

This note provides a list of the significant accounting policies
adopted in the preparation of these financial statements. These
policies have been consistently applied to all the years presented,
unless otherwise stated.

A) Basis of Preparation

i) Compliance with Ind AS

The financial statements have been prepared on accrual
and going concern basis and comply in all material aspects
with Indian Accounting Standards (Ind AS) notified
under Section 133 of the Companies Act, 2013 (the Act)
[Companies (Indian Accounting Standards) Rules, 2015]
and other relevant provisions of the Act.

ii) Historical cost convention

The financial statements have been prepared on a historical
cost basis, except for certain financial assets and liabilities
that are measured at fair value.

B) Property plant and equipment

Freehold land is carried at cost. All other items of property, plant
and equipment are stated at cost less accumulated depreciation
and accumulated impairment, if any. The cost comprises of
purchase price, taxes, duties, freight and other incidental
expenses directly attributable and related to acquisition and
installation of the concerned assets and are further adjusted

by the amount of CENVAT /GST/VAT credit availed wherever
applicable. The present value of the expected cost for the
decommissioning of an asset after its use is included in the cost
of the respective asset if the recognition criteria for a provision
are met.

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

Depreciation methods, estimated useful lives and residual
value

Depreciation on buildings, machinery and equipments has been
provided on straight-line basis over the estimated useful lives
of the respective assets. Intangible assets are amortised over
their estimated useful economic lives on straight line basis.
Freehold land and work in progress are not depreciated. The
estimated useful lives considered for providing depreciation on
other substantial assets are as follows:

Building- 35-45 years

Plant & Machinery-15-25 years

Computers-3-5 years

Furniture & Fixtures-10-15 years

Office Equipments-5-10 years

Vehicles-8-10 years

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.

C) Intangible assets

Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible
assets are carried at costless accumulated amortization and
accumulated impairment losses, if any. Internally generated
intangibles, excluding capitalized development cost, are
not capitalized and the related expenditure is reflected
in Statement of Profit and Loss in the period in which the
expenditure is incurred. Cost comprises the purchase price
and any attributable cost of bringing the asset to its working
condition for its intended use.

Research and development cost

expenditure and development expenditure that do not meet
the criteria as given in Ind AS-38 “Intangible Assets” are
recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised as an
asset in a subsequent period.

Amortisation methods and periods

The Company amortises intangible assets with a finite useful
life using the straight-line method over their estimated useful
life of 3-6 years.

The amortization period and the amortization method for an
intangible asset with a finite useful life is 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 is accounted for by changing
the amortization period or method, as appropriate and are
treated as changes in accounting estimates. The amortization
expense on intangible assets with finite lives is recognised in
the Statement of Profit and Loss.

Gains or losses arising from disposal of the intangible assets are
measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognised in the
Statement of Profit and Loss when the assets are disposed off.

D) Impairment of non-financial assets

The carrying amounts of the assets are reviewed at each
Balance sheet date for any indication of impairment based
on internal/external factors. If any such 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's (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. 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 available. If no such transactions can
be identified, an appropriate valuation model is used. After
impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.

Impairment losses including impairment on inventories are
recognised in the Statement of Profit and Loss.

E) Financial Instruments
i) Financial Assets

A) Initial recognition and measurement

All financial assets and liabilities are initially
recognised at fair value. Transaction costs that are
directly attributable to the acquisition or issue of
financial assets and financial liabilities, which are not
at fair value through profit or loss, are adjusted to the
fair value on initial recognition.

B) Subsequent measurement

a) Financial assets carried at amortised cost

A financial asset is measured at amortised cost if
it is held within a business model whose objective
is to hold the asset in order to collect contractual
cash flows and the contractual terms of the
financial asset give rise on specified dates to cash
flows that are solely payments of principal and
interest on the principal amount outstanding.

b) Financial assets carried at fair value through
other comprehensive income (FVTOCI)

A financial asset is measured at FVTOCI if it is
held within a business model whose objective is
achieved by both collecting contractual cash flows
and selling financial assets and the contractual
terms of the financial asset give rise on specified
dates to cash flows that are solely payments of
principal and interest on the principal amount
outstanding.

c) Financial assets carried at fair value through
profit or loss (FVTPL)

A financial asset which is not classified in any of
the above categories are measured at FVTPL.

C) Investment in subsidiaries

The investment in subsidiary and Joint venture are
carried at cost as per IND AS 27. The Company
regardless of the nature of its involvement with an
entity (the investee), determines whether it is a parent
by assessing whether it controls the investee. The
Company controls an investee when it is exposed, or
has rights, to variable returns from its involvement
with the investee and has the ability to affect those
returns through its power over the investee. Thus, the
Company controls an investee if and only if it has all
the following:

(a) power over the investee;

(b) exposure, or rights, to variable returns from its
involvement with the investee and

(c) Investments are accounted in accordance with
IND AS 105 when they are classified as held for
sale. On disposal of investment, the difference
between its carrying amount and net disposal
proceeds is charged or credited to the statement
of profit and loss

(d) Investments are accounted in accordance with
IND AS 105 when they are classified as held for
sale. On disposal of investment, the difference
between its carrying amount and net disposal
proceeds is charged or credited to the statement
of profit and loss

D) Other Equity Investments

All other equity investments are measured at fair value
with changes in fair value recognised in statement of
profit and loss except for those equity investments for
which the Company has elected to present the value
changes in 'Other Comprehensive Income.

E) Impairment of financial assets

In accordance with Ind AS 109, the Company uses
'Expected Credit Loss' (ECL) model, for evaluating
impairment of financial assets other than those
measured at fair value through profit and loss (FVTPL).

Expected credit losses are measured through a loss
allowance at an amount equal to:

• The 12 months expected credit losses(expected
credit losses that result from those default events
on the financial instrument that are possible
within 12 months after the reporting date; or

• Full lifetime expected credit losses (expected
credit losses that result from all possible default
events over the life of the financial instrument).

For trade receivables Company applies 'simplified
approach' which requires expected lifetime losses
to be recognised from initial recognition of the
receivables. The Company uses historical default rates
to determine impairment loss on the portfolio of trade
receivables. At every reporting date these historical
default rates are reviewed and changes in the forward
looking estimates are analysed.

For other assets, the Company uses 12 month ECL
to provide for impairment loss where there is no
significant increase in credit risk. If there is significant
increase in credit risk full lifetime ECL is used.

ii) Financial Liabilities

A) Initial recognition and measurement

All financial liabilities are recognised at fair value
and in case of loans net of directly attributable cost.
Fees of recurring nature are directly recognised in the
Statement of Profit and Loss as finance cost.

B) Subsequent measurement

Financial liabilities are carried at amortised cost using
the effective interest rate method (EIR). Amortised
cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an
integral part of EIR. The EIR amortisation is included
as finance costs in the Statement of Profit and Loss.
For trade and other payables maturing within one year
from the balance sheet date, the carrying amounts
approximate fair value due to the short maturity of
these instruments.

F) Income recognition
Interest income

Interest income from debt instruments is recognised using the
effective interest rate method. The effective interest rate is
the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to the gross
carrying amount of a financial asset. When calculating the
effective interest rate, the Company estimates the expected
cash flows by considering all the contractual terms of the
financial instrument (for example, prepayment, extension, call
and similar options) but does not consider the expected credit
losses.

Dividends

Dividends are recognised in profit or loss only when the right to
receive payment is established, it is probable that the economic
benefits associated with the dividend will flow to the Company,
and the amount of the dividend can be measured reliably.

G) Inventories

Raw materials and stores, work in progress, traded and finished
goods are stated at the lower of cost and net realisable value.
Cost of raw materials and traded goods comprises cost of
purchases. Cost of work-in-progress and finished goods
comprises direct materials, direct labour and an appropriate
proportion of variable and fixed overhead expenditure, the
latter being allocated on the basis of normal operating capacity.
Cost of inventories also include all other costs incurred in
bringing the inventories to their present location and condition.
Costs are assigned to individual items of inventory on the basis
of weighted average cost basis. Costs of purchased inventory
are determined after deducting rebates and discounts. Net
realisable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and
the estimated costs necessary to make the sale.

H) Revenue Recognition

Effective April 1, 2018, the Company has applied Ind AS 115
which establishes a comprehensive framework for determining
whether, how much and when revenue is to be recognised. Ind
AS 115 replaces Ind AS 18 Revenue and Ind AS 11 Construction
Contracts. The Company has adopted Ind AS 115 using the
cumulative effect method. The effect of initially applying this
standard is recognised at the date of initial application (i.e.
April 1, 2018). The standard is applied retrospectively only
to contracts that are not completed as at the date of initial
application and the comparative information in the statement of
profit and loss is not restated - i.e. the comparative information
continues to be reported under Ind AS 18 and Ind AS 11. The
impact of adoption of the standard on the financial statements
of the Company is insignificant.

Revenue is recognised upon transfer of control of promised
products or services to customer in an amount that reflects
the consideration which the Company expects to receive in
exchange for those products or services, which is usually at the
time of delivery of products or services to the customer. Revenue
from sale of product is measured at fair value of consideration

received /receivable, net of returns, trade allowances, rebates,
value added taxes, Goods and Service Tax (GST) and amounts
collected on behalf of third parties. Revenue is recognised
when it is probable that economic benefits associated with
the transaction will flow to the entity, amount of revenue can
be measured reliably and entity retains neither continuing
managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold.

Contract assets are recognised when there is excess of revenue
earned over billings on contracts. Contract assets are classified
as unbilled receivables (only act of invoicing is pending) when
there is unconditional right to receive cash, and only passage of
time is required, as per contractual terms.

I) Contract Balances

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. A receivable represents the Company's right
to an amount of consideration that is unconditional.

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.

A trade receivable is recognised if an amount of consideration
that is unconditional (i.e., only the passage of time is required
before payment of the consideration is due). Refer to accounting
policies of financial assets in section (Financial instruments -
initial recognition and subsequent measurement).

J) Employee Benefits

(i) Short-term obligations

Liabilities for wages and salaries, including non-monetary
benefits that are expected to be settled wholly within 12
months after the end of the period in which the employees
render the related service are recognised in respect of
employees' services up to the end of the reporting period
and are measured at the amounts expected to be paid
when the liabilities are settled.

(ii) Post-Employment Benefits

Defined Contribution Plan: A defined contribution plan is a
post-employment benefit plan under which the Company
pays specified contributions to a separately entity. The
Company has defined contribution plans for the post¬
employment benefits namely provident fund scheme. The
Company's contribution in the above plans is recognised as
an expense in the Statement of Profit and Loss during the
year in which the employee renders the related service.

Defined Benefit Plans: The Company has defined benefit
plan namely Gratuity for employees. The liability in respect
of gratuity plans is calculated annually by independent
actuary using the projected unit credit method. The

Company recognises the following changes in the net
defined benefit obligation under Employee benefits
expense in statement of profit or loss:

• Service costs comprising current service costs, past service
costs , gains and losses on curtailment and non-routine-
settlements

• Net Interest expense

Remeasurement gains and losses arising from experience
adjustments and changes in actuarial assumptions are
recognised in the period in which they occur, directly
in Other comprehensive income. They are included in
retained earnings in the Statement of Changes in Equity
and in the Balance Sheet. Remeasurements are not
reclassified to profit or loss in subsequent periods.

Termination benefits are recognized as an expense
immediately.

K) Borrowing Cost

General and specific borrowing costs that are directly
attributable to the acquisition, construction or production of
a qualifying asset are capitalised during the period of time that
is required to complete and prepare the asset for its intended
use or sale. Qualifying assets are assets that necessarily take a
substantial period of time to get ready for their intended use or
sale.

Investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for
capitalisation.

Other borrowing costs are expensed in the period in which
they are incurred.

L) Income Tax

The income tax expense or credit for the period is the tax
payable on the current period's taxable income based on the
applicable income tax rate adjusted by changes in deferred tax
assets and liabilities attributable to temporary differences and
to unused tax losses.

The current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the end of
the reporting period. 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 income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the
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 reporting period 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.

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 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.

Current and deferred tax is recognised in profit or 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.

M) Lease

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

Company as a lessee

The Company's lease asset classes primarily comprise of lease
for land and building. 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: (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 applies a single recognition and measurement
approach for all leases, except for short-term leases and leases
of low-value assets. 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. The
Company recognises lease liabilities to make lease payments
and right-of-use assets representing the right to use the
underlying assets as below:

Right-of-use assets

The Company recognises right-of-use 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 underlying assets (i.e. 30 and
60 years)

If ownership of the leased asset transfers to the Company at
the end of the lease term or the cost reflects the exercise of a

purchase option, depreciation is calculated using the estimated
useful life of the asset. The right-of-use assets are also subject
to impairment. Refer to the accounting policies in section
'Impairment of nonfinancial assets'.

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 in substance 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.

Variable lease payments that do not depend on an index or
a rate are recognised as expenses (unless they are incurred
to produce inventories) in the period in which the event or
condition that triggers the payment occurs.

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.

Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition
exemption to its short-term leases (i.e., those leases that have
a lease term of 12 months or less from the commencement
date and do not contain a purchase option). It also applies the
lease of low-value assets recognition exemption to leases 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.

Company as a lessor

Leases for which the Company is a lessor is classified as finance
or operating lease. Leases in which the Company does not
transfer substantially all the risks and rewards incidental to
ownership of an asset are classified as operating leases. Rental
income arising is accounted for on a straight-line basis over
the lease terms. 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.

N) Foreign Currency Transactions

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 the Company's functional and presentation
currency.

Foreign currency transactions are translated into the functional
currency using the exchange rates at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates are generally recognised
in profit or loss.

O) Earnings Per Share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the Company

• by the weighted average number of equity shares
outstanding during the financial year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account:

• the after income tax effect of interest and other
financing costs associated with dilutive potential
equity shares, wherever applicable, and

• the weighted average number of additional equity
shares that would have been outstanding assuming
the conversion of all dilutive potential equity shares.