1. GENERAL INFORMATION

KEC International Limited (“the Company”) (CIN:
L45200MH2005PLC152061) is a public limited company
incorporated and domiciled in India. Its shares are listed
on BSE Limited and National Stock Exchange of India
Limited. The registered office of the Company is located
at RPG House, 463, Dr. Annie Besant Road, Worli,
Mumbai- 400 030.

The Company is primarily engaged in Engineering,
Procurement and Construction business (EPC) relating
to infrastructure interalia products, projects and systems
and related activities for power transmission, distribution,
railway, civil, cable and other EPC businesses.

The Company’s manufacturing footprint extends across
three countries in addition to India. The Company has
several international branch offices enabling diversified
global footprint.

2. NEW AND AMENDED STANDARDS ADOPTED BY
THE COMPANY

The Ministry of Corporate Affairs vide notification dated
September 9, 2024 and September 28, 2024 notified
the Companies (Indian Accounting Standards) Second
Amendment Rules, 2024 and Companies (Indian Accounting
Standards) Third Amendment Rules, 2024, respectively,
which amended/notified certain accounting standards
(see below), and are effective for annual reporting periods
beginning on or after April 1, 2024:

• Insurance contracts - Ind AS 117; and

• Lease Liability in Sale and Leaseback - Amendments
to Ind AS 116

These amendments did not have any material impact on the
amounts recognised in prior periods and are not expected
to significantly affect the current or future periods

3. ACCOUNTING POLICY INFORMATION

3.1 Statement of compliance

The fi nancial statements have been prepared in accordance
with the provisions of Companies Act, 2013 and 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.

3.2 Basis of preparation and presentation

The financial statements have been prepared on the
historical cost basis except for certain financial assets
and liabilities (including derivative instruments) and plan

assets under defined benefit plans, that are measured at
fair values at the end of each reporting period, as explained
in the accounting policies below.

Summary of material accounting policies is as under:
Operating Cycle

Assets and liabilities other than those relating to long-term
contracts (i.e. supply or construction contracts) are
classified as current if it is expected to realize or settle
within 12 months after the balance sheet date.

I n case of long-term contracts, operating cycle of the
Company exceeds one year covering the duration
of the contract including the defect liability period,
wherever applicable, and extends upto the realisation of
receivables (including retention monies) within the credit
period normally applicable to the respective contract.
Accordingly, for classification of assets and liabilities related
to such contracts as current, duration of each contract is
considered as its operating cycle.

3.3 Revenue recognition

The Company derives revenue principally from following
streams:

• Sale of products (towers and cables)

• Construction contracts

• Sale of services

• Other Operating Revenue

3.3.1 Sale of products:

The Company recognizes revenue in relation to sale
of tower/cable and ancillary products when it satisfi es
a performance obligation in accordance with the
contract with the customer. This is achieved when
control of the product has been transferred to the
customer, which is generally determined when legal
title, physical possession, risk of obsolescence, loss
and rewards of ownership pass to the customer and
the Company has the present right to payment, all
of which occurs at a point in time upon shipment or
delivery of the product.

The Company considers the terms of the contract
in determining the transaction price. The transaction
price is based upon the amount the Company
expects to be entitled to in exchange for transferring
of promised goods and services to the customer.
Transaction price excludes taxes and duties collected
on behalf of the government. Invoices are issued
according to contractual terms and are usually payable
as per the credit period agreed with the customer.

3.3.2 Construction contracts:

The Company enters into engineering, procurement
and construction contracts (‘EPC’) which are
fixed price contracts or variable price contracts.
Revenue is recognized from engineering, procurement
and construction contracts (‘EPC’) over the period of
time, as performance obligations are satisfied over
time due to continuous transfer of control to the
customer. EPC contracts are generally accounted
for as a single performance obligation as it involves
complex integration of goods and services.

The revenue is recognised to the extent of transaction
price allocated to the performance obligation satisfi ed.
Transaction price is the amount of consideration
to which the Company expects to be entitled in
exchange for transferring goods or services to a
customer excluding amounts collected on behalf of
a third party. Transaction price does not include any
significant financing component.

Costs to obtain a contract which are incurred
regardless of whether the contract was obtained are
charged-off in profit or loss immediately in the period
in which such costs are incurred. Incremental costs of
obtaining a contract, if any, and costs incurred to fulfil
a contract are amortised over the period of execution
of the contract in proportion to the progress measured
in terms of a proportion of actual cost incurred
to-date, to the total estimated cost attributable to the
performance obligation.

The performance obligations are satisfied over time
as the work progresses. The Company recognises
revenue using input method (i.e percentage-of-
completion method), based primarily on contract
cost incurred to date compared to total estimated
contract costs. Changes to total estimated contract
costs, if any, are recognised in the period in which
they are determined as assessed at the contract
level. If the consideration in the contract includes
price variation clause or there are amendments in
contracts, the Company estimates the amount of
consideration to which it will be entitled in exchange
for work performed.

Due to the nature of work required to be performed on
many of the performance obligations, the estimation
of total revenue and cost at completion is complex,
subject to many variables and requires significant
judgement. Variability in the transaction price arises
primarily due to liquidated damages, price variation
clauses, changes in scope, incentives, discounts,
if any and claims for cost-overrun arising from

customer caused delays, suspension of projects,
which are various stages of negotiation, discussions,
arbitration, litigation with the customer. The Company
considers its experience with similar transactions and
expectations regarding the contract in estimating
the amount of variable consideration to which it will
be entitled and determining whether the estimated
variable consideration should be constrained.

The Company includes estimated amounts of claims
and variable consideration in the transaction price
when its recovery is assessed to be highly probable
that a significant reversal of cumulative revenue
recognised will not occur when the uncertainty
associated with the variable consideration is resolved.
The estimates of variable consideration and claims
are based largely on an assessment of anticipated
performance and all information (historical, current
and forecasted) that is reasonably available.
To make this assessment, management considers the
following factors, wherever considered necessary -
contractual tenability of the claims/variations, status
of the discussions/negotiations with the customers,
management expert’s assessment and legal opinion.

Progress billings are generally issued upon completion
of certain phases of the work as stipulated in the
contract. Billing terms of the over-time contracts
vary but are generally based on achieving specified
milestones. The difference between the timing of
revenue recognised and customer billings result in
changes to contract assets and contract liabilities.
Contractual retention amounts billed to customers are
generally due upon expiration of the contract period.

The contracts generally result in revenue recognised
in excess of billings which are presented as contract
assets on the statement of financial position.
Amounts billed and due from customers are classified
as trade receivables in the balance sheet when right to
consideration is unconditional and only the passage of
time is required before payment of the consideration
is due.. The portion of the payments retained by
the customer until final contract settlement is not
considered a significant financing component since it
is usually intended to provide customer with a form
of security for Company’s remaining performance as
specified under the contract, which is consistent with
the industry practice. Contract liabilities represent
amounts billed to customers in excess of revenue
recognised till date. A liability is recognised for advance
payments, and it is not considered as a significant
financing component since it is used to meet working
capital requirements at the time of project mobilization

stage. The same is presented as contract liability in
the balance sheet. Contract assets and liabilities are
reported in a net position on a contract-by-contract
basis at the end of each reporting period.

Estimates of revenues, costs or extent of progress
toward completion are revised if circumstances
change. Any resulting increases or decreases in
estimated revenues or costs are reflected in profit or
loss in the period in which the circumstances that give
rise to the revision become known to management.

For construction contracts the control is transferred
over time and revenue is recognised based on
the extent of progress towards completion of the
performance obligations. When it is probable that
total contract costs will exceed total contract
revenue, the expected loss is recognised as an
expense immediately.

3.3.3 Sale of services:

Services rendered include tower testing and designing,
operating and maintenance and other services.

Revenue from providing services is recognised in the
accounting period in which the services are rendered.

Invoices are issued according to contractual terms
and are usually payable as per the credit period
agreed with the customer.

3.3.4 Other Operating Revenue:

Export benefits under Duty Drawback benefits and
Remission of Duties and Taxes on Export Products
Scheme (RoDTEP) are accounted as other operating
revenue on accrual basis as and when export of goods
take place, where there is a reasonable assurance
that the benefit will be received and the Company will
comply with all the attached conditions.

3.4 Foreign currency transactions

Items included in the standalone financial statements
of the Company are measured using the currency of the
primary economic environment in which the entity operates
(functional currency). For each branch and jointly controlled
operation situated outside India, the Company determines
the functional currency and items included in the financial
statements of each entity are measured using that functional
currency of that respective branch and jointly controlled
operation. The functional and presentation currency of the

Company is Indian Rupees (INR). The financial statements
are presented in Indian rupees (INR).

3.4.1 Accounting for transactions and balances in
foreign currencies

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

Non-monetary items that are measured in terms
of historical cost in foreign currencies are not
retranslated at year end.

I n case of consideration paid or received in advance
for foreign currency denominated contracts, the
related expense or income is recognised using the
rate on the date of transaction on initial recognition of
a related asset or liability.

Exchange differences on settlement or translation
of monetary items are recognised in the Statement
of Profit and Loss in the period in which they arise.
except for exchange differences on transactions
entered into in order to hedge certain foreign
currency risks (see Note 3.22 below for hedging
accounting policies);

3.4.2 Translation of foreign operations whose functional
currency is other than presentation currency:

1. Assets and liabilities, both monetary and non¬
monetary are translated at the rates prevailing at
the end of each reporting period and all resulting
exchange differences are accumulated in the
exchange differences on translation of foreign
operations in the statement of changes in equity.

2. I ncome and expense items are translated at the
exchange rates at the dates of the transactions
and all resulting exchange differences are
accumulated in the exchange differences on
translation of foreign operations in the statement
of changes in equity.

On the disposal of a foreign operation all of
the exchange differences accumulated in other
comprehensive income relating to that particular
foreign operation attributable to the owners of
the Company is reclassified in the statement of
profit and loss.

3.5 Interests in Jointly Controlled Operations (Refer
Note 49 )

A jointly controlled operation is a joint arrangement whereby
the parties that have joint control of the arrangement have
rights to the assets, and obligations for the liabilities,
relating to the arrangement. 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.

When a Company undertakes its activities under jointly
controlled operations, the Company as a joint operator
recognises in relation to its interest in a jointly controlled
operation the assets, liabilities, revenues, and expenses
relating to its interest in a jointly controlled operation in
accordance with the applicable Ind AS.

When a Company transacts with a jointly controlled
operation in which a Company is a joint operator (such
as a sale or contribution of assets), the Company is
considered to be conducting the transaction with the other
parties to the jointly controlled operation, and gains and
losses resulting from the transactions are recognised in the
Company’s financial statements only to the extent of other
parties’ interests in the jointly controlled operation.

When a Company transacts with a jointly controlled
operation in which a Company is a joint operator (such as
a purchase of assets), the Company does not recognise its
share of the gains and losses until it resells those assets
to a third party.

3.6 Impairment of investments in subsidiaries

Investment in subsidiaries are carried at cost and are tested
for Impairment in accordance with Ind AS 36, ‘Impairment
of assets’. The carrying amount of investment is tested for
impairment as a single asset by comparing its recoverable
amount with its carrying amount, any impairment loss
recognised reduces the carrying amount of investment and
is recognised in the Statement of Profit and Loss.

3.7 Impairment of financial assets

The Company recognizes loss allowances on a
forward-looking basis using the expected credit loss
(ECL) model for all the financial assets except for trade
receivables and contract assets. Loss allowance for all
financial assets is measured at an amount equal to lifetime
ECL. The Company recognises impairment loss on trade
receivables and contract assets using expected credit loss
model which involves use of a provision matrix constructed
on the basis of historical credit loss experience and adjusted
for forward-looking information as permitted under Ind AS
109. The expected credit loss is based on the ageing of the
days, the receivables due and the expected credit loss rate.

In addition, in case of event driven situation as litigations,
disputes, change in customer’s credit risk history, specific
provisions are made after evaluating the relevant facts and
expected recovery. The amount of expected credit losses
(or reversal) that is required to adjust the loss allowance at
the reporting date is recognized as an impairment gain or
loss in the Statement of Profit and Loss.

3.8 Leasing
As a lessee:

The Company assesses whether a contract is or contains
a lease, at inception of the contract. 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.

The Company applies a single recognition and measurement
approach for all leases, except for short-term leases having
lease term of 12 months or less 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.

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. and includes
the net present value of the following lease payments:

• Lease payments less any lease incentives receivable

• Variable lease payments that are based on an
index or a rate

• Amounts expected to be payable by the Company
under residual value guarantees, if any

• Exercise price of the purchase option, if the Company
is reasonably certain to exercise that option, and

• Payments of penalties for terminating the lease, if the
lease term reflects the Company exercising that option.

The lease payments are discounted using Company’s
incremental borrowing rate (since the interest rate
implicit in the lease cannot be readily determined).
Incremental borrowing rate is the rate of interest that the
Company would have to pay to borrow over a similar term,
and 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.

Variable lease payments that depend on any key variable
/ condition, are recognised in profit or loss in the period in
which the condition that triggers those payments occurs.

I n case of sale and leaseback transactions, the Company
first considers whether the initial transfer of the underlying
asset to the buyer-lessor is a sale by applying the
requirements of Ind AS 115. If the transfer qualifies as a
sale and the transaction is at market terms, the Company
effectively derecognises the asset, recognises a ROU asset
and corresponding lease liability.

When the lease liability is remeasured, the corresponding
adjustment is reflected in the right-of-use asset or
Statement of profit and loss, as the case may be.

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 following:

• The amount of the initial measurement of lease liability

• Any lease payments made at or before the
commencement date less any lease incentives
received

• Any initial direct costs and

• Restoration costs.

Right-of-use assets are depreciated over the lease term on
a straight-line basis.

Short-term leases and leases of low-value assets

Payments associated with short-term leases of plant and
equipment, buildings and all leases of low-value assets are
recognised on a straight-line basis as an expense in profit
or loss. Short-term leases are leases with lease term of 12
months or less.

As a lessor:

Lease income from operating leases where the Company
is a lessor is recognised in income on a straight-line basis
over the lease term.

3.9 Borrowing costs

Borrowing costs include finance costs calculated using
the effective interest method in respect of assets acquired
on lease and exchange differences arising on foreign
currency borrowings, to the extent they are regarded as an
adjustment to finance costs.

Finance expenses are recognised immediately in the
Statement of Profit and Loss, unless they are directly
attributable to qualifying assets, which are assets that

necessarily take a substantial period of time to get ready for
their intended use or sale in which case they are capitalised
until such time as the assets are substantially ready for their
intended use or sale.

All other borrowing costs are recognised in the
Statement of Profit and Loss in the period in which
they are incurred.

3.10 Employee benefits

3.10.1 Post Employment Benefits:

(a) Defined Contribution Plans:

Payments to defined contribution
retirement benefit scheme for eligible
employees in the form of superannuation
fund and provident fund are recognised as
expense when employees have rendered
services entitling them to the contributions.
The Company has no further payment
obligation once the contributions have
been paid. The contributions are accounted
for as defined contribution plans and the
contributions are recognised as employee
benefit expenses when they are incurred.

(b) Defined Benefit Plans:

The Company has established ‘KEC
International Limited Provident Fund’ in
respect of employees other than factory
workers, to which both the employee
and the employer make contribution
equal to 12% of the employee’s basic
salary. The Company’s contribution to
the provident fund for all employees are
charged to the Statement of Profit and
Loss. In case of any liability arising due
to shortfall between the return from its
investments and the administered interest
rate, the same is required to be provided for
by the Company.

The defined benefit plan of Company and
its jointly controlled operations at India
i.e. gratuity plan, provides for lump sum
payment to vested employees on retirement
/ separation of an amount equivalent to 15
days salary for completed years of service
and on death while in employment an
amount equivalent to 15 days salary for
anticipated years of service in terms of
Gratuity scheme of the Company or as per
payment of the Gratuity Act, whichever is
higher. Vesting occurs upon completion of
five years of service.

In case of jointly controlled operation at
Al-Sharif Group and KEC Ltd Company and
Saudi Arabia (Al Sharif JV), the defined benefit
plan i.e. End Service Benefit (ESB), provides
for lump sum payment to vested employees
on resignation/ termination or retirement based
on an amount equivalent to 15 days salary up
to 5 years and one month salary from 6th year
onwards for each completed year of service or
part thereof on proportionate basis according to
the law applicable in Saudi. Vesting occurs upon
completion of two years of service.

The cost of providing benefits is determined
using the projected unit credit method, with
actuarial valuations being carried out at the end
of each annual reporting period.

3.10.2 Long-term employee benefit:

Compensated absences:

Company has liabilities for earned leave that
are not expected to be settled wholly within
12 months after the end of the period in which
the employees render the related service.
These obligations are therefore measured as
the present value of expected future payments
to be made in respect of services provided
by employees up to the end of the reporting
period using the projected unit credit method.
The benefits are discounted using the appropriate
market yields at the end of the reporting period
that have terms approximating to the terms of
the related obligation. Remeasurements as a
result of experience adjustments and changes
in actuarial assumptions are recognised in
profit or loss.

The Obligations are presented as either current
or non-current liabilities on the balance sheet,
depending on whether the entity has an
unconditional right to defer settlement for at least
twelve months after the reporting period. If the
entity lacks this unconditional right, regardless
of when settlement is expected to occur, the
obligations are classified as current liabilities.
Conversely, if there exists an unconditional right
to defer settlement for more than twelve months
after the reporting period, the obligations
are presented as non-current liabilities on
the balance sheet.

3.10.3 Short-term employee benefit:

Short term employee benefits such as salaries,
wages, short term compensated absences,
bonus, ex gratia and performance linked
rewards including non-monetary benefits that
are expected to be settled wholly within 12
months after the end of period in which the
employees rendered the related services are
recognised in respect of employee services up
to the end of reporting period and are measured
at the amounts expected to be paid when the
liabilities are settled. The liabilities are presented
as current employee benefits obligations in
the balance sheet.

Liabilities recognised in respect of short-term
employee benefits are measured at the
undiscounted amount of the benefits expected
to be paid in exchange for the related service.

3.11 Taxation

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

3.11.1 Current tax

The Company’s current tax is calculated using
tax rates that have been enacted or substantively
enacted by the end of the reporting period in
the countries where the Company, its branches
and jointly controlled operations operate and
generate taxable income.

Management periodically evaluates positions
taken in tax returns with respect to situations
in which applicable tax regulations is subject to
interpretations. It establishes provisions, where
appropriate, on the basis of amounts expected
to be paid to the tax authorities.

3.11.2 Deferred tax

Deferred tax is recognised on temporary
differences between the carrying amounts of
assets and liabilities in the financial statements
and the corresponding tax bases used in the
computation of taxable profit. Deferred tax
liabilities are generally recognised for all taxable
temporary differences. Deferred tax assets are
generally recognised for all deductible temporary
differences to the extent that it is probable that
taxable profits will be available against which

those deductible temporary differences can be
utilised. Such deferred tax assets and liabilities
are not recognised if the temporary difference
arises from the initial recognition (other than in
a business combination) of assets and liabilities
in a transaction that affects neither the taxable
profit nor the accounting profit.

Deferred tax liabilities are recognised for
taxable temporary differences associated with
interests in jointly controlled operations and
foreign branches except where it is probable
that the temporary difference will not reverse
in the foreseeable future. Deferred tax assets
arising from deductible temporary differences
associated with such interests are only
recognised to the extent that it is probable that
there will be sufficient taxable profits against
which to utilise the benefits of the temporary
differences, and they are expected to reverse in
the foreseeable future.

The carrying amount of deferred tax assets is
reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured
at the tax rates that are expected to apply in the
period in which the liability is settled or the asset
realised, based on tax rates (and tax laws) that
have been enacted or substantively enacted by
the end of the reporting period.

The measurement of deferred tax liabilities and
assets reflects the tax consequences that would
follow from the manner in which the Company
expects, at the end of the reporting period, to
recover or settle the carrying amount of its
assets and liabilities.

Deferred tax assets are not recognised for
temporary differences between the carrying
amount and tax bases of investments in
subsidiaries, branches and associates and
interest in joint arrangements where it is not
probable that the differences will reverse in
the foreseeable future and taxable profit will
not be available against which the temporary
differences can be utilised.

Deferred tax assets and liabilities are offset
when there is legally enforceable right to offset
current tax assets and liabilities and when the

of the asset, the operating conditions of the asset, past
history of replacement, anticipated technological changes,
etc. The estimated useful life of these Property, Plant and
Equipment is mentioned below:

An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
Any gain or loss arising on the disposal or retirement of
an item of property, plant and equipment is determined as
the difference between the sales proceeds and the carrying
amount of the asset and is recognised in the Statement of
Profit and Loss.

Capital work-in-progress

Capital work-in-progress comprises the cost of assets that
are not yet ready for their intended use at the year end and
are stated at historical cost and impairment, if any.

3.13 Intangible assets

3.13.1 Intangible assets acquired separately

I ntangible assets with finite useful lives

that are acquired separately are carried at

cost less accumulated amortisation and
accumulated impairment losses, if any.
Amortisation is recognised on a straight-line basis
over their estimated useful lives. The estimated
useful life and amortisation method are reviewed
at the end of each reporting period, with the effect
of any changes in estimate being accounted for
on a prospective basis.

3.13.2 Intangible assets acquired in a business

combination

Intangible assets acquired in a business

combination are initially recognised at their fair
value at the acquisition date (which is regarded
as their cost).

Subsequent to initial recognition, intangible
assets acquired in a business combination are

reported at cost less accumulated amortisation
and accumulated impairment losses, if any on
the same basis as intangible assets that are
acquired separately.

3.13.3 Research and development costs

Research expenditure and development
expenditure that do not meet the criteria
mentioned in Ind AS 38 are recognised as
an expense as incurred. Development costs
previously recognised as an expense are not
recognised as an asset in a subsequent period.

3.13.4 Derecognition of intangible assets

An intangible asset is derecognised on disposal,
or when no future economic benefits are
expected from use or disposal. Gains or losses
arising from derecognition of an intangible asset,
measured as the difference between the net
disposal proceeds and the carrying amount of
the asset are recognised in the Statement of
Profit and Loss when the asset is derecognised.

3.13.5 Useful lives of intangible assets

Brand in respect of the power transmission
business acquired under the High Court
approved Composite Scheme of Arrangement
in an earlier year is amortised by the Company
in terms of the said Scheme over its useful life,
which based on an expert opinion is estimated
to be 20 years. Non-compete fees paid on
acquisition of Spur Infrastructure Private Limited
are amortized on straight line basis over the term
of non-compete agreement i.e. 3 years.

Computer Software are amortised on straight
line basis over the estimated useful life ranging
between 4-6 years.

3.14 Impairment of Non-current assets

At the end of each reporting period, the Company
reviews the carrying amounts of its Property, plant and
equipment, intangible and other non-current assets to
determine whether there is any indication that those assets
have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss (if
any). When it is not possible to estimate the recoverable
amount of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which
the asset belongs.

Recoverable amount is the higher of fair value less costs to
sell and value in use.

I f the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit)
is reduced to its recoverable amount. An impairment
loss is recognised immediately in the Statement of
Profit and Loss.

When an impairment loss subsequently reverses, the
carrying amount of the asset (or a cash-generating unit)
is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been
determined had no impairment loss been recognised for
the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in the
Statement of Profit and Loss.

3.15 Investments

I nvestment in equity shares of subsidiaries are
measured at cost.

Investments in equity instruments are measured at fair
value through other comprehensive income.

The Company classifies its financial assets in the
measurement categories as those to be measured
subsequently at fair value (through other comprehensive
income or through profit and loss) and those measured
at amortised cost. The classification depends on the
Company’s business model for managing the financial
asset and the contractual terms of the cash flows.

I nvestment in preference shares of subsidiaries are
classified as equity since the Company has the option
of early conversion with fixed ratio and also there is no
requirement for mandatory dividend payment.

3.16 Inventories

I nventories (Raw material, work-in-progress, finished
goods, stores and spares) are stated at the lower of cost
and net realisable value. Cost of inventory is determined on
a weighted average basis. Net realisable value represents
the estimated selling price for inventories less all estimated
costs of completion and costs necessary to make the sale.
Scrap is valued at net realisable value.

Cost of work-in-progress and finished goods includes
material cost, labour cost, and manufacturing overheads
absorbed on the basis of normal capacity of production.