2.1 Material accounting policies

(A) Basis of preparation

The financial statements of the Company have been
prepared in accordance 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 (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 Company.

The financial statements have been prepared on a
historical cost basis, except for the following assets and
liabilities which have been measured at fair value or
revalued amount:

(i) Certain financial assets and liabilities measured
at fair value (refer accounting policy regarding
financial instruments), and

(ii) Employee stock option.

(B) Summary of material accounting policies

a. 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:

(i) Expected to be realised or intended to be sold
or consumed in normal operating cycle

(ii) Held primarily for the purpose of trading

(iii) Expected to be realised within twelve months
after the reporting period, or

(iv) Cash or cash equivalents (as defined in Ind AS
7, 'Statement of Cash Flows') 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:

(i) It is expected to be settled in normal
operating cycle

(ii) It is held primarily for the purpose of trading

(iii) It is due to be settled within twelve months after
the reporting period, or

(iv) There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period. Terms
of a liability that could, at the option of the
counterparty, result in its settlement by the
issue of equity instruments do not affect its
classification.

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.

b. Foreign currencies

The Company's financial statements are presented in
INR, which is also its functional currency.

Transactions and balances

Transactions in foreign currencies are initially
recorded by the Company at its functional currency
spot rate at the date the transaction first qualifies
for recognition. However, for practical reasons,
the Company uses average rate if the average
approximates the actual rate at the date of
the transaction.

Monetary assets and liabilities denominated in
foreign currencies are translated at the functional
currency spot rate of exchange at the reporting date.

Exchange differences arising on settlement or
translation of monetary items 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. Non-monetary items
measured at fair value in a foreign currency are
translated using the exchange rates at the date when
the fair value is determined. The gain or loss arising
on translation of non-monetary items measured at
fair value is treated in line with the recognition of the

gain or loss on the change in fair value of the item
(i.e., translation differences on items whose fair value
gain or loss is recognised in OCI or profit or loss are
also recognised in OCI or profit or loss, respectively).

c. Fair value measurement

The Company measures financial instruments, such as,
investments 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:

(i) In the principal market for the asset or
liability, or

(ii) 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:

(i) Level 1 - Quoted (unadjusted) market prices in
active markets for identical assets or liabilities

(ii) Level 2 - Valuation techniques for which
the lowest level input that is significant to
the fair value measurement is directly or
indirectly observable

(iii) Level 3 - Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable

For assets and liabilities that are recognised in
the financial statements on a recurring basis, the
Company determines whether transfers have
occurred between levels in the hierarchy by re¬
assessing categorisation (based on the lowest level
input that is significant to the fair value measurement
as a whole) at the end of each reporting period.

The management determines the policies and
procedures for both recurring fair value measurement
as well as for non-recurring measurement.

At each reporting date, the management analyses
the movements in the values of assets and liabilities
which are required to be remeasured or re-assessed
as per the Company's accounting policies. For this
analysis, the management verifies the major inputs
applied in the latest valuation by agreeing the
information in the valuation computation to contracts
and other relevant documents.

The management also compares the change
in the fair value of each asset and liability with
relevant external sources to determine whether the
change is reasonable.

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.

d. Revenue from contract with customer

Revenue from contracts with customers is recognised
when control of the goods or services are transferred
to the customer at an amount that reflects the
consideration to which the Company expects to be
entitled in exchange for those goods or services.
The Company has generally concluded that it is
the principal in its revenue arrangements because
it typically controls the goods or services before
transferring them to the customer.

The disclosures of significant accounting judgements,
estimates and assumptions relating to revenue from
contracts with customers are provided in note 2.2.

Sale of goods

Revenue from sale of all types of goods is
recognised at the point in time when control of
the asset is transferred to the customer, based on
delivery terms. The normal credit term is 30 to 90
days upon delivery.

The Company considers whether there are
other promises in the contract that are separate
performance obligations to which a portion of

the transaction price needs to be allocated. In
determining the transaction price for the sale of
goods, the Company considers the effects of
variable consideration, non-cash consideration, and
consideration payable to the customer (if any).

Variable consideration

If the consideration in a contract includes a variable
amount, the Company estimates the amount of
consideration to which it will be entitled in exchange
for transferring the goods to the customer. The variable
consideration is estimated at contract inception and
is recognised to the extent that it is highly probable
that a significant revenue reversal in the amount
of cumulative revenue recognised will not occur
when the associated uncertainty with the variable
consideration is subsequently resolved. Some
contracts provide customers with a right of return
the goods within a specified period. The Company
also provides retrospective volume rebates to certain
customers once the quantity of goods purchased
during the period exceeds the threshold specified in
the contract. The rights of return and volume rebates
give rise to variable consideration.

(ij Rights of return

The Company uses the expected value method
to estimate the variable consideration given
the large number of contracts that have similar
characteristics. The Company then applies
the requirements on constraining estimates of
variable consideration in order to determine
the amount of variable consideration that can
be included in the transaction price. A refund
liability is recognized for the goods that are
expected to be returned (i.e., the amount not
included in the transaction price).

(iij Volume rebates

The Company applies the most likely amount
method or the expected value method to
estimate the variable consideration in the
contract. The selected method that best
predicts the amount of variable consideration
is primarily driven by the number of volume
thresholds contained in the contract. The most
likely amount is used for those contracts with
a single volume threshold, while the expected
value method is used for those with more
than one volume threshold. The Company
then applies the requirements on constraining
estimates of variable consideration and
recognizes a refund liability for the expected
future rebates.

The disclosures of significant estimates and
assumptions relating to the estimation of
variable consideration for returns and volume
rebates are provided in note 2.2.

Trade receivables

A 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). For trade receivables, the
Company applies the simplified approach required
by Ind AS 109, which requires expected lifetime
losses to be recognised from initial recognition of
the receivables.

Contract liabilities

A contract liability is recognised if a payment is
received or a payment is due (whichever is earlier)
from a customer before the Company transfers the
related goods or services. Contract liabilities are
recognised as revenue when the Company performs
under the contract (i.e., transfers control of the
related goods or services to the customer).

e. 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 enacted, at the
reporting date.

Current income tax relating to items recognised
outside profit or loss 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.

The Company applies the provisions of Appendix C
to Ind AS 12 - Uncertain tax treatment to determine
the liability if any. If it is probable (more likely
than not) that a tax treatment will be accepted, no
adjustment is made. If the company concludes that
the tax treatment is not probable to be accepted by
the tax authorities, it is reflected in the income tax
accounting (as additional liability or higher rate)
by using the approach- most likely amount or the
expected value approach.

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 recognised for all taxable
temporary differences, except when the deferred tax
liability arises from the initial recognition of goodwill or
an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss.

Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax
assets are recognised 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 unused tax losses
can be utilised, 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 combination
and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.

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 profit 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 asset to be recovered.

Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realised, 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 recognised outside profit
or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Deferred tax
items are recognised in correlation to the underlying
transaction either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities 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.

Goods and Services tax paid on acquisition of
assets or on incurring expenses

Leasehold improvements are depreciated on a
straight-line basis over the period of the lease
or useful life whichever is lower. The lease
term is five years.

The Company, based on technical assessment made
by technical expert and management estimate,
depreciates certain items of building, plant and
equipment over estimated useful lives which are
different from the useful life prescribed in Schedule
II to the Companies Act, 2013. The management
believes that these estimated useful lives are realistic
and reflect fair approximation of the period over
which the assets are likely to be used.

An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss
arising on derecognition of the asset (calculated as the
difference between the net disposal proceeds and the
carrying amount of the asset) is included in the statement
of profit and loss when the asset is derecognised.

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.

g. Other intangible assets

Intangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less any accumulated
amortisation and accumulated impairment losses.

The useful lives of intangible assets are assessed as
either finite or indefinite.

Intangible assets with finite lives are amortised over
the useful economic life and assessed for impairment
whenever there is an indication that the intangible
asset may be impaired. The amortisation period and
the amortisation method for an intangible asset with
a finite useful life 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 considered to modify the amortisation period or
method, as appropriate, and are treated as changes
in accounting estimates. The amortisation expense on
intangible assets with finite lives is recognised in the
statement of profit and loss unless such expenditure
forms part of carrying value of another asset.

Intangible assets with indefinite useful lives are not
amortised, but are tested for impairment annually,
either individually or at the cash-generating unit level.
The assessment of indefinite life is reviewed annually
to determine whether the indefinite life continues to
be supportable. If not, the change in useful life from
indefinite to finite is made on a prospective basis.

An intangible asset is derecognised upon disposal
(i.e., at the date the recipient obtains control) or
when no future economic benefits are expected
from its use or disposal. Any gain or loss arising
upon derecognition of the asset (calculated as
the difference between the net disposal proceeds
and the carrying amount of the asset) is included
in the statement of profit and loss, when the asset
is derecognised.

A summary of the policies applied to the Company's
intangible assets is, as follows:

h. Leases

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 applies a single recognition and
measurement approach for all leases, except for
short-term leases and leases of low-value assets. The
Company recognises lease liabilities to make lease
payments and right-of-use assets representing the
right to use the underlying assets.

ij 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 assets, as follows:

a. Leasehold land - upto 99 years

b. Building - upto 10 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.

iij 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.

iiij Short-term leases and leases of low-value

assets

The Company applies the short-term lease
recognition exemption to its short-term leases

J. Impairment of non-financial 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's (CGU) fair
value less costs of disposal and its value in use. The
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 or groups of assets. When 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 forecast calculations, which
are prepared separately for each of the Company's
CGUs to which the individual assets are allocated.
These budgets and forecast calculations generally
cover a period of five years. For longer periods,
a long-term growth rate is calculated and applied
to project future cash flows after the fifth year. To
estimate cash flow projections beyond periods
covered by the most recent budgets/forecasts, the
Company extrapolates cash flow projections in the
budget using a steady or declining growth rate for
subsequent years, unless an increasing rate can
be justified. In any case, this growth rate does not
exceed the long-term average growth rate for the
products, industries, or country or countries in which
the Company operates, or for the market in which
the asset is used.

Impairment losses of continuing operations, including
impairment on inventories, are recognised in the
statement of profit and loss, except for properties
previously revalued with the revaluation surplus
taken to OCI. For such properties, the impairment is
recognised in OCI up to the amount of any previous
revaluation surplus.

For assets excluding goodwill, an assessment is
made at each reporting date to determine whether
there is an indication that previously recognised
impairment losses no longer exist or have
decreased. If such indication exists, the Company
estimates the asset's or CGU's recoverable amount.
A previously recognised impairment loss is reversed
only if there has been a change in the assumptions
used to determine the asset's recoverable amount
since the last impairment loss was recognised. The
reversal is limited so that the carrying amount of the
asset does not exceed its recoverable amount, nor
exceed the carrying amount that would have been
determined, net of depreciation, had no impairment
loss been recognised for the asset in prior years.
Such reversal is recognised in the statement of profit
and loss unless the asset is carried at a revalued
amount, in which case, the reversal is treated as a
revaluation increase.

Goodwill is tested for impairment annually and
when circumstances indicate that the carrying value
may be impaired.

Impairment is determined for goodwill by assessing
the recoverable amount of each CGU (or group
of CGUs) to which the goodwill relates. When the
recoverable amount of the CGU is less than it's
carrying amount, an impairment loss is recognised.
Impairment losses relating to goodwill cannot be
reversed in future periods.

k. Provisions

Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to
settle the obligation and a reliable estimate can be
made of the amount of the obligation. The expense
relating to a provision is presented in the statement of
profit and loss net of any reimbursement.

If the effect of the time value of money is material,
provisions are discounted using a current pre¬
tax rate that reflects, when appropriate, the risks
specific to the liability. When discounting is used, the
increase in the provision due to the passage of time
is recognised as a finance cost.

l. Retirement and other employee benefits

Retirement benefit in the form of provident fund is a
defined contribution scheme. The Company has no
obligation, other than the contribution payable to the
provident fund. The Company recognizes contribution
payable to the provident fund scheme as an expense,
when an employee renders the related service.

The Company operates a defined benefit gratuity
plan in India, which requires contributions to be
made to a separately administered fund. The cost of
providing benefits under the defined benefit plan is
determined using the projected unit credit method.

Remeasurements, comprising of actuarial gains
and losses, the effect of the asset ceiling, excluding
amounts included in net interest on the net defined
benefit liability and the return on plan assets
(excluding amounts included in net interest on the net
defined benefit liability), are recognised immediately
in the balance sheet with a corresponding debit
or credit to retained earnings through OCI in the
period in which they occur. Remeasurements are not
reclassified to profit or loss in subsequent periods.

Past service costs are recognised in profit or loss on
the earlier of:

(i) The date of the plan amendment or
curtailment, and

(ii) The date that the Company recognises related
restructuring costs

Net interest is calculated by applying the discount
rate to the net defined benefit liability or asset. The
Company recognises the following changes in the
net defined benefit obligation as an expense in the
statement of profit and loss:

(i) Service costs comprising current service
costs, past-service costs, gains and losses on
curtailments and non-routine settlements; and

(ii) Net interest expense or income

Accumulated leave, which is expected to be utilized
within the next 12 months, is treated as short-term
employee benefit. The Company measures the
expected cost of such absences as the additional
amount that it expects to pay as a result of the
unused entitlement that has accumulated at the
reporting date. The Company recognizes expected
cost of short-term employee benefit as an expense,
when an employee renders the related service.

The Company treats accumulated leave expected to
be carried forward beyond twelve months, as long¬
term employee benefit for measurement purposes.
Such long-term compensated absences are
provided for based on the actuarial valuation using
the projected unit credit method at the reporting date.
Actuarial gains/losses are immediately taken to the
statement of profit and loss and are not deferred.

The obligations are presented as current liabilities
in the balance sheet if the entity does not have an
unconditional right to defer the settlement for at least
twelve months after the reporting date.

m. Share-based payments

Employees (including senior executives) of the
Company receive remuneration in the form of
share-based payments, whereby employees render
services as consideration for equity instruments
(equity-settled transactions).

Equity-settled transactions

The cost of equity-settled transactions is determined
by the fair value at the date when the grant is made
using an appropriate valuation model.

That cost is recognised, together with a corresponding
increase in share-based payment reserves in equity,
over the period in which the performance and/or
service conditions are fulfilled in employee benefits
expense. The cumulative expense recognised for
equity-settled transactions at each reporting date
until the vesting date reflects the extent to which
the vesting period has expired and the Company's
best estimate of the number of equity instruments
that will ultimately vest. The expense or credit in the
statement of profit and loss for a period represents
the movement in cumulative expense recognised
as at the beginning and end of that period and is
recognised in employee benefits expense.

No expense is recognised for awards that do not
ultimately vest because service conditions have not
been met. Where shares are forfeited due to a failure
by the employee to satisfy the service conditions, any
expenses previously recognised in relation to such
shares are reversed effective from the date of the
forfeiture. When the terms of an equity-settled award
are modified, the minimum expense recognised is
the grant date fair value of the unmodified award,
provided the original vesting terms of the award are
met. An additional expense, measured as at the date
of modification, is recognised for any modification
that increases the total fair value of the share-based
payment transaction, or is otherwise beneficial to
the employee. Where an award is cancelled by
the entity or by the counterparty, any remaining
element of the fair value of the award is expensed
immediately through profit or loss.

The dilutive effect of outstanding options is reflected
as additional share dilution in the computation of
diluted earnings per share.

n. 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.

Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition,
as subsequently measured at amortised cost, fair
value through other comprehensive income (OCI),
and fair value through profit or loss.

The classification of financial assets at initial
recognition depends on the financial asset's
contractual cash flow characteristics and the
Company's business model for managing them. With
the exception of trade receivables that do not contain
a significant financing component or for which the
Company has applied the practical expedient, the
Company initially measures a financial asset at its
fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs.
Trade receivables that do not contain a significant
financing component or for which the Company has
applied the practical expedient are measured at the
transaction price determined under Ind AS 115.

In order for a financial asset to be classified and
measured at amortised cost or fair value through OCI, it
needs to give rise to cash flows that are 'solely payments
of principal and interest (SPPI)' on the principal amount
outstanding. This assessment is referred to as the SPPI
test and is performed at an instrument level. Financial
assets with cash flows that are not SPPI are classified
and measured at fair value through profit or loss,
irrespective of the business model.

The Company's business model for managing financial
assets refers to how it manages its financial assets
in order to generate cash flows. The business model
determines whether cash flows will result from collecting
contractual cash flows, selling the financial assets,
or both. Financial assets classified and measured at
amortised cost are held within a business model with
the objective to hold financial assets in order to collect
contractual cash flows while financial assets classified
and measured at fair value through OCI are held within
a business model with the objective of both holding to
collect contractual cash flows and selling.

Purchases or sales of financial assets that require
delivery of assets within a time frame established by
regulation or convention in the market place (regular
way trades) are recognised on the trade date, i.e.,
the date that the Company commits to purchase or
sell the asset.

Subsequent measurement

For purposes of subsequent measurement, financial
assets are classified in four categories:

(i) Financial assets at amortised cost
(debt instruments)

(ii) Financial assets at fair value through other
comprehensive income (FVTOCI) with
recycling of cumulative gains and losses
(debt instruments)

(iii) Financial assets designated at fair value
through OCI with no recycling of cumulative
gains and losses upon derecognition
(equity instruments)

(iv) Financial assets at fair value through profit or loss

Financial assets at amortised cost

A 'financial asset' is measured at the amortised cost
if both the following conditions are met:

(i) The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and

(ii) Contractual terms of the asset give rise on
specified dates to cash flows that are solely
payments of principal and interest (SPPI) on
the principal amount outstanding.

This category is the most relevant to the Company.
After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method. 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 profit or loss. The
losses arising from impairment are recognised in
the profit or loss. The Company's financial assets
at amortised cost includes trade receivables and
other receivables.

Equity investment in subsidiary is carried at
historical cost as per the accounting policy choice
given by Ind AS 27.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss
are carried in the balance sheet at fair value with net
changes in fair value recognised in the statement of
profit and loss.

This category includes derivative instruments and
listed equity investments which the Company had
not irrevocably elected to classify at fair value

through OCI. Dividends on listed equity investments
are recognised in the statement of profit and loss
when the right of payment has been established.

Derecognition

A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e. removed from
the Company's balance sheet) when:

(i) The rights to receive cash flows from the asset
have expired, or

(ii) 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 (a)
the Company has transferred substantially all
the risks and rewards of the asset, or (b) the
Company has neither transferred nor retained
substantially all the risks and rewards of the
asset, but has transferred control of the asset.

When the Company has transferred its rights to
receive cash flows from an asset or has entered into
a pass-through arrangement, it evaluates if and to
what extent it has retained the risks and rewards
of ownership. When it has neither transferred nor
retained substantially all of the risks and rewards
of the asset, nor transferred control of the asset, the
Company continues to recognise the transferred
asset to the extent of the Company's continuing
involvement. In that case, the Company also
recognises an associated liability. The transferred
asset and the associated liability are measured on a
basis that reflects the rights and obligations that the
Company has retained.

Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset
and the maximum amount of consideration that the
Company could be required to repay.

Impairment of financial assets

In accordance with Ind-AS 109, the Company applies
expected credit loss ("ECL") model for measurement
and recognition of impairment loss. The Company
follows 'simplified approach' for recognition of
impairment loss allowance on trade receivables.

The application of simplified approach does not
require the Company to track changes in credit risk.
Rather, it recognizes impairment loss allowance
based on lifetime ECLs at each reporting date, right
from its initial recognition.

For recognition of impairment loss on other financial
assets and risk exposure, the Company determines
that whether there has been a significant increase
in the credit risk since initial recognition. If credit risk
has not increased significantly, 12-month ECL is used
to provide for impairment loss. However, if credit risk
has increased significantly, lifetime ECL is used. If, in
a subsequent period, credit quality of the instrument
improves such that there is no longer a significant
increase in credit risk since initial recognition, then
the Company reverts to recognizing impairment loss
allowance based on 12-month ECL.

Lifetime ECL are the expected credit losses resulting
from all possible default events over the expected
life of a financial instrument. The 12-month ECL is a
portion of the lifetime ECL which results from default
events on a financial instrument that are possible
within 12 months after the reporting date.

ECL is 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 EIR. When estimating the
cash flows, a Company is required to consider:

(i) All contractual terms of the financial instrument
(including prepayment, extension, call and
similar options) over the expected life of
the financial instrument. However, in rare
cases when the expected life of the financial
instrument cannot be estimated reliably, then
the Company is required to use the remaining
contractual term of the financial instrument

(ii) Cash flows from the sale of collateral held or
other credit enhancements that are integral to
the contractual terms

As a practical expedient, the Company uses a
provision matrix to determine impairment loss
allowance on portfolio of its trade receivables. The
provision matrix is based on its historically observed
default rates over the expected life of the trade
receivables and is adjusted for forward-looking
estimates. At every reporting date, the historical
observed default rates are updated and changes in
the forward-looking estimates are analyzed.

ECL impairment loss allowance (or reversal)
recognized during the period is recognized as
income/ expense in the Statement of profit and
loss. This amount is reflected in a separate line in
the Statement of profit and loss as an impairment
gain or loss. The balance sheet presentation is
described below:

Financial assets measured as at amortized cost and
contractual revenue receivables. ECL is presented
as an allowance, i.e., as an integral part of the
measurement of those assets in the balance sheet.
The allowance reduces the net carrying amount.

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.

The Company's financial liabilities include trade
and other payables, put option liability, loans and
borrowings including bank overdrafts.

Subsequent measurement

For purposes of subsequent measurement, financial
liabilities are classified in two categories:

• Financial liabilities at fair value
through profit or loss

• Financial liabilities at amortised cost (loans
and borrowings)

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 incurred for the purpose of repurchasing in
the near term. This category also includes derivative
financial instruments entered into by the Company
that are not designated as hedging instruments in
hedge relationships as defined by Ind AS 109.
Separated embedded derivatives are also classified
as held for trading unless they are designated as
effective hedging instruments.

Gains or losses on liabilities held for trading are
recognised in the profit or loss.

Financial liabilities designated upon initial
recognition at fair value through profit or loss are
designated as such at the initial date of recognition,
and only if the criteria in Ind AS 109 are satisfied.
For liabilities designated as FVTPL, fair value gains/

losses attributable to changes in own credit risk
are recognized in OCI. These gains/ losses are
not subsequently transferred to P&L. However, the
Company may transfer the cumulative gain or loss
within equity. All other changes in fair value of such
liability are recognised in the statement of profit and
loss. The Company has not designated any financial
liability as at fair value through profit or loss.

Financial liabilities at amortised cost (Loans and
borrowings)

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

This category generally applies to borrowings.

Derecognition

A financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the terms
of an existing liability are substantially modified,
such an exchange or modification is treated as
the derecognition of the original liability and the
recognition of a new liability. The difference in the
respective carrying amounts is recognised in the
statement of profit and loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset,
and the net amount is reported in the balance sheet
if there is a currently enforceable legal right to offset
the recognised amounts and there is an intention to
settle on a net basis, to realise the assets and settle
the liabilities simultaneously.

o. Cash and cash equivalents

Cash and cash equivalent in the balance sheet
comprise cash at banks and on hand and short-term
deposits with an original maturity of three months
or less, that are readily convertible to a known
amount of cash and 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 and short-term
deposits, as defined above, net of outstanding bank
overdrafts as they are considered an integral part of
the Company's cash management.

p. Segment Reporting

Operating segments are reported in a manner
consistent with the internal reporting provided to the
chief operating decision maker.

The Board of Directors of the Company has identified
the Managing Director and Chief Executive
Officer as the chief operating decision maker of
the Company.

q. Contingent liability

A disclosure for a contingent liability is made where
there is a possible obligation that arises from past
events and the existence of which will be confirmed
only by the occurrence or non-occurrence of one
or more uncertain future events not wholly within
the control of the Company or a present obligation
that arises from the past events where it is either
not probable that an outflow of resources will be
required to settle the obligation or a reliable estimate
of the amount cannot be made.

r. Trade and other payables

These amounts represent liabilities for goods and
services provided to the Company prior to the
end of the financial year which are unpaid. The
amounts are unsecured and are usually paid within
30 days of recognition. Trade and other payables
are presented as current liabilities unless payment is
not due within 12 months after the reporting period.
They are recognised initially at their fair value and
subsequently measured at amortised cost using the
effective interest method.

Other Accounting Policies

s. Earnings per share

Basic earnings per share is calculated by dividing
the net profit or loss attributable to equity holders
of parent company (after deducting preference
dividends and attributable taxes) by the weighted
average number of equity shares outstanding
during the period.

For the purpose of calculating diluted earnings per
share, the net profit or loss for the period attributable
to equity shareholders of the parent company and
the weighted average number of shares outstanding
during the period are adjusted for the effects of all
dilutive potential equity shares.

t. Borrowing costs

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 asset. All other borrowing
costs are expensed in the period in which they occur.
Borrowing costs consist of interest and other costs
that an entity incurs in connection with the borrowing
of funds. Borrowing cost also includes exchange
differences to the extent regarded as an adjustment
to the borrowing costs.

u. Interest Income

Interest Income from a financial asset is recognised
when it is probable that the economic benefits will
flow to the Company and the amount of income can
be measured reliably. Interest Income is accrued on
a time proportion basis, by reference to the principal
outstanding and the effective interest rate applicable.

v. Rounding off amounts

All amounts disclosed in the financial statements
and notes have been rounded off to the nearest
lacs as per the requirement of Schedule III, unless
otherwise stated.

2.2 Significant accounting judgements, estimates
and assumptions

The preparation of the Company's financial statements requires
management to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets
and liabilities, and the accompanying disclosures, and the
disclosure of contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes that require
a material adjustment to the carrying amount of assets or
liabilities affected in future periods

Other disclosures relating to the Company's exposure to risks
and uncertainties include:

• Capital management

• Financial risk management objectives and policies

• Sensitivity analyses disclosures

In the process of applying the Company's accounting policies,
management has made the following judgements, estimates
and assumptions which have the most significant effect on
the amounts recognised in the financial statements. The key
assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are described below. The Company based its assumptions and
estimates on parameters available when the financial statements

were prepared. Existing circumstances and assumptions about
future developments, however, may change due to market
changes or circumstances arising that are beyond the control
of the Company. Such changes are reflected in the assumptions
when they occur.

Leases - Company as lessee

The Company determines the lease term as the non-cancellable
term of the lease, together with any periods covered by an option
to extend the lease if it is reasonably certain to be exercised, or
any periods covered by an option to terminate the lease, if it is
reasonably certain not to be exercised.

The Company has several lease contracts that include extension
and termination options. The Company applies judgement in
evaluating whether it is reasonably certain whether or not to
exercise the option to renew or terminate the lease. That is, it
considers all relevant factors that create an economic incentive
for it to exercise either the renewal or termination. After the
commencement date, the Company reassesses the lease term
if there is a significant event or change in circumstances that
is within its control and affects its ability to exercise or not to
exercise the option to renew or to terminate.

The Company cannot readily determine the interest rate implicit
in the lease, therefore, it uses its incremental borrowing rate (IBR)
to measure lease liabilities. The IBR is the rate of interest that the
Company would have to pay to borrow over a similar term, and
with a similar security, the funds necessary to obtain an asset
of a similar value to the right-of-use asset in a similar economic
environment. The IBR therefore reflects what the Company 'would
have to pay' which requires estimation when no observable
rates are available or when they need to be adjusted to reflect
the terms and conditions of the lease. The Company estimates
the IBR using observable inputs (such as market interest rates).

Revenue from contracts with customers

The Company applied the following judgements that significantly
affect the determination of the amount and timing of revenue
from contracts with customers:

• Determining method to estimate variable consideration
and assessing the constraint

Certain contracts for the sale of goods include a right of return
and volume rebates that give rise to variable consideration. The
Company estimates variable considerations to be included in
the transaction price for the sale of goods with rights of return
and volume rebates. In estimating the variable consideration, the
Company is required to use either the expected value method or
the most likely amount method based on which method better
predicts the amount of consideration to which it will be entitled.

The Company determined that the expected value method
is the appropriate method to use in estimating the variable
consideration for the sale of goods with rights of return, given
the large number of customer contracts that have similar

characteristics. In estimating the variable consideration for the
sale of goods with volume rebates, the Company determined
that using a combination of the most likely amount method
and expected value method is appropriate. The Company has
developed a model for forecasting sales returns. The model
used the historical return data of each product to come up with
expected return percentages. These percentages are applied to
determine the expected value of the variable consideration. Any
significant changes in experience as compared to historical return
pattern will impact the expected return percentages estimated
by the Company.The selected method that better predicts the
amount of variable consideration was primarily driven by the
number of volume thresholds contained in the contract.

The Company's expected volume rebates are analysed on a
per customer basis for contracts that are subject to a volume
threshold. Determining whether a customer will be likely entitled
to rebate will depend on the customer's historical rebates
entitlement and accumulated purchases to date.

The Company applied a model for estimating expected volume
rebates for contracts. The model uses the historical purchasing
patterns and rebates entitlement of customers to determine the
expected rebate percentages and the expected value of the
variable consideration. Any significant changes in experience
as compared to historical purchasing patterns and rebate
entitlements of customers will impact the expected rebate
percentages estimated by the Company.

The Company updates its assessment of expected returns and
volume rebates annually and the refund liabilities are adjusted
accordingly. Estimates of expected returns and volume rebates
are sensitive to changes in circumstances and the Company's
past experience regarding returns and rebate entitlements may
not be representative of customers' actual returns and rebate
entitlements in the future. Refer note 18 for further details.

Before including any amount of variable consideration in the
transaction price, the Company considers whether the amount of
variable consideration is constrained. The Company determined
that the estimates of variable consideration are not constrained
based on its historical experience, business forecast and the
current economic conditions. In addition, the uncertainty on the
variable consideration will be resolved within a short time frame.

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash
generating unit exceeds its recoverable amount, which is the
higher of its fair value less costs of disposal and its value in
use. The fair value less costs of disposal calculation is based
on available data from binding sales transactions, conducted
at arm's length, for similar assets or observable market prices
less incremental costs for disposing of the asset. The value in use
calculation is based on a DCF model. The cash flows are derived
from the budget for the next five years and do not include
restructuring activities that the Company is not yet committed
to or significant future investments that will enhance the asset's

performance of the CGU being tested. The recoverable amount
is sensitive to the discount rate used for the DCF model as well
as the expected future cash-inflows and the growth rate used
for extrapolation purposes. These estimates are most relevant
to goodwill recognised by the Company. The key assumptions
used to determine the recoverable amount for the different
CGUs, including a sensitivity analysis.