2.2 Change in accounting policies
2.2.1Accounting for leases

The Company's lease asset classes primarily
consist of leases for Building. The Company as¬
sesses whether a contract is contains a lease, at
inception of a contract. A contract is, or contains,
a lease if the contract conveys the right to con¬
trol 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 as¬
sesses whether:

(i) the contract involves the use of an identified
asset

(ii) the Company has substantially all of the eco¬
nomic 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 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 leases of low value as¬
sets. For these short - term and leases of low val¬
ue assets, the Company recognizes 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 recognized 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 meas¬
ured 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.

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 deter¬
minable, using the incremental borrowing rates.
The lease liability is subsequently remeasured by
increasing the carrying amount to reflect interest
on the lease liability and reducing the carrying
amount to reflect the lease payments made.

A lease liability is remeasured upon the occur¬
rence 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 remeasure¬
ment normally also adjusts the leased assets.
Lease liability and ROU asset have been sepa¬
rately presented in the Balance Sheet and lease

payments have been classified as financing
cash flows.

The Company has lease contracts that in¬
clude extension and termination options.
These options are negotiated by manage¬
ment to provide flexibility in managing the
leased - asset portfolio and again the Compa¬
ny's business needs. Management exercise
significant judgment in determining whether
theses extension and termination option are
reasonably certain to be exercised (see Note
5).

2.3 Current versus non-current classifica¬
tion

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 oper¬
ating cycle

• It is held primarily for the purpose of trad¬
ing

• 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 classi¬
fied as noncurrent assets and liabilities.

The operating cycle is the time between the
acquisition of assets for processing and
their realization in cash and cash equiva¬
lents. The Company has identified twelve¬
months as its operating cycle.

2.4. Revenue recognition

Revenue from Products: Revenue from sale
of products and services are recognized at a
time at which the properties in goods are
transferred to the buyer. In determining

whether an entity has right to payment, the entity
shall consider whether it would have an enforcea¬
ble right to demand or retain payment for good
supplied.

Revenue is recognized at the transaction price.
Transaction price is the amount of consideration
to which a company expects to be entitled in ex¬
change for transferring promised goods or ser¬
vices to a customer, excluding amounts collected
on behalf of third parties.

The Company does not expect to have any con¬
tracts where the period between the transfer of
the promised goods or services to the customer
and payment by the customer exceeds one year.
As a consequence, it does not adjust any of the
transaction prices for the time value of money.
Interest and Dividend Income: Interest income is
recognized on a time proportion basis taking into
account the amount outstanding and the rate ap¬
plicable. Dividend income is recognized when the
shareholders' right to receive dividend is estab¬
lished.

Insurance Claim: Claims receivable are account¬
ed at the time when such income has been earned
by the Company depending on the certainty of re¬
ceipts.

The specific recognition criteria described below
must also be met before revenue is recognized.

2.5. Export incentives

Export Incentives such as Merchandise Export
Incentive Scheme, is recognized in the Statement
of Profit and Loss as a part of other operating
revenues.

2.6. Taxes
Current income tax

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 or substantively enact¬
ed, at the reporting date in India where the Com¬
pany operates and generates taxable income.

Current income tax relating to items recognized
outside profit or loss is recognized outside profit
or loss (either in other comprehensive income or
in equity). Current tax items are recognized in
correlation to the underlying transaction either in
statement of profit and loss or directly in equity.
Management periodically evaluates positions tak¬
en in the tax returns with respect to situations in
which applicable tax regulations are subject to
interpretation and establish provisions where ap¬
propriate.

2.7. Deferred tax

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 liabilities are recog-

nized for all taxable temporary differences,
except:

• When the deferred tax liability arises from
the initial recognition of an asset or liability
in a transaction that is not a business combi¬
nation and, at the time of the transaction,
affects neither the accounting profit nor taxa¬
ble profit or loss

Deferred tax assets are recognized for all
deductible temporary differences, the carry
forward of unused tax credits and any un¬
used tax losses. Deferred tax assets are rec¬
ognized to the extent that it is probable that
taxable profit will be available against which
the deductible temporary differences and the
carry forward of unused tax credits and un¬
used tax losses can be utilized, except:

• When the deferred tax asset relating to the
deductible temporary difference arises from
the initial recognition of an asset or liability
in a transaction that is not a business combi¬
nation and, at the time of the transaction,
affects neither the accounting profit nor taxa¬
ble profit or loss

The carrying amount of deferred tax assets
is reviewed at each reporting date and re¬
duced to the extent that it is no longer prob¬
able that sufficient taxable profit will be
available to allow all or part of the deferred
tax asset to be utilized. Unrecognized de¬
ferred tax assets are re - assessed at each
reporting date and are recognized to the ex¬
tent that it has become probable that future
taxable profits will allow the deferred tax as¬
set to be recovered.

Deferred tax assets and liabilities are meas¬
ured at the tax rates that are expected to
apply in the year when the asset is realized
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 recognized
outside profit or loss is recognized outside
profit or loss (either in other comprehensive
income or in equity). Deferred tax items are
recognized in correlation to the underlying
transaction neither in OCI nor directly in eq¬
uity.

Deferred tax assets and deferred tax liabili¬
ties are offset if a legally enforceable right
exists to set off current tax assets against
current tax liabilities and the deferred taxes
relate to the same taxable entity and the
same taxation authority.

2.8. Goods and Service Tax/ value added
taxes paid on acquisition of assets or on

incurring expenses

Expenses and assets are recognized net of the
amount of GST/ paid, except:

• When the tax incurred on a purchase of assets
or services is not recoverable from the taxation
authority, in which case, the tax paid is recog¬
nized as part of the cost of acquisition of the
asset or as part of the expense item, as applica¬
ble

• When receivables and payables are stated with
the amount of tax included the net amount of tax
recoverable from, or payable to, the taxation au¬
thority is included as part of receivables or pay¬
ables in the balance sheet.

2.9. Property, plant and equipment

Property, plant and equipment is stated at cost,
net of accumulated depreciation and accumulat¬
ed impairment losses, if any. Capital work in
progress is stated at cost. Cost comprises the
purchase price and any attributable cost of
bringing asset to its working condition for its in¬
tended use only. Such cost includes the cost of
replacing part of the plant and equipment and
borrowing costs for long-term construction pro¬
jects if the recognition criteria are met. Subse¬
quent expenditure related to an item of fixed as¬
set is added to its book value only if it increases
the future benefits from the existing asset be¬
yond its previously assessed standard of perfor¬
mance. When significant parts of plant and
equipment are required to be replaced at inter¬
vals, the Company depreciates them separately
based on their specific useful lives. Likewise,
when a major inspection is performed, its cost is
recognized in the carrying amount of the plant
and equipment as a replacement if the recogni¬
tion criteria are satisfied. All other repair and
maintenance costs are recognized in profit or
loss as incurred.

Depreciation is calculated as per schedule II of
the companies act 2013 on a straight-line basis
using the rates arrived at based on the useful
lives estimated by the management. The Compa¬
ny has used the following useful lives to provide
depreciation on its fixed assets. The identified
components are depreciated over their useful
lives; the remaining asset is depreciated over
the life of the principal asset.

spective basis.

Gains or losses arising from derecognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the carry¬
ing amount of the asset and are recognized in the
statement of profit and loss when the asset is
derecognized.

Intangible assets are amortized on straight line
method asunder:

• Software expenditure is amortized over a period
of three years.

• Technical Knowhow expenditure is amortized
over a period of ten years.

2.11. Borrowing costs

Borrowing costs directly attributable to the acqui¬
sition, construction or production of an asset that
necessarily takes a substantial period of time to
get ready for its intended use or sale are capital¬
ized as part of the cost of the asset. All other
borrowing costs are expensed in the period in
which they occur. Borrowing costs consist of in¬
terest and other costs that an entity incurs in
connection with the borrowing of funds. Borrow¬
ing cost also includes exchange differences to
the extent regarded as an adjustment to the bor¬
rowing costs. To the extent that the Company
borrows funds specifically for the purpose of ob¬
taining a qualifying asset, the Company deter¬
mines the amount of borrowing costs eligible for
capitalization as the actual borrowing costs in¬
curred on that borrowing during the period less
any investment income on the temporary invest¬
ment of those borrowings.

To the extent that the Company borrows funds
generally and uses them for the purpose of ob¬
taining a qualifying asset, the Company deter¬
mines the amount of borrowing costs eligible for
capitalization by applying a capitalization rate to
the expenditures on that asset. The capitalization
rate is the weighted average of the borrowing
costs applicable to the borrowings of the Compa¬
ny that are outstanding during the period, other
than borrowings made specifically for the purpose
of obtaining a qualifying asset

Investments:

Current investments are carried at the lower of
cost or quoted/ fair value, computed category -
wise. Long term investments are stated at cost
and provision is made for any diminution in such
value, which is not temporary in nature.

2.13 Leases

The Company has entered into various arrange¬
ments like lease of premises which has been dis¬
closed accordingly under Ind AS 116 At inception
of a contract, the Company assesses whether
contract is, or contains, lease. A contract is, or
contains, a lease is the contract convey the right
of control the use of an identified assets for the
period of time in exchange for consideration. The
assessment of whether a contract convey the
right to control the use of as identified assets

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 rare are recognized as expenses
(unless the const is included in the carrying val¬
ue of inventor) in the period in which the event or
condition that triggers the payments occurs.

In calculating the present value of lease pay¬
ment, the Company uses its incremental borrow¬
ing rate at the lease commencement date be¬
cause the interest rate implicit in the lease is not
readily determinable. After the commencement
date, the amount lease liabilities are increased
to reflect the accretion of interest and reduces
for the lease payment made. In addition, the car¬
rying amount of lease liabilities is re measured if
there is a modification, a change in the lease
terms, 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 assess¬
ment of an option to purchase the underlying as¬
sets.

The Company's lease liabilities are included in
current and non - current financial; liabilities.
Lease liabilities have been separately presented
in the Balance Sheet and lease payments have
been classified as financing cash flows.

2.13.1.3 Short-term lease and leases of low-
value assets

The Company applies the short-term lease recog¬
nition exemption to the contracts which have a
lease term of 12 months or less from the date of
commencement date and do not contain a pur¬
chase option. It also applies the lease of low-
value assets recognition exemption to the lease
contract that are considered to the low value.
Lease payments on short-term leases and leases
of low-value assets are recognized as expenses
on a straight - line basis over the lease term.

2.14 Inventories

Inventories are valued at the lower of cost and
net realizable value.

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

• Raw materials, components, stores and spares
are valued at lower of cost and net realizable
value. 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 first in first out basis.

• Work - in - progress and finished goods are valued
at lower of cost and net realizable value. Cost
includes direct materials and labor and a propor¬
tion of manufacturing overheads based on normal

operating capacity but excluding borrowing
cost. Cost of finished goods excluding GST.
Cost is determined on a first in first out basis.

• Traded goods are valued at lower of cost and
net realizable value. Cost includes cost of pur¬
chase and other costs incurred in bringing the
inventories to their present location and condi¬
tion. Cost is determined on a first in first out
basis.

Net realizable 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.