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

These standalone financial statements
have been prepared in accordance with the
Indian Accounting Standards (referred to as
"Ind AS”) as prescribed under section 133
of the Companies Act, 2013 read with the
Companies (Indian Accounting Standards)
Rules as amended from time to time.

b) Basis of preparation

i) These financial statements are prepared
in accordance with Indian Accounting
Standards (Ind AS), under the historical
cost convention on the accrual basis
except for certain financial instruments
which are measured at fair values, the
provisions of the Companies Act, 2013
("the Act”) (to the extent notified) and
guidelines issued by the Securities and

Exchange Board of India (SEBI). The Ind
AS are prescribed under Section 133 of
the Act read with Rule 3 of the Companies
(Indian Accounting Standards) Rules,
2015 and relevant amendment rules
issued thereafter. Accounting policies
have been consistently applied except
where a newly-issued accounting
standard is initially adopted or a revision
to an existing accounting standard
requires a change in the accounting
policy hitherto in use. As the year-end
figures are taken from the source and
rounded to the nearest digits, the figures
reported for the previous quarters might
not always add up to the year-end figures
reported in this statement.

ii) Historical cost convention the financial
statements have been prepared
on a historical cost basis, except
for the following:

• Certain financial assets and liabilities
that are measured at fair value;

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

c) Segment reporting

Operating segments are reported in a
manner consistent with the internal reporting
provided to the chief operating decision
maker. The Company has identified Managing
Director and Chief Financial Officer as chief
operating decision maker. Refer Note 44 for
segment information presented.

d) 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 amortized
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.

e) Revenue Recognition

The Company recognizes revenue
in accordance with Ind- AS 115.
Revenue is recognised upon transfer of control
of promised goods to customers i.e., when the
performance obligation gets fulfilled in an
amount that reflects the consideration which
the company expects to receive in exchange
for that particular performance obligation.
Revenue is measured based on the transaction
price, which is the net of variable consideration,
adjusted for discounts, price concessions, and
incentives, if any, as specified in the contract
with the customer. Revenue also excludes
taxes collected from customers.

Sale of Goods

Revenue from the sale of manufactured and
traded goods is recognised when significant
risks and rewards of ownership of goods have
been 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.

Other Revenue

Customs Duty

Customs Duty/incentive entitlement as and
when eligible is accounted on accrual basis.
Accordingly, import duty benefits against
exports effected during the year are accounted
on estimate basis as incentive till the end of
the year in respect of duty-free imports of raw
material yet to be made.

Interest Income

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

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.

f) Government grants

Government grants are not recognised
until there is reasonable assurance that the
Company will comply with the conditions
attached to them and that the grants
will be received.

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 assistance to entities meets
the definition of government grants in
Ind AS 20, even if there are no conditions
specifically relating to the operating activities
of the entity other than the requirement to
operate in certain regions or industry sectors.
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.

g) 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

Income tax expense is the aggregate
amount of Current tax. Current tax is the
amount of income tax determined to
be payable in respect of taxable income
for an accounting period or computed
on the basis of the provisions of Section
115JB of Income Tax Act, 1961 by
way of minimum alternate tax at the
prescribed percentage on the adjusted
book profits of a year, when Income Tax
Liability under the normal method of tax
payable basis works out either a lower
amount or nil amount compared to the
tax liability u/s 115JA.

ii) Deferred Tax

Deferred tax is recognised, using
the liability method, on temporary
differences arising between the tax bases
of assets and liabilities and their carrying
values in the financial statements.
However, deferred tax are not recognised

if it arises from initial recognition of an
asset or liability in a transaction other
than a business combination that at the
time of the transaction affects neither
accounting nor taxable profit or loss.

Deferred Tax Liability are genrally
recognised for all taxable temporary
difference. In contrast, Deferred tax
assets are recognised only to the extent
that it is probable that future taxable
profit will be available against which the
temporary differences can be utilized.
However, if these are unabsorbed
depreciation, carry forward losses and
items relating to capital losses, deferred
tax assets are recognised when there is
reasonable certainty that there will be
sufficient future taxable income available
to realize the assets. Deferred tax assets
in respect of unutilized tax credits which
mainly relate to minimum alternate
tax are recognised to the extent it is
probable that such unutilized tax credits
will get realized.

The unrecognized deferred tax assets/
carrying amount of deferred tax assets
are reviewed at each reporting date for
recoverability and adjusted appropriately.

Deferred tax is determined using tax
rates (and laws) that have been enacted
or substantively enacted by the reporting
date and are expected to apply when
the related deferred income tax asset
is realized or the deferred income tax
liability is settled.

Income tax assets and liabilities are off-set
against each other and the resultant
net amount is presented in the balance
sheet, if and only when, (a) the Company
currently has a right to set-off the current
income tax assets and liabilities, and (b)
when it relate to income tax levied by the
same taxation authority and where there
is an intention to settle the current income
tax balances on net basis. Ref. Note No.34

h) 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.

At the commencement date, a lessee shall
recognise a right-of-use asset at cost and a
lease liability at the present value of the lease
payments that are not paid at that date for
all leases unless the lease term is 12 months
or less or the underlying asset is of low value.
Subsequently, right-of-use asset is measured
using cost model whereas, the lease liability
is measured by increasing the carrying
amount to reflect interest on the lease liability,
reducing the carrying amount to reflect the
lease payments made and re-measuring the
carrying amount to reflect any reassessment
or lease modifications. The lease liability is
initially measured at amortized cost at the
present value of the future lease payments.
The lease payments are discounted using
the interest rate implicit in the lease or, if not
readily determinable, using the incremental
borrowing rates of these leases.

Lease liabilities are premeasured with a
corresponding adjustment to the related
right of use asset if the Company changes
its assessment if whether it will exercise an
extension or a termination option. Lease liability
and ROU asset are separately presented in
the Balance Sheet and lease payments are
classified as financing cash flows. Lease liability

obligations is presented separately under the
head "Financial Liabilities”.

Right-of-use asset is depreciated over the
useful life of the asset, if the lessor transfers
ownership of the asset to the lessee by the
end of the lease term or if the cost of the
right-to-use asset reflects that the lessee will
exercise a purchase option. Otherwise, the
lessee shall depreciate the right-to-use asset
from the commencement date to the earlier
of the end of the useful life of the right-of-use
asset or the end of the lease term.

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.

In March 2019, the Ministry of Corporate Affairs
issued the Companies (Indian Accounting
Standards) (Amendments) Rules, 2019,
notifying Ind AS 116 - ‘Leases’. This standard
is effective from1^st April, 2019. The Standard
sets out the principles for the recognition,
measurement, presentation and disclosure
of leases for both parties to a contract i.e., the
lessee and the lessor. Ind AS 116introduces a
single lessee accounting model and requires a
lessee to recognize assets and liabilities for all
leases with a term of more than twelve months,
unless the underlying asset is of low value.
Ind AS 116 - Leases amends the rules for the
lessee’s accounting treatment of operating
leases. According to the standard all operating
leases (with a few exceptions) must therefore
be recognized in the balance sheet as lease
assets and corresponding lease liabilities.
The lease expenses, which were recognised
as a single amount (operating expenses), will
consist of two elements: depreciation and
interest expenses. The standard has become
effective from 2019 and the Company has

assessed the impact of application of Ind
AS 116 on Company’s financial statements
and provided necessary treatments and
disclosures as required by the standard
(Refer Note No 39).

i) Impairment of assets

The impairment of assets depends on
whether there has been a significant increase
in the credit risks since initial recognition.
Accordingly, the Company deals with
providing for impairment of loss. In case of
trade receivables, the Company applies the
simplified approach which requires expected
lifetime losses to be recognised from initial
recognition of the receivables.

j) Inventories

The general practice adopted by the company
for valuation of inventory is as under:

i) Raw Materials - *At lower of cost and net
realizable value.

ii) Stores and spares - At cost

iii) Work-in-process/semi-finished goods -
At material cost plus labour and other
appropriate portion of production
and administrative overheads
and depreciation

iv) Finished Goods/Traded Goods - At lower
of cost and net realizable value.

v) Finished Goods at the end of trial run - At
net realizable value.

vi) Scrap material - At net realizable value.

vii) Tools and equipments - At lower of cost
and disposable value.

^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.

Costs of inventories are determined on
a weighted average basis. Net realizable
value represents the estimated selling
price for inventories less all estimated
costs of completion and costs necessary
to make the sale.

k) Cash and cash equivalents

For the purpose of presentation in the
statement of cash flows, cash and cash
equivalents includes cash on hand, deposits
held at call with financial institutions, other
short-term, highly liquid investments with
original maturities of three months or less that
are readily convertible to known amounts of
cash and which are subject to an insignificant
risk of changes in value.

l) Investments and other financial assets

i) Classification

The Company classifies its financial assets
in the following measurement categories:

• Those to be measured subsequently
at fair value (either through other
comprehensive income, or through
profit or loss), and

• Those measured at amortized cost.

The classification depends on the entity’s
business model for managing the
financial assets and the contractual terms
of the cash flows.

For assets measured at fair value, gains
and losses will either be recorded in
Statement of profit or loss or other
comprehensive income. For investments
in debt instruments, this will depend
on the business model in which the
investment is held. For investments in
equity instruments, this will depend
on whether the Company has made
an irrevocable election at the time of
initial recognition to account for equity
investment at fair value through other
comprehensive income.

The Company reclassifies debt
investments when and only when its
business model for managing those
assets changes.

ii) Measurement

At initial recognition, the company
measures a financial asset at its fair value
plus, in the case of a financial asset not at
fair value through profit or loss, transaction
costs that are directly attributable to
the acquisition of the financial asset.
Transaction costs of financial assets
carried at fair value through profit or loss
are expenses in profit or loss.

Debt instruments:

Subsequent measurement of debt
instruments depends on the Company’s
business model for managing the asset
and the cash flow characteristics of the
asset. There are three measurement
categories into which the Company
classifies its debt instruments.

Amortized cost:

Assets that are held for collection of
contractual cash flows where those
cash flows represent solely payments
of principal and interest are measured
at amortised cost. However, where the
impact of discounting / transaction
costs is significant, the amortised cost
is measured using the effective interest
rate (‘EIR’) method. Interest income
from these financial assets is included
in Other Income.

Fair value through other comprehensive
income (FVOCI):

Assets that are held for collection of
contractual cash flows and for selling
the financial assets, where the assets’
cash flows represent solely payments
of principal and interest, the same
are measured at fair value through
other comprehensive income (FVOCI).

iii) Impairment of financial assets

The Company applies the expected
credit loss model for recognising
impairment loss on financial assets
measured at amortised cost, debt
instruments at FVTOCI, lease receivables,
trade receivables, other contractual
rights to receive cash or other financial
asset, and financial guarantees not
designated as at FVTPL.

Expected credit losses are the weighted
average of credit losses with the
respective risks of default occurring as
the weights. Credit loss is the difference
between all contractual cash flows that
are due to the Company in accordance
with the contract and all the cash flows
that the Company expects to receive
(i.e. all cash shortfalls), discounted at
the original effective interest rate (or
credit-adjusted effective interest rate for
purchased or originated credit-impaired
financial assets). The Company estimates
cash flows by considering all contractual
terms of the financial instrument (for
example, prepayment, extension, call and
similar options) through the expected life
of that financial instrument.

The Company measures the loss allowance
for a financial instrument at an amount
equal to the lifetime expected credit
losses if the credit risk on that financial
instrument has increased significantly
since initial recognition. If the credit risk on
a financial instrument has not increased
significantly since initial recognition, the
Company measures the loss allowance for
that financial instrument at an amount
equal to 12-month expected credit losses.
12-month expected credit losses are
portion of the life-time expected credit
losses and represent the lifetime cash
shortfalls that will result if default occurs
within the 12 months after the reporting
date and thus, are not cash shortfalls that
are predicted over the next 12 months.

If the Company measured loss allowance
for a financial instrument at lifetime
expected credit loss model in the
previous year, but determines at the end
of a reporting year that the credit risk has
not increased significantly since initial
recognition due to improvement in credit
quality as compared to the previous
year, the Company again measures
the loss allowance based on 12-month
expected credit losses.

When maki ng the assessment of whether
there has been a significant increase in
credit risk since initial recognition, the
Company uses the change in the risk of
a default occurring over the expected life
of the financial instrument instead of the
change in the amount of expected credit
losses. To make that assessment, the
Company compares the risk of a default
occurring on the financial instrument
as at the reporting date with the risk
of a default occurring on the financial
instrument as at the date of initial
recognition and considers reasonable
and supportable information, that is
available without undue cost or effort,
that is indicative of significant increases
in credit risk since initial recognition.

For trade receivables or any contractual
right to receive cash or another financial
asset that result from transactions that
are within the scope of Ind AS 115, the
Company always measures the loss
allowance at an amount equal to lifetime
expected credit losses.

Further, for the purpose of measuring
lifetime expected credit loss allowance
for trade receivables, the Company has
used a practical expedient as permitted
under Ind AS 109. This expected credit
loss allowance is computed based on a
provision matrix which takes into account
historical credit loss experience and
adjusted for forward-looking information.

The impairment requirements for the
recognition and measurement of a loss
allowance are equally applied to debt
instruments at FVTOCI except that the
loss allowance is recognised in other
comprehensive income and is not
reduced from the carrying amount in
the balance sheet.

The Company has performed sensitivity
analysis on the assumptions used and
based on current indicators of future
economic conditions, the Company
expects to recover the carrying amount
of these assets.

iv) Derecognition of financial assets

Financial asset is derecognized only when:

• The Company has transferred the
rights to receive cash flow from the
financial asset or

• Retains the contractual rights to
receive the cash flows of the financial
assets, but assumes a contractual
obligation to pay cash flows to one
or more recipients.

Where the entity has transferred an
asset, the Company evaluates whether it
has transferred substantially all risks and
rewards of ownership of the financial
asset. In such cases, the financial asset
is derecognized. Where the entity has
not transferred substantially all risks and
rewards of ownership of the financial
asset is not derecognized.

Where the entity has neither transferred
a financial asset nor retains substantially
all risks and rewards of ownership of
the financial asset, the financial asset is
derecognized if the Company has not
retained control of the financial asset.
Where the Company retains control of the
financial asset, the asset is continued to
be recognized to the extent of continuing
involvement in the financial asset.

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 the 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.

Financial Assets

Initial Recognition

All financial assets are recognized initially at
fair value. Transaction costs that are directly
attributable to the acquisition of financial
assets (other than financial assets at fair
value through profit or loss) are added to the
fair value measured on initial recognition of
financial asset. However, trade receivables
that do not contain a significant financing
component are measured at transaction price.

Subsequent Measurement

The subsequent measurement of the
non-derivative financial assets depends on
their classification as follows:

p) Property, plant and equipment

An item of PPE is recognized as an asset
if 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. PPE are initially
measured at cost of acquisition/ construction
including decommissioning or restoration
cost wherever required. Cost of land
includes expenditures which are directly
attributable to the acquisition of the land like,
rehabilitation expenses, resettlement cost and
compensation in lieu of employment incurred
for concerned displaced persons etc.

Property, plant and equipment are carried
at cost less accumulated depreciation and
impairment loss, if any in accordance with
Ind-AS 16. The Company reviews the fair value
with sufficient frequency to ensure that the
carrying amount does not differ materially
from its fair value.

Cost excludes Input credit under GST and
such other taxes which can utilize against
GST liabilities and other refundable taxes.
Depreciation on assets is claimed on such
‘reduced’ cost. All items of repairs and
maintenance are recognized in the statement
of profit and loss, except those meet the
recognition principle as defined in Ind-AS 16.
Any revaluation of an asset is recognized in
other comprehensive income and shown as
revaluation reserves in other equity

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^st April, 2016 measured as
per the previous GAAP and use that carrying
value as the deemed cost of the property,
plant and equipment.

Depreciation/Amortization methods,
estimated useful lives 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 a pro-rata basis on the assets acquired or
disposed off during the year. Leasehold assets
are amortized 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.

q) 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 Company amortized intangible
assets on a straight line method over their
estimated useful life not exceeding 5
years. Software is amortized over a period
of three years.

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^st April, 2016 measured

as finance costs in the statement of
profit and loss.

Derecognition

A financial liability is derecognized
when the obligation under the liability is
discharged or cancelled or expires.

r) 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 amortized
cost using the effective interest method.

s) Borrowings

Borrowings are initially recognized at fair
value, net of transaction cost incurred.
Borrowings are subsequently measured at
amortized cost. Any difference between the
proceeds (net of transaction costs) and the
redemption amount is recognized in profit or
loss over the period of the borrowings using
the effective interest method. Fees Paid on the
establishment of loan facilities are recognized
as transaction costs of the loan to the extent
that it is probable that some or all of the
facility will be drawn down. In this case, the fee
is deferred until the draw down occurs. To the
extent there is no evidence that it is probable
that some or all the facility will be drawn
down, there is capitalized as a prepayment
for liquidity services and amortized over the
period of the facility to which it relates.

Borrowings are removed from the balance
sheet when the obligation specified in the
contract is discharged, canceled or expired.
The difference between the carrying
amount of a financial liability that has been
extinguished or transferred to another party
and the consideration paid, including any
non-cash assets transferred or liabilities
assumed, is recognized in profit or loss.

Where the terms of a financial liability are
renegotiated and the entity issues equity
instruments to a creditor to extinguish all or
part of the liability (debt for equity swap), a
gain or loss is recognized in profit or loss, which
is measured as the difference between the
carrying amount of the financial liability and
the fair value of the equity instrument issued.

t) 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.

u) 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 and
superannuation fund.

(c) Defined benefit plans such as
Leave encashment.

Gratuity & Leave Encashment
obligations

The liability or assets recognized in the
balance sheet in respect of gratuity &
Leave Encashment 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 expenses
in the statement of profit and loss.

Re-measurement 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 curtailment are
recognized immediately in profit or loss.

iv) 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 expenses
when they are due.

v) Equity settled share-based payments

Equity-settled share based payments to
employees are measured at the fair value
(i.e. excess of fair value over the exercise
price of the option) of the Employee

Stock Options Plan at the grant date.
The fair value of option at the grant
date is calculated by Black- Scholes
model. In case the options are granted to
employees of the company, the fair value
determined at the grant date is expensed
on a straight line basic over the vesting
period, based on the Company’s estimate
of options that will eventually vest, with a
corresponding increase in equity.

vi) 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.

v) 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.

w) 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.

x) Earnings per share

i) Basic earnings per share: Basic earnings
per share are calculated by dividing:

• The profit attributable to owners
of the company.

• 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:

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

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

y) Custom duty and its benefits

Customs Duty payable on imported raw
materials, components and stores and spares
is recognized to the extent assessed by the
customs department.

Customs duty entitlement eligible under
passbook scheme / DEPB is accounted on
accrual basis. Accordingly, import duty benefits
against exports affected during the year are
accounted on estimate basis as incentive till
the end of the year in respect of duty free
imports of raw material yet to be made.

z) The Treatment of expenditure during
construction period

All expenditure and interest cost during the
project construction period, are accumulated
and shown as Capital Work-in- Progress
provided they meet the recognisition
criteria as per IND AS 16 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.

aa) Fair value measurement

The Company reviews the fair value of Land
with sufficient frequency to ensure that the
carrying amount does not differ materially
from its fair value. 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.

ab) Amortization of expenses

Equity Issue expenses: Expenditure incurred
in equity issue is being treated as Deferred
and Revenue Expenditure to be amortized
over a period of 10 years;

Debenture Issue Expenses: Debenture
Issue expenditure is amortized over the
period of 10 years.

Deferred Revenue Expenses: Deferred
Revenue expenses are amortized over a
period of 5 years.

ac) 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.

ad) Investment in Associates

Investments in associates are recognized at
cost. The company provides for any permanent
diminution, if any, in value of such investment.