2. Material accounting policies

2.1 Basis of preparation

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

The standalone 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:

(a) Derivative financial instruments,

(b) Plan assets of defined employee benefit plans, and

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

The standalone financial statements are presented in
Indian Rupees (INR) which is also the Company's functional
currency and all values are rounded to the nearest lacs,
except when otherwise indicated.

The Company has prepared the financial statements on the
basis that it will continue to operate as a going concern.

These policies have been consistently applied to all the
years presented, unless otherwise stated.

2.2. Summary of material accounting policies

(a) Investment in subsidiaries and joint venture

A subsidiary is an entity that is controlled by another
entity.

A joint venture is a type of joint arrangement whereby
the parties that have joint control of the arrangement
have rights to the net assets of the joint venture. Joint
control is the contractually agreed sharing of control
of an arrangement, which exists only when decisions
about the relevant activities require unanimous consent
of the parties sharing control.

The Company's investments in its subsidiaries and joint
venture are accounted at cost less impairment.

Impairment of investments

The Company reviews its carrying value of investments
carried at cost annually, or more frequently when there
is indication for impairment. If the recoverable amount
is less than its carrying amount, the impairment loss is
recorded in the Statement of Profit and Loss.

When an impairment loss subsequently reverses, the
carrying amount of the Investment is increased to the
revised estimate of its recoverable amount, so that the
increased carrying amount does not exceed the cost
of the Investment. A reversal of an impairment loss is
recognised immediately in P&L.

(b) Revenue recognition

Revenue from Contracts with Customers

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.

Revenue is stated exclusive of Goods and Service Tax
(GST).

The disclosures of significant accounting judgements,

estimates and assumptions relating to revenue from
contracts with customers are provided in Note 32.

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

Sales of goods

Revenue from the sale of goods is recognised at
the point in time when control is transferred to the
customer which is usually on shipment. Revenue is
measured based on the transaction price, which is the
consideration, adjusted for volume discounts, rebates,
scheme allowances, price concessions, incentives, and
returns, if any, as specified in the contracts with the
customers. Revenue excludes taxes collected from
customers on behalf of the government. Accruals
for discounts/incentives and returns are estimated
(using the most likely method) based on accumulated
experience and underlying schemes and agreements
with customers. Due to the short nature of credit
period given to customers, there is no financing
component in the contract.

Rendering of services

Revenue from sale of services is recognised over the
period of time as per the terms of the contract with
customers based on the stage of completion when
the outcome of the transactions involving rendering of
services can be estimated reliably.

Contract balances

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).
Refer to accounting policies of financial assets in
section (m) financial instruments.

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).

Other income
Interest Income

For all financial instruments measured either
at amortised cost or fair value through other
comprehensive income, interest income is recorded
using the effective interest rate (EIR). EIR is the rate that
exactly discounts the estimated future cash payments
or receipts over the expected life of the financial
instrument or a shorter period, where appropriate, to
the gross carrying amount of the 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. Interest income is included in other income in
the Statement of Profit and Loss.

Dividends

Revenue is recognised when the Company's right to
receive the payment is established, which is generally
when shareholders approve the dividend.

(c) Property, plant and equipment

Items of property, plant and equipment except item
stated below are stated at cost, net of accumulated
depreciation and accumulated impairment losses, if
any. The cost comprises purchase price, borrowing
costs if capitalization criteria are met and directly
attributable cost of bringing the asset to its working
condition for the intended use. Any trade discounts
and rebates are deducted in arriving at the purchase
price. Such cost includes the cost of replacing part of
the plant and equipment and borrowing costs for long¬
term construction projects if the recognition criteria
are met. Subsequent expenditure related to an item of
fixed asset is added to its book value only if it increases
the future benefits from the existing asset beyond its
previously assessed standard of performance. When
significant parts of plant and equipment are required
to be replaced at intervals, the Company depreciates
them separately based on their specific useful lives. All
other repair and maintenance costs are recognised in
Statement of Profit and Loss as incurred. In respect of

additions to /deletions from the property, plant and
equipment, depreciation is provided on pro-rata basis
with reference to the date of addition/ deletion of the
assets.

Capital work in progress is stated at cost, net of
accumulated impairment loss, if any.

The Company, based on technical assessment made
by technical expert and management estimate,
depreciates certain items of 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. Depreciation on remaining items of
property, plant & equipment has been provided on
Straight Line Method based on useful life of the assets
as prescribed in Schedule II of the Companies Act,
2013. . Furthermore, the Company considers climate-
related matters, including physical and transition risks.
Specifically, the Company determines whether climate-
related legislation and regulations might impact either
the useful life or residual values.

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 de-recognition 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.

(d) Investment Properties

Investment properties are properties held for rental
income, capital appreciation or the purpose of future
use is not yet determined by the management as of the
reporting date. Investment properties are measured
initially at cost, including transaction costs. Subsequent
costs are included in the asset's carrying amount or
recognized as a separate asset, as appropriate, only
when it is probable that future economic benefits
associated with the asset will flow to the Company. All
other repair and maintenance costs are recognized in
Statement of profit and loss as incurred.

Investment properties are subsequently measured at
cost less accumulated depreciation and accumulated
impairment losses, if any. Though the Company
measures investment properties using cost-based
measurement, the fair value of investment properties
are disclosed in the notes. Fair values are determined
based on the evaluation performed by the management
based on the acceptable valuation method.

Investment properties are de-recognized either
when they have been disposed of or when they are
permanently withdrawn from use and no future
economic benefit is expected from their disposal. The
difference between the net disposal proceeds, if any,
and the carrying amount of the asset is recognized
in the Statement of profit and loss in the period
of de-recognition. In determining the amount of
consideration from the derecognition of investment
properties the Company considers the effects of
variable consideration, existence of a significant
financing component, non-cash consideration, and
consideration payable to the buyer (if any).

The Company depreciates building component of
investment property over 30 years from the date of
original purchase.

Transfers are made to (or from) investment properties
only when there is a change in use. Transfers between
investment property, owner-occupied property and
inventories do not change the carrying amount of
the property transferred and they do not change the
cost of that property for measurement or disclosure
purposes.

Intangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
intangible assets with finite life are carried at cost
less any accumulated amortisation and accumulated
impairment losses. Internally generated intangibles,
excluding capitalised development costs, are not
capitalised and the related expenditure is reflected in
profit or loss in the period in which the expenditure is
incurred.

Intangible assets are amortized on a straight-line basis
over the estimated useful economic life.

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.

Gains or losses arising from derecognition of an
intangible asset 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 asset is derecognised.

Research costs are expensed as incurred. Development
expenditures on an individual project are recognised
as an intangible asset when the Company can
demonstrate:

• The technical and commercial feasibility of
completing the intangible asset so that the asset
will be available for use or sale

• Its intention to complete and its ability and
intention to use or sell the asset

• How the asset will generate future economic
benefits

• The availability of resources to complete the asset

• The ability to measure reliably the expenditure
during developments

Following initial recognition of the development
expenditure as an asset, the asset is carried at cost
less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins
when development is complete and the asset is
available for use. It is amortised over the period of
expected future benefit. Amortisation expense is
recognised in the Statement of Profit and Loss unless
such expenditure forms part of carrying value of
another asset.

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

(f) Foreign currencies

Transactions and Balances

Transactions in foreign currency are recorded applying
the exchange rate at the date of transaction.
Monetary assets and liabilities denominated in foreign
currency remaining unsettled at the end of the year,
are translated at the closing rates prevailing on the
Balance Sheet date. Non-monetary items which are
carried in terms of historical cost denominated in
foreign currency are reported using the exchange rate
at the date of transaction. Exchange differences arising
as a result of the above are recognized as income or
expenses in the Statement of Profit and Loss. Exchange
difference arising on the settlement of monetary items
at rates different from those at which they were initially
recorded during the year, or reported in previous
financial statements, are recognised as income or
expenses in the year in which they arise.

Foreign exchange difference on foreign currency
borrowings, settlement gain/loss and fair value gain/
loss on derivative contract relating to borrowings
are accounted and disclosed under finance cost.
Such exchange difference does not include foreign
exchange difference regarded as an adjustment to the

borrowings cost and capitalised with cost of assets.

(g) Fair value measurement

The Company measures financial instruments, such as,
derivatives and equity 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:

a) In the principal market for the asset or liability, or

b) 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:

a) Level 1 — Quoted (unadjusted) market prices in
active markets for identical assets or liabilities.

b) Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is directly or indirectly observable.

c) 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.

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

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

- Quantitative disclosures of fair value measurement
hierarchy (note 34)

- Financial instruments (including those carried at
amortised cost) (note 7, 11, 15 and 18)

(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.

A lease is a contract that contains 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. The Company recognises lease liabilities
to make lease payments and right-of-use assets
representing the right to use the underlying assets.

The Company has lease contracts for various items of
land, office premises, warehouses and vehicles.

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 re-measurement 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:

There are renewal terms that can extend the lease
term for up to 2-5 years and are included in the
lease term when it is reasonably certain that the
Company will exercise the option. The right-of-
use assets are also subject to impairment. Refer to
the accounting policies in section (j) Impairment
of non-financial assets.

The Right-of-use assets are presented as separate
line item in the balance sheet.

ii) 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. 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 expense 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.

The lease liabilities are presented as separate line
item in the balance sheet under financial liabilities.

iii) Short-term leases

The Company applies the short-term lease
recognition exemption to its short-term leases
of office premises, warehouses and vehicles (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).

Lease payments on short-term leases are
recognised as expense on a straight-line basis over
the lease term.

Company as a lessor

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 and is included
in other income in the statement of profit or loss due
to its operating nature. 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.

(i) Inventories

The items of inventories are measured at cost after
providing for obsolescence, if any. Cost of inventories
comprise of cost of purchase, cost of conversion and
appropriate portion of variable and fixed proportion
overheads and such other costs incurred in bringing

them to their respective present location and condition.
Fixed production overheads are based on normal
capacity of production facilities.

Stores and spares, packing materials and raw materials
are valued at lower of cost or net realisable value.
However, the aforesaid items are not valued below
cost if the finished products in which they are to be
incorporated are expected to be sold at or above cost.

Semi-finished products, finished products and by¬
products are valued at lower of cost or net realisable
value.

Traded goods are valued at lower of cost and net
realizable value.

Cost of raw material, process chemicals, stores and
spares packing materials, trading and other products
are determined on weighted average basis.

Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make
the sale.

(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) net selling price 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. 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 net selling price,
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.

An assessment is made at each reporting date as
to whether there is any indication that previously
recognized impairment losses may no longer exist
or may have decreased. If such indication exists, the
Company estimates the asset's or cash-generating
unit's recoverable amount. A previously recognized
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 recognized. 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 recognized for the
asset in prior years. Such reversal is recognized 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.

The Company assesses whether climate risks, including
physical risks and transition risks could have a
significant impact. If so, these risks are included in the
cash-flow forecasts in assessing value-in-use amounts.