2.1 Material accounting policies

This note provides a list of the material accounting policies
adopted in the preparation of these Indian Accounting
Standards (Ind-AS) financial statements. These policies have
been consistently applied to all the years except where newly
issued accounting standard is initially adopted.

a) Property, plant and equipment (PPE)

Capital work in progress and property, plant and equipment
is stated at cost, net of accumulated depreciation and
accumulated impairment losses, if any. Cost comprises

the purchase price (net of input tax credit) and any directly
attributable cost to bring assets to present location and
condition. When significant parts of property, plant and
equipment are required to be replaced at intervals, 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 property, plant
and equipment as a replacement if the recognition criteria
are satisfied. All other repair and maintenance costs are
recognized in profit or loss as incurred.

• Gains or losses arising from de-recognition of tangible
assets are measured as the difference between the net
disposable proceeds and the carrying amount of the
asset and are recognized in the Statement of Profit and
Loss when the asset is derecognized.

• The Company identifies any particular component
embedded in the main asset as a separate asset having
significant value to total cost of asset and also applies a
different life as compared to the main asset.

• 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.

• Machinery spares which are specific to a particular
item of property, plant and equipment and whose use
is expected to be irregular are capitalized when they
meet the definition of property, plant and equipment,
i.e. when the Company intends to use these during
more than a period of 12 months.

Depreciation on property, plant and equipment

Cost of leasehold improvements on property, plant and
equipment are amortized on a straight-line basis over the
period of lease or their useful lives, whichever is shorter.

Depreciation on other property, plant and equipment is
calculated on a straight-line basis using rates arrived at
based on the useful lives estimated by the management.
The Company identifies and determines cost of each
component/part of the asset separately, if the Component/
part has a cost which is significant to the total cost of the
asset and has useful life that is materially different from that of
the remaining components of the asset. These components
are depreciated separately over their useful lives and the
remaining components are depreciated over the useful life
of the principal assets. The Company has used following
estimated useful life to provide depreciation on its property,
plant and equipment:

¹The management has estimated, supported by independent
assessment, the useful life of certain plant and machinery as
20 years, which is higher than those indicated in schedule II
of the Companies Act 2013.

²The management has estimated, based on its internal
assessment and past experience, the useful life of these
blocks of assets as lower than the life indicated for respective
block of assets in schedule II of the Companies Act 2013.

Residual value of plant and machinery is considered at 5%.

b) 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's lease asset classes primarily comprise of
lease for Land & Building. The Company assesses whether
a contract contains a lease, at inception of a contract. A
contract is, or contains, a lease if the contract conveys the
right to control the use of an identified asset for a period of
time in exchange for consideration. To assess whether a
contract conveys the right to control the use of an identified
asset, the Company assesses whether: (i) the contract
involves the use of an identified asset (ii) the Company has
substantially all of the economic benefits from use of the
asset through the period of the lease and (iii) the Company
has the right to direct the use of the asset.

(i) Right-of-use assets

The Company recognizes 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
recognized, initial direct costs incurred, and lease
payments made at or before the commencement date
less any lease incentives received. Right-of-use assets
are depreciated on a straight-line basis over the shorter
of the lease term and the estimated useful lives of the
underlying assets.

If ownership of the leased asset transfers to the
Company at the end of the lease term or the cost
reflects the exercise of a purchase option, depreciation
is calculated using the estimated useful life of the asset.

The right-of-use assets are also subject to impairment.
Refer to the accounting policies in section 'Impairment
of non- financial assets'.

(ii) Lease Liabilities

At the commencement date of the lease, the Company
recognizes 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 recognized 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.

(iii) Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition
exemption to its short-term leases (i.e., those leases
that have a lease term of 12 months or less from the
commencement date and do not contain a purchase
option). It also applies the lease of low-value assets
recognition exemption to leases that are considered to
be low value. Lease payments on short-term leases and
leases of low-value assets are recognized as expense
on a straight-line basis over the lease term.

"Lease liabilities” and "Right of Use Assets” have been
separately presented in the Balance Sheet and lease
payments have been classified as financing cash flows.

c) Investment

Investments, which are readily realizable and intended to be
held for not more than one year from the date on which such
investments are made, are classified as current investments.
All other investments are classified as long-term investments.

Equity securities (unlisted) which are not held for trading,
and for which the group has irrevocably elected at initial
recognition to present changes in fair value through OCI
rather than profit or loss. These are strategic investments and
the group considers this classification to be more relevant.
Equity investments for which the entity has not elected to
recognise fair value gains and losses through OCI, are carried
at fair value through profit and loss.

On initial recognition, all investments are measured at cost.
The cost comprises purchase price and directly attributable
acquisition charges such as brokerage, fees and duties. If
an investment is acquired, or partly acquired, by the issue
of shares or other securities, the acquisition cost is the fair
value of the securities issued. If an investment is acquired in
exchange for another asset, the acquisition is determined by
reference to the fair value of the asset given up or by reference
to the fair value of the investment acquired, whichever is more
clearly evident.

d) Inventories

Raw materials, components and 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. Cost of raw materials, components and stores
and spares is determined on moving weighted average basis.

Stores and spares which do not meet the definition of
Property, plant and equipment are accounted as inventories.

Work-in-progress and finished goods are valued at lower of
cost and net realizable value. Cost includes direct materials
and labor and a proportion of manufacturing overheads
based on normal operating capacity. Cost is determined on
moving weighted average basis.

Traded goods are valued at cost or net realizable value,
whichever is lower.

Scrap is valued at net realizable value.

Net realizable value is the estimated selling price in the
ordinary course of business, less estimated costs of
completion and estimated costs necessary to make the sale.
Obsolete and non-moving inventory are determined on the
basis of regular review and are valued at net realizable value
or cost whichever is lower.

e) Revenue from Contract with customers

The Company manufactures and sells a range of automobile
suspension products. Revenue from contracts with
customers is recognized 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 before transferring them to the customer.

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

1) Sale of goods

Revenue from sale of goods is recognized at the point
in time when control of the inventory is transferred to
the customer, generally on delivery of the equipment.
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
allocated a portion of the transaction price to goods
based on its relative standalone prices and also
considers the following:

(i) Schemes

The Company operates several sales incentive
programs wherein the customers are eligible for several
benefits on achievement of underlying conditions
as prescribed in the scheme program such as credit

notes, tours, reimbursement etc. Revenue from
contract with customer is presented deducting cost of
all these schemes.