2. Significant Accounting Policies

2.1 Basis of preparation

The financial statements of the company have been prepared and presented in
accordance with Indian Accounting Standards (Ind AS) notified under the
Companies (Indian Accounting Standards) Rules, 2015 as amended by the
Companies (Indian Accounting Standards)(Amendment) Rules, 2015 and the
relevant provisions of the Companies Act, 2013 (“the Act”).

These financial statements have been prepared and presented under the
historical cost convention, on the accrual basis of accounting except for
certain financial assets and financial liabilities that are measured at fair
values at the end of each reporting period as stated in the accounting policies.
The accounting policies have been applied consistently over all the periods
presented in these financial statements.

2.2 Significant accounting judgments’, estimates and assumptions:

The preparation of the financial statements in conformity with IND AS requires
the management to make estimates, judgments’ and assumptions. These
judgments and assumptions affect the application of accounting policies and
the reported amount of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements and reported
amount of revenues and expenses during the period. The application of
accounting policies that require critical accounting estimates involving
complex and subjective judgments and the use of assumptions in these
financial statements have been disclosed below. Accounting estimates could
change from period to period. Actual results could differ from those estimates.
Changes in estimates are reflected in the financial statements in the period in
which changes are made and if material, their effects are disclosed in the notes

to the financial statements.

2.3 Current versus non - current classification:

All the assets and liabilities have been classified as current or non - current as
per the Company’s operating cycle and other criteria set out in the Schedule III
to the Act. Based on the nature of the products and the time between the
acquisition of assets for processing and their realization in cash and cash
equivalents, the company has ascertained its operating cycle as 12 months for the
purpose of current and non - current classification of assets and liabilities.

2.1 Property, Plant and Equipment (PPE)

• PPE are recognized 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. PPE (other than Freehold land and Capital Work-in¬
progress) are stated at cost less accumulated depreciation and impairment
losses, if any. The initial cost of an asset comprises its purchase price, non¬
refundable purchase taxes and any costs directly attributable to bringing the
asset into the location and condition necessary for it to be capable of operating
in the manner intended by management, the initial estimate of any
decommissioning obligation, if any. Cost includes qualifying assets, borrowing
costs capitalized in accordance with the company’s accounting policy.

• If significant parts of an item of PPE have different useful lives, then those are
accounted as separate items (major components) of PPE.

• Material items such as spare parts, stand-by equipment and service
equipment are classified as and when they meet the definition of PPE, as
specified in IND AS 16 on “Property, Plant and Equipment”.

• The carrying amount of an item of PPE, derecognized upon disposal or when
no future economic benefit is expected to arise from its continued use. Any
gain or loss arising on the recognition of an item of PPE is determined as the
difference between the net disposal proceeds and the carrying amount of the
item and is recognised in Statement of Profit and Loss.

Capital Work-in-Progress

Property, Plant and Equipment which are not ready for intended use on the
date of balance sheet are disclosed as capital work-in-progress. It is carried at
cost, such properties are classified and capitalized to the appropriate
categories of Property, Plant and Equipment when completed and ready for
intended use. Depreciation of these assets, will be provided on the same basis
as other property assets are ready for their intended use.

2.2 Depreciation

Depreciation on Property, Plant and Equipment (other than Freehold Land and
Capital Work-in-progress) is provided on the Straight-Line Method in
accordance with requirements prescribed under Schedule II to the Companies
Act, 2013.

The Company has assessed the estimated useful lives of its PPE and has
adopted the useful lives and residual value as prescribed therein.

Land under finance lease is amortised over the period of lease.

The estimated useful lives, residual values and depreciation method are
reviewed at the end of each reporting period, with the effect of any change in
estimate accounted for on a prospective basis.

2.3 Intangible Assets and Amortisation

Intangible assets are stated at acquisition cost, net of accumulated
Amortisation and accumulated impairment losses, if any. Intangible assets are
amortised on a straight line basis as per Schedule II of Companies Act, 2013.

The estimated useful life and amortizations 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.

2.4 Impairment of non-financial assets

At the end of each reporting period, the Company reviews the carrying
amounts of its tangible and intangible assets to determine whether there is
any indication that those assets may have been impaired. If any such
indication exists, the recoverable amount, which is the higher of its value in
use or its fair value less costs of disposal, of the asset or cash-generating unit,
as the case may be, is estimated and impairment loss (if any) is recognised and
the carrying amount is reduced to its recoverable amount. 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.

In assessing the value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.

Intangible assets with indefinite useful lives and intangible assets not yet
available for use are tested for impairment at least annually, and whenever
there is an indication that the asset may be impaired.

An impairment loss is recognised immediately in the Statement of Profit and
Loss. When an impairment subsequently reverses, the carrying amount of the
asset is increased to the revised estimate of its recoverable amount, but up to
the amount that would have been determined, had noimpairment loss been
recognized for that asset or cash generating unit. A reversal of an impairment
loss is recognised immediately in the Statement of Profit and Loss.

2.5 Inventories

• Inventories are valued at lower of cost and net realizable value.

• Inventories comprise all costs of purchase, conversion and other costs
incurred in bringing the inventories to their present location and condition.

• Cost of raw materials, packing materials, including materials in transit, work
in process and finished goods are arrived at on the First in first out method of
valuation, including manufacturing overheads wherever applicable.

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

2.6 Statement of Cash Flows

Cash flows are reported using the indirect method, whereby net profit for the
period is adjusted for the effects of transactions of non-cash nature, any
deferrals or accruals of past or future operating cash receipts or payments and
items of income or expenses associated with investing or financing cash flows.
The cash flows from operating, investing and financing activities of the
Company are segregated.

For the purpose of presentation in the Statement of Cash Flows, cash and
cash equivalents include cash on hand, cash at banks, other short-term
deposits and highly liquid investments with original maturity of three months
or less that are readily convertible into cash and which are subject to an
insignificant risk of changes in value, as reduced by bank overdrafts.

2.7 Segment Reporting

• The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and management
structure. The operating segments are the segments for which separate
financial information is available and for which operating profit / loss amounts
are evaluated regularly by the Chief Operating Decision Maker (CODM) in
deciding how to allocate resources and in assessing performance.

• The accounting policies adopted for segment reporting are in line with the
accounting policies of the Company.

• Segment revenue, segment expenses, segment assets and segment liabilities
have been identified to segments on the basis of their relationship to the
operating activities of the segment.

2.8 Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or
production of an asset that necessarily takes a substantial period of time to
get ready for its intended use or sale are capitalized as part of the cost of the
asset. All other borrowing costs are expensed in the period in which they are
incurred. Borrowing costs consists of interest and other costs that an entity
incurs in connection with the borrowing of funds. Borrowing costs also include
exchange differences to the extent regarded as an adjustment to the borrowing
costs.