2. Significant Accounting Policies

This note provides a list of the significant accounting
policies adopted in the preparation of these financial
statements. These policies have been consistently
applied to all the years presented, unless otherwise
stated.

a) Statement of Compliance/Adoption of Ind AS

In accordance with the notification issued by the
ministry of corporate affairs, the company has
adopted Indian Accounting Standards (referred to
as “Ind-AS”) notified under the Companies (Indian
Accounting Standards Rules, 2015 with effect
from April 1, 2017 previous period have been
restated to Ind-AS.

For all periods up to and including the year ended
31st March 2017, the Company prepared its
Standalone financial statements in accordance
with requirements of the Accounting Standards
notified under the Companies (Accounting
Standards) Rules, 2006 (“Previous GAAP”).

These Standalone Financial Statements have
been prepared in accordance with Ind-AS as
notified under the Companies (Indian Accounting
Standards) Rules, 2015 read with Section 133 of
the Companies Act, 2013.

b) Basis of preparation

i. Compliance with Ind AS:

The financial statements comply in all material
aspects 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.

The financial statements up to year ended
31 March 2017 were prepared in accordance

with the accounting standards notified under
the Companies (Accounting Standards)
Rules, 2006 (as amended) and other relevant
provisions of the Act.

ii. Historical cost convention:

The financial statements have been prepared
on a historical cost basis, except for the
following:

Ý Certain financial assets and liabilities
that are measured at fair value, wherever
applicable;

Ý Defined benefit plans - plan assets
measured at fair value;

:) Property, Plant and Equipment

i) Recognition and measurement

Property, plant and equipment are carried at
historical cost including attributable interest
and finance costs up to relating to the
borrowed fund attributable to the acquisition
of asset up to the date the assets are ready
to use, less accumulated depreciation and
impairment loss, if any in accordance with
IND-AS 16.

ii) Transition to Ind AS

On transition to Ind AS, the Company has
elected to continue with the carrying value
of all its property, plant and equipment
recognized as at 1 April 2016 measured as
per the previous GAAP and use that carrying
value as the deemed cost of the property,
plant and equipment.

iii) Depreciation methods, estimated useful
life and residual value

Depreciation is calculated using the straight¬
line basis at the rates arrived at based on the
useful lives prescribed in Schedule II of the
Companies Act, 2013. The company follows
the policy of charging depreciation on pro¬
rata basis on the assets acquired or disposed
off during the year. Leasehold assets are
amortised over the period of lease.

The residual values are not more than 5%
of the original cost of the asset. The assets’
residual values and useful lives are reviewed,
and adjusted if appropriate, at the end of each
reporting period. An asset’s carrying amount
is written down immediately to its recoverable
amount if the asset’s carrying amount is
greater than its estimated recoverable
amount. Gains or losses on disposal are
determined by comparing proceeds with
carrying amount.

iv) Subsequent costs

Subsequent expenditure relating to property,
plant and equipment is capitalised only
when it is probable that future economic
benefits associated with the item will flow
to the Company and the cost of the item
can be measured reliably. All other repairs
and maintenance costs are charged to the
Statement of Profit and Loss as incurred

v) Derecognition

Property, plant and equipment are
derecognised from the Standalone Financial
Statements, either on disposal or when no
economic benefits are expected from its use
or disposal. The gain or loss arising from
disposal of property, plant and equipment
are determined by comparing the proceeds
from disposal with the carrying amount of
property, plant and equipment recognised in
the Standalone Statement of Profit and Loss
in the year of occurrence.

vi) Capital work in progress

Cost of assets not ready for intended use,
as on the Balance Sheet date, is shown as
capital work in progress.

d) Segment Reporting

The Company is engaged in the trading of iron
and steel and there are no separate reportable
segments as per Indian Account Standard (AS-
108) “Segment Reporting”. The Company’s
operations are within India.

e) Foreign currency transaction

i) Functional and presentation currency:

Items included in the financial statements are
measured using the currency of the primary
economic environment in which the entity
operates (‘the functional currency’). The
financial statements are presented in Indian
National rupee ('), which is the Company’s
functional and presentation currency.

ii) Transactions and balances: Foreign
currency transactions are translated into the
functional currency using the exchange rates
at the dates of the transactions. Exchange
differences arising from foreign currency
fluctuations are dealt with on the date of
payment/receipt. Assets and Liabilities
related to foreign currency transactions
remaining unsettled at the end of the period/
year are translated at the period/ year end
rate. The exchange difference is credited /
charged to Profit & Loss Account in case of
revenue items and capital items.

Forward exchange contracts entered into,
to hedge foreign currency risk of an existing
asset/ liability. The premium or discount
arising at the inception of forward exchange
contract is amortised and recognized as
an expense/ income over the life of the
contract. Exchange differences on such
contracts, except the contracts which are
long-term foreign currency monetary items,
are recognized in the statement of profit and
loss in the period in which the exchange
rates change. Any profit or loss arising on
cancellation or renewal of such forward
exchange contract is also recognized as
income or as expense for the period.

f) Revenue Recognition

The company recognizes revenue in accordance
with Ind- AS 115. Revenue is recognized when a
customer obtains control of goods or services and
thus has the ability to direct the use and obtained
the benefits of the goods or services. Any advance
received against supply of the goods and services
is recognized under the head current liabilities,
sub head trade and other payable.

Ind -AS 115 was issued on March 28, 2018 and
establishes a five step model to account for
revenue arising from contracts with customers.
Under Ind AS 115, revenue is recognized at an
amount that reflects the consideration to which
an entity expects to be entitled in exchange for
transferring goods or services to a customer. The
new revenue standard will supersede all current
revenue recognition requirements under Ind AS.

Sale of products:

Revenue from the sale of manufactured and
traded goods is recognized when the goods are
delivered and titles have been passed, significant
risks transferred, effective control over the goods
no longer exists with the company, amount of
revenue / costs in respect of the transactions can
reliably be measured and probable economic
benefits associated with the transactions will flow
to the company.

Measurement of revenue:

Revenue from sales is based on the price specified
in the sales contracts, net of all discounts and
returns at the time of sale.

Other Revenue

1) Interest income

Interest income is accrued on a time basis by
reference to the principal outstanding and the
effective interest rate.

2) Other Income/ Miscellaneous Income

Other items of income are accounted as and
when the right to receive such income arises
and it is probable that the economic benefits
will flow to the company and the amount of
income can be measured reliably.

g) Government grants

Grants from the government are recognized at fair
value where there is a reasonable assurance that
the grant will be received and the Company will
comply with all attached conditions.

Government grants relating to income are
deferred and recognized in the profit or loss over

the period necessary to match them with the costs
they are intended to compensate and presented
within other income.

Government grants relating to the purchase of
property, plant and equipment are included in
non-current liabilities as deferred income and are
credited to profit and loss on a straight line basis
over the expected lives of the related assets and
presented within other income.

The benefit of a government loan at a below-
market rate of interest is treated as a government
grant, measured as the difference between
proceeds received and the fair value of the loan
based on prevailing market interest rates.

h) Income Taxes

Income tax expenses comprise current tax
expense and the net changes in the deferred
tax asset or liability during the year. Current &
deferred taxes are recognized in the statement
of Profit & Loss, except when they relate to items
that are recognized in other comprehensive
income or directly in equity, in which case, the
current & deferred tax are also recognized in
other comprehensive income or directly in equity,
respectively.

i. Current Income Tax

Current income tax assets and liabilities
are measured at the amount expected to
be refunded from or paid to the taxation
authorities using the tax rates and tax laws
that are in force at the reporting date. Current
income tax relating to items recognised
outside the Statement of Profit and Loss is
recognised outside the Statement of Profit
and Loss (either in OCI 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.

ii. 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:

a. 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.

b. In respect of taxable temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures,
when the timing of the reversal of the
temporary differences can be controlled and
it is probable that the temporary differences
will not reverse in the foreseeable future.

c. 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.

d. 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.

e. Deferred taxes are provided on the
undistributed earnings of subsidiaries where it
is expected that the earnings of the subsidiary
will be distributed in the foreseeable future.

f. Deferred tax assets and liabilities are offset
when they relate to income taxes levied by
the same taxation authority and the relevant
entity intends to settle its current tax assets
and liabilities on a net basis.

g. Deferred tax relating to items recognised
outside the Statement of Profit and Loss is
recognised outside the Statement of Profit
and Loss. Such deferred tax items are
recognised in correlation to the underlying
transaction either in OCI or directly in equity.

h. 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.

i) Leases

The Leases of property, plant and equipment
where the Company, as lessee, has substantially
all the risks and rewards of ownership are classified
as finance leases. Finance leases are capitalized
at the lease’s inception at the fair value of the
leased property or, if lower, the present value of
the minimum lease payments. The corresponding
rental obligations, net of finance charges, are
included in borrowings or other financial liabilities
as appropriate.

Each lease payment is allocated between the
liability and finance cost. The finance cost is
charged to the profit or loss over the lease period
so as to produce a constant periodic rate of
interest on the remaining balance of the liability for
each period.

Leases in which a significant portion of the risks
and rewards of ownership are not transferred to
the Company as lessee are classified as operating
leases. Payments made under operating leases
are charged to Statement of profit and loss on
a straight line basis over the period of the lease
unless the payments are structured to increase in
line with expected general inflation to compensate
for the lessor’s expected inflationary cost
increases.

j) Impairment of non-financial assets

The carrying values of assets / cash generating
units at each balance sheet date are reviewed for
impairment if any Indication of impairment exists.

If the carrying amount of the assets exceed the
estimated recoverable amount, an impairment
loss is recognised for such excess amount. The
impairment loss is recognised as an expense
in the Standalone Statement of Profit and Loss,
unless the asset is carried at revalued amount, in
which case any impairment loss of the revalued
asset is treated as a decrease to the extent a
revaluation reserve is available for that asset.

The recoverable amount is the greater of the net
selling price and the value in use. Value in use
is arrived at by discounting the future cash flows
to their present value based on an appropriate
discount factor. When there is Indication that an
impairment loss recognised for an asset (other
than a revalued asset) in earlier accounting
periods which no longer exists or may have
decreased, such reversal of impairment loss is
recognised in the Standalone Statement of Profit
and Loss, to the extent the amount was previously
charged to the Standalone Statement of Profit and
Loss. In case of revalued assets, such reversal is
not recognised.

k) Inventories

Inventories are stated at the lower of cost
(determined using weighted average cost method)
and net realizable value. The costs comprise its
purchase price and any directly attributable cost
of bringing to its present location and condition.
Net realizable value is the estimated selling
price in the ordinary course of business, less the
estimated costs of completion and the estimated
variable costs necessary to make the sale.

*Material and other supplies held for use in the
production of the inventories are not written down
below cost if the finished goods in which they will be
incorporated are expected to be sold at or above cost.

(l) Financial Instruments

Initial Measurement:

The Company recognizes financial assets and
financial liabilities when it becomes a party to
the contractual provisions of the instrument. All
financial assets and liabilities are recognized
at fair value on initial recognition, except for
trade receivables which are initially measured
at transaction price. Transaction costs that are
directly attributable to the acquisition or issue of
financial assets and financial liabilities, which are
not at fair value through profit or loss, are added to
the fair value on initial recognition.

Financial Assets

Subsequent Measurement:

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.
The Company’s business model refers to how
it manages its financial assets to generate cash
flows.

The business model determines whether the cash
flows will result from collecting contractual cash
flows, selling the financial assets, or both.

> At Amortized Cost

Financial assets are subsequently measured
at amortised cost if these financial assets
are held within a business model with an
objective to hold these assets in order
to collect contractual cash flows and the

contractual terms of the financial asset give
rise on specified dates to cash flows that are
solely payments of principal and interest on
the principal amount outstanding. Interest
income from these financial assets is included
in finance income using the effective interest
rate (‘EIR’) method. Impairment gains or
losses arising on these assets are recognised
in the Statement of Profit and Loss.

> At Fair Value through Other
Comprehensive Income

Financial assets are measured at fair value
through Other Comprehensive Income
(‘OCI’) if these financial assets are held within
a business model with an objective to hold
these assets in order to collect contractual
cash flows or to sell these financial assets
and the contractual terms of the financial
asset give rise on specified dates to cash
flows that are solely payments of principal and
interest on the principal amount outstanding.
Movements in the carrying amount are taken
through OCI, except for the recognition of
impairment gains or losses, interest revenue
and foreign exchange gains and losses which
are recognised in the Statement of Profit and
Loss.

> At fair value through profit or loss (FVTPL)

Any financial asset which does not meet the
criteria for categorization as financial asset
at amortized cost or at FVTOCI, is classified
as financial asset at FVTPL. Financial assets
included within the FVTPL category are
subsequently measured at fair value with all
changes recognized in the statement of profit
and loss. Interest income from these financial
assets is included in other income.

Trade Receivables

Trade receivables are initially recognised at their
transaction price (as defined in IND AS 115) unless
those contain significant financing component
determined in accordance with IND AS 115. The
company estimates the credit losses on the Trade
Receivables at each reporting date in accordance
with the guidelines prescribed by IND AS 109.

Equity Instruments

All investments in equity instruments classified
under financial assets are initially measured at fair
value and the Company may, on initial recognition,
irrevocably elect to measure the same either at
FVOCI or FVTPL.

The Company makes such election on an
instrument-by-instrument basis. Fair value
changes on an equity instrument are recognised
as other income in the Statement of Profit and
Loss unless the Company has elected to measure
such instrument at FVOCI. Fair value changes
excluding dividends, on an equity instrument
measured at FVOCI are recognized in OCI.
Amounts recognised in OCI are not subsequently
reclassified to the Statement of Profit and Loss.
Dividend income on the investments in equity
instruments are recognised as ‘Other Income’ in
the Statement of Profit and Loss.

The company has elected to recognize the
investments in equity instruments at Fair Value
through OCI.

Measurement of unquoted equity instruments:

IND AS 109 requires all investment in equity
instruments and contract on those instruments
to measured at fair value. However, IND AS 109
also requires that in some limited circumstances,
cost may be appropriate estimate of fair value.
That may be the case if insufficient more recent
information is available to measure fair value,
or if there isa wide range of possible fair value
within that range. However, cost is never the best
estimate of fair value for investments in quoted
equity instruments.

Investments in Subsidiary and Associate
Companies

Investments in subsidiaries, joint ventures and
associates are recognised at fair value as per
IND AS 27 - Separate Financial Statements.
With respect to Investment in Subsidiaries, the
company has opted to recognize the investment
in Subsidiary at Fair Value through Other
comprehensive income. Thus, investments in

subsidiaries are recognised at Fair Value as per
IND AS 109. The changes in the Fair Value are
recognized in Other Comprehensive Income.

Debt Instruments

Debt instruments are measured at amortised
cost, fair value through other comprehensive
income (‘FVOCI’) or fair value through profit or
loss (‘FVTPL’) till derecognition on the basis of
(i) the Company’s business model for managing
the financial assets and (ii) the contractual cash
flow characteristics of the financial asset. The
company recognizes the debt instruments such
as inter corporate deposits at “Fair value through
Profit or Loss” since the business model of the
company with respect to this financial asset did not
fulfil the conditions in order for it to be recognized
at Amortized Cost or Fair Value through Other
Comprehensive Income.

Derecognition

The Company derecognises a financial asset
when the contractual rights to the cash flows
from the financial asset expire, or it transfers the
contractual rights to receive the cash flows from
the asset.

Impairment of Financial Asset

Expected credit losses are recognized for all
financial assets subsequent to initial recognition
other than financial assets in FVTPL category.
For financial assets other than trade receivables,
as per IND AS 109, the Company recognises 12
month expected credit losses for all originated or
acquired financial assets if at the reporting date the
credit risk of the financial asset has not increased
significantly since its initial recognition. The
expected credit losses are measured as lifetime
expected credit losses if the credit risk on financial
asset increases significantly since its initial
recognition. The Company’s trade receivables do
not contain significant financing component and
loss allowance on trade receivables is measured
at an amount equal to life time expected losses i.e.
expected cash shortfall. The impairment losses

and reversals are recognised in Statement of
Profit and Loss.

Financial Liabilities

Subsequent Measurement

The measurement of financial liabilities depends
on their classification, as described below:

> At FVTPL: Financial liabilities at FVPL
include financial liabilities held for trading
and financial liabilities designated upon initial
recognition as at FVPL. Financial liabilities
are classified as held for trading if they are
incurred for the purpose of repurchasing in
the near term. Gains or losses on liabilities
held for trading are recognised in the
Statement of Profit and Loss.

> At amortised cost: After initial recognition,
interest-bearing loans and borrowings are
subsequently measured at amortised cost
using the EIR method.

Any difference between the proceeds (net
of transaction costs) and the settlement or
redemption of borrowings is recognised over.

De-recognition of financial liabilities

Financial liabilities are de-recognised when the
obligation specified in the contract is discharged,
cancelled or expired. 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 de¬
recognition of the original liability and recognition
of a new liability. The difference in the respective
carrying amounts is recognised in the Statement
of Profit and Loss.

Offsetting 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.

Transition to Ind AS

On transition to Ind AS, the Company has elected
to continue with the carrying value of all its
Investments and other financial assets recognized
as at 1 April 2016 measured as per the previous
GAAP and use that carrying value as the deemed
cost of the Investments and other financial assets.

l) Income recognition
Interest income

Interest income from debt instruments is
recognized using effective interest rate method.
The effective interest rate is the rate that exactly
discounts estimated future cash receipts through
the expected life of the financial asset to the
gross carrying amount of a financial asset. When
calculating the effective interest rate, the company
estimates the expected cash flows by considering
all the contractual terms of the financial instruments
but does not consider the expected credit losses.

m) Cost recognition

Costs and expenses are recognized when incurred
and have been classified according to their nature.
The costs of the Company are broadly categorized
in to material consumption, cost of trading
goods, employee benefit expenses, depreciation
and amortization, other operating expenses
and finance cost. Employee benefit expenses
include employee compensation, gratuity, leave
encashment, contribution to various funds and
staff welfare expenses. Other expenses broadly
comprise manufacturing expenses, administrative
expenses and selling and distribution expenses.

n) Derivatives

The derivative contracts to hedge risks which are
not designated as hedges are accounted at fair
value through profit or loss and are included in
profit and loss account.

o) Offsetting financial instruments

Financial assets and liabilities are offset and the
net amount is reported in the balance sheet where
there is a legally enforceable right to offset the

recognized amounts and there is an intention to
settle on a net basis or realize the asset and settle
the liability simultaneously. The legally enforceable
right must not be contingent on future events and
must be enforceable in the normal course of
business and in the event of default, insolvency or
bankruptcy of the Company or the counterparty.

p) Intangible assets

i) Recognition

Intangible assets are recognized only when
future economic benefits arising out of
the assets flow to the enterprise and are
amortized over their useful life. Intangible
assets purchased are measured at cost or
fair value as of the date of acquisition, as
applicable, less accumulated amortization
and accumulated impairment, if any.

ii) Amortization methods and periods

The depreciable amount of an intangible
asset with a finite useful life shall be allocated
on a systematic basis over its useful life. The
amortisation method used shall reflect the
pattern in which the asset’s future economic
benefits are expected to be consumed by the
entity. If that pattern cannot be determined
reliably, the straightline method shall be used.

iii) Transition to Ind AS

On transition to Ind AS, the company has
elected to continue with the carrying value
of all of intangible assets recognized as at
1 April 2016 measured as per the previous
GAAP and use that carrying value as the
deemed cost of intangible assets.

q) Trade and other payables

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

r) Borrowing costs

General and specific borrowing costs that are
directly attributable to the acquisition, construction
or production of a qualifying asset as defined in
Ind-AS 23 are capitalized during the period of time
that is required to complete and prepare the asset
for its intended use or sale. Qualifying assets are
assets that necessarily take a substantial period of
time to get ready for their intended use or sale.

Investment income earned on the temporary
investment of specific borrowings pending their
expenditure on qualifying assets is deducted from
the borrowing cost eligible for capitalization. Any
related foreign currency fluctuations on account of
qualifying asset under construction is capitalized
and added to the cost of asset concerned. Other
borrowing costs are expensed as incurred.

s) Employee benefits

i) Short-term obligations

Liabilities for wages and salaries, including
non-monetary benefits that are expected to
be settled wholly within 12 months after the
end of the period in which the employees
render the related service are recognized
in respect of employees’ services up to the
end of the reporting period and are measured
at the amounts expected to be paid when
the liabilities are settled. The liabilities are
presented as current employee benefit
obligations in the balance sheet.

ii) Other long-term employee benefit
obligations

The liabilities for earned leave are not
expected to be settled wholly within 12
months after the end of the period in which
the employees render the related service.
They are therefore measured at 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 market

yields at the end of the reporting period that
have terms approximating to the terms of the
related obligations.

Remeasurements as a result of the
experience adjustments and changes in
actuarial assumptions are recognized in profit
or loss.

The obligations are presented as current
liabilities in the balance sheet if the entity
does not have an unconditional right to defer
settlement for at least twelve months after
the reporting period, regardless of when the
actual settlement is expected to occur.

iii) Post-employment obligations

The Company operates the following post¬
employment schemes:

(a) Defined benefit plans such as gratuity;
and

(b) Defined contribution plans such as
provident fund.

Gratuity obligations

The liability or assets recognized in the
balance sheet in respect of gratuity plans
is the present value of the defined benefit
obligation at the end of the reporting period
less the fair value of plan assets. The defined
benefit obligation is calculated annually by
actuaries using the projected unit credit
method.

The present value of the defined benefit
obligation is determined by discounting the
estimated future cash outflows by reference
to market yields at the end of the reporting
period on government bonds that have terms
approximating to the terms of the related
obligation.

The net interest cost is calculated by applying
the discount rate to the net balance of the
defined benefit obligation and the fair value of
plan assets. This cost is included in employee
benefit expense in the statement of profit and
loss.

Remeasurement gains and losses arising
from experience adjustments and changes in
actuarial assumptions are recognized in the
period in which they occur, directly in other
comprehensive income. They are included
in retained earnings in the statement of
changes in equity and in the balance sheet.

Changes in the present value of the defined
benefit obligation resulting from plan
amendments or curtailments are recognized
immediately in profit or loss.

Defined contribution plans

The company pays provident fund
contributions to publicly administered funds
as per local regulations. The Company
has no further payment obligations once
the contributions have been paid. The
contributions are accounted for as defined
contribution plans and the contributions are
recognized as employee benefit expense
when they are due.

iv) Bonus plans

The Company recognizes a liability and
an expense for bonuses. The Company
recognizes a provision where contractually
obliged or where there is a past practice that
has created a constructive obligation.

t) Contributed equity

Equity shares are classified as equity. Incremental
costs directly attributable to the issue of new
shares or options are shown in equity as a
deduction, net of tax, from the proceeds.

u) Dividends

Provision is made for the amount of any dividend
declared, being appropriately authorized and no
longer at the discretion of the entity, on or before
the end of the reporting period but not distributed
at the end of the reporting period.

v) Earnings per share

i) Basic earnings per share:

Basic earnings per share are calculated by
dividing:

Ý The profit attributable to owners of the
company.

Ý By the weighted average number of
equity shares outstanding during the
financial year.

ii) Diluted earnings per share:

Diluted earnings per share adjust the figures
used in the determination of basic earnings
per share to take into account:

Ý The after income tax effect of interest
and other financing costs associated
with dilutive potential equity shares, and

Ý The weighted average number of
additional equity shares that would
have been outstanding assuming the
conversion of all dilutive potential equity
shares.

w) The Treatment of expenditure during
construction period

All expenditure and interest cost during the project/
asset construction period, are accumulated
and shown as Capital Work-in- Progress until
the project/assets commences commercial
production. Assets under construction are not
depreciated. Expenditure/Income arising out of
trial run is part of pre-operative expenses included
in Capital Work-in-Progress.

x) Fair value measurement

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 Company uses valuation
techniques that are appropriate in circumstances
and for which sufficient data is available to
measure fair value, maximizing the use of relevant
absorbable inputs and minimizing the use of un¬
absorbable inputs. External valuers are appointed
for valuing land. The selection criteria for these
valuers include market knowledge, reputation,
independence and whether professional standards
are maintained.

Fair Value Hierarchy

To increase consistency and comparability in fair
value measurements and related disclosures,

Ind AS 113 establishes a fair value hierarchy
that categorises into three levels, the inputs to
valuation techniques used to measure fair value.
The fair value hierarchy gives the highest priority
to quoted prices (unadjusted) in active markets for
identical assets or liabilities (Level 1 inputs) and
the lowest priority to unobservable inputs (Level 3
inputs) as described below:

> Level 1: Level 1 hierarchy includes financial
instruments measured using quoted prices.
This includes listed financial instruments that
have quoted price. The fair value of all financial
instruments which are traded in the stock
exchanges is valued using the closing price as at
the end of the reporting period.

> Level 2: The fair value of financial instruments that
are not traded in an active market is determined
using valuation techniques which maximise
the use of observable market data and rely as
little as possible on entity-specific estimates.
If all significant inputs required to fair value an
instrument are observable, the instrument is
included in level 2.

> Level 3: If one or more of the significant inputs
is not based on observable market data, the
instrument is included in level 3. This is the case
for unlisted equity securities, security deposits
included in level 3.

y) Amortization of expenses

i) Equity Issue expenses: Expenditure
incurred in equity issue is being treated as
Deferred and Revenue Expenditure to be
amortized over a period on straight line basis,
as may be considered reasonable by the
management.

ii) Debenture Issue Expenses: Debenture
Issue expenditure is amortized over the
period on straight line basis, as may be
considered reasonable by the management.

iii) Deferred Revenue Expenses: Deferred
Revenue expenses are amortized over a
period on straight line basis, as may be
considered reasonable by the management.

z) Research and development expenses

Research and Development costs (other than
cost of fixed assets acquired) are expensed in
the year in which they are incurred. Development
costs are capitalised as an intangible asset if it can
be demonstrated that the project is expected to
generate future economic benefits, it is probable
that those future economic benefits will flow to the
entity and the costs of the asset can be measured
reliably, else it is charged to the Statement of Profit
and Loss.