3. Material accounting policies

3.1 Revenue recognition

Revenue is recognised upon transfer of control of
promised goods to customers in an amount that
reflects the consideration which the Company expects
to receive in exchange for those goods. Revenue from
the sale of goods is recognised at the point in time
when control is transferred to the customer which is
usually on dispatch/ delivery depending on the terms
of contracts with customers. Revenue is also recognised
where goods are ready as per customer request and
pending dispatch at the instruction of the customer.
In such cases, the products are separately identified
as belonging to the customer and the Company
does not hold the right to redirect the product to
another customer. Revenue is measured based on the
transaction price, which is the consideration, adjusted
for volume discounts, rebates, scheme allowances,
price concessions, incentives, and returns, if any, as
specified in the contracts with the customers. Revenue
excludes taxes collected from customers on behalf of
the government. Accruals for discounts/incentives are
estimated (using the most likely method) based on
accumulated experience and underlying schemes and
agreements with customers.

For contracts that permit the customer to return
an item, revenue is recognised to the extent that it
is highly probable that a significant reversal in the
amount of cumulative revenue recognised will not
occur. Therefore, the amount of revenue recognised
is adjusted for expected returns, which are estimated
based on the historical data related to sale returns.

In these circumstances, a refund liability and a right
to recover returned goods asset are recognised. The
right to recover returned goods asset is measured at
the former carrying amount of the inventory less any
expected costs to recover goods. The refund liability
is included in other financial liabilities and the right to
recover returned goods is included in other current
assets. The Company reviews its estimate of expected
returns at each reporting date and updates the amounts
of the asset and liability accordingly.

At contract inception, since for most of the contracts it
is expected that the period between the transfer of the
promised goods or services to a customer and payment
for these goods or services by the customer will be one
year or less, practical expedient in Ind AS 115 have been
applied and accordingly the Company does not adjust
the promised amount of consideration for the effects of
any significant financing component.

Contract balances

Contract assets: The Company classifies its right to
consideration in exchange for deliverables as either a
receivable or as unbilled revenue. A receivable is a right
to consideration that is unconditional upon passage
of time. Revenues in excess of billings is recorded as
unbilled revenue and is classified as a financial asset
where the right to consideration is unconditional upon
passage of time.

Contract liabilities: A contract liability is the obligation
to transfer goods or services to a customer for which
the Company has received consideration from the
customer. If a customer pays consideration before the
Company transfers goods or services to the customer,
a contract liability is recognised when the payment is
received.

Other operating revenue

Revenue from operations includes "Other Operating
Revenue" which consists of export incentives, interest
on overdue trade receivables, scrap and by-products
sales.

Export benefits are accounted for in the year of exports
based on eligibility and when there is no uncertainty in
receiving the same and the Company will comply with
the conditions associated with the relevant scheme.
Interest on overdue trade receivables is accrued on a
time basis, by reference to the outstanding overdue
trade receivables.

3.2 Other income

• Dividend income from investments is recognised
when the right to receive the payment is
established.

• Interest income is recognised using the effective
interest method. The effective interest rate is the
rate that exactly discounts estimated future cash

receipts through the expected life of the financial
asset to that asset's net carrying amount on initial
recognition.

3.3 Leases

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

At the date of commencement of the lease, the
Company recognizes a right-of-use asset ("ROU") and a
corresponding lease liability for all lease arrangements
in which it is a lessee, except for leases with a term
of twelve months or less (short-term leases) and low
value leases. For these short-term and low value leases,
the Company recognizes the lease payments as an
operating expense on a straight-line basis over the term
of the lease.

Certain lease arrangements include the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that they
will be exercised.

The right-of-use assets are initially recognized at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct
costs plus any initial direct costs and an estimate of
costs to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is
located less any lease incentives. They are subsequently
measured at cost less accumulated depreciation and
impairment losses.

Right-of-use assets are depreciated from the
commencement date on a straight-line basis over
the shorter of the lease term and useful life of the
underlying asset unless the lease transfers ownership
of the underlying asset to the Company by the end
of the lease term or the cost of the right-of-use asset
reflects that the Company will exercise a purchase
option. In that case the right-of-use asset will be
depreciated over the useful life of the underlying
asset, which is determined on the same basis as those
of property, plant and equipment. Right of use assets
are evaluated for recoverability whenever events or
changes in circumstances indicate that their carrying
amounts may not be recoverable. For the purpose of
impairment testing, the recoverable amount (i.e. the

higher of the fair value less cost to sell and the value-in¬
use) is determined on an individual asset basis unless
the asset does not generate cash flows that are largely
independent of those from other assets. In such cases,
the recoverable amount is determined for the Cash
Generating Unit (CGU) to which the asset belongs.

The lease liability is initially measured 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 rate at the lease commencement date.

Lease liabilities are remeasured 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 have been separately
presented in the Balance Sheet and lease payments
have been classified as financing cash flows.

3.4 Insurance claims

Insurance claims are accounted for on the basis of claims
admitted/expected to be admitted and to the extent
that the amount recoverable can be measured reliably
and it is reasonable to expect ultimate collection.

3.5 Foreign currencies transactions and
translations

In preparing the financial statements of the Company,
transactions in currencies other than the entity's
functional currency (foreign currencies) are recognised
at the rates of exchange prevailing at the dates of the
transactions. At the end of each reporting period,
monetary items denominated in foreign currencies
are translated at the rates prevailing at that date.
Non-monetary items carried at fair value that are
denominated in foreign currencies are translated at
the rates prevailing at the date when the fair value was
determined. Non-monetary items that are measured
based on historical cost in a foreign currency are
translated at the exchange rate at the date of the
transaction.

Exchange differences on monetary items are recognised
in the standalone statement of profit and loss in the
period in which they arise.

3.6 Borrowing costs

Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which
are assets that necessarily take a substantial period of
time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as
the assets are substantially ready for their intended use
or sale.

Interest income earned on the temporary investment
of specific borrowings pending their expenditure on

qualifying assets is deducted from the borrowing costs
eligible for capitalisation. All other borrowing costs are
recognised in standalone statement of profit and loss in
the period in which they are incurred.

3.7 Employee benefits

Defined contribution plans

A defined contribution plan is a post-employment
benefit plan where the Company's legal or constructive
obligation is limited to the amount that it contributes
to a separate legal entity. Contributions in respect
of Employees Provident Fund, Employee's State
Insurance scheme and Pension Fund which are defined
contribution schemes, are made to a fund administered
through Regional Provident Fund Commissioner and
are charged as an expense based on the amount of
contribution required to be made and when services
are rendered by the employees.

Defined benefit plans

The Company's Gratuity scheme for its employees is
a defined benefit retirement benefit plan. Obligations
under the gratuity scheme is covered under a Scheme
of Life Insurance Corporation of India (LIC) and
contributions in respect of such scheme are recognised
in the standalone statement of profit and loss. The
liability as at the Standalone Balance Sheet date is
provided for using the projected unit credit method,
with actuarial valuations being carried out as at the end
of the year by a qualified actuary.

Remeasurement, comprising actuarial gains and
losses, the effect of the changes to the asset ceiling
(if applicable) and the return on plan assets (excluding
net interest), is reflected immediately in the standalone
balance sheet with a charge or credit recognised in
other comprehensive income in the period in which
they occur. When the calculation results in a potential
asset for the Company, the recognised asset is limited to
the present value of economic benefits available in the
form of any future refunds from the plan or reductions
in future contributions to the plan ('the asset ceiling').
Remeasurement recognised in other comprehensive
income is reflected immediately in retained earnings
and is not reclassified to standalone statement of profit
and loss.

Defined benefit costs are categorised as follows:

• Service cost (including current service cost,
past service cost, as well as gains and losses on
curtailments and settlements);

• Net interest expense or income; and

• Remeasurement.

The Company presents the first two components of
defined benefit costs in the standalone statement
of profit and loss in the line item 'Employee benefits

expense'. Curtailment gains and losses are accounted
for as past service costs. The Company determines
the net interest expense (income) on the net defined
benefit liability (asset) for the period by applying the
discount rate determined by reference to market yields
at the end of the reporting period on government
bonds.

Compensated absences

The employees of the Company are entitled
to compensated absences. The employees can
carry-forward a portion of the unutilised accrued
compensated absence and utilise it in future periods or
receive cash compensation at retirement or termination
of employment for the unutilised accrued compensated
absence. The Company records an obligation for
compensated absences in the period in which the
employee renders the services that increase this
entitlement. The Company measures the expected cost
of compensated absence based on actuarial valuation
made by an independent actuary as at the standalone
balance sheet date on projected unit credit method.
Compensated absences expected to be maturing after
12 months from the date of balance sheet are classified
as non-current.

3.8 Share based payment arrangement

Equity-settled share-based payments to employees and
others providing similar services are measured at the
fair value of the equity instruments at the grant date.

The fair value determined at the grant date of the
equity-settled share based payments is expensed on
a straight-line basis over the vesting period, based on
the Company's estimate of equity instruments that
will eventually vest, with a corresponding increase
in equity. At the end of each reporting period, during
the vesting period, the Company revises its estimate
of the number of equity instruments expected to vest.
The impact of the revision of the original estimates, if
any, is recognised in the standalone statement of profit
and loss such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to
the equity-settled employee benefits reserve.

3.9 Earnings per share

The Company presents basic and diluted earnings
per share ("EPS") data for its equity shares. Basic
EPS is calculated by dividing the profit attributable to
equity shareholders by weighted average number of
equity shares outstanding during the period. Diluted
earnings per share is computed by dividing the profit
(considered in determination of basic earnings per
share) after considering the effect of interest and other
financing costs or income (net of attributable taxes)
associated with dilutive potential equity shares by the
weighted average number of equity shares considered
for deriving basic earnings per share adjusted for
the weighted average number of equity shares that

would have been issued upon conversion of all dilutive
potential equity shares.

3.10 Taxation

Income tax expense comprises current tax expense and
deferred tax expense. Current and deferred taxes are
recognised in standalone statement of profit and loss,
except when they relate to items that are recognised
in other comprehensive income or directly in equity,
in which case, the current and deferred tax are also
recognised in other comprehensive income or directly
in equity, respectively.

Current Tax

Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable
in respect of previous years. The amount of current
tax payable or receivable is the best estimate of the
tax amount expected to be paid or received that
reflects uncertainty related to income taxes, if any. It
is measured using tax rates enacted or substantively
enacted at the reporting date.

Current tax assets and liabilities are offset only if there
is a legally enforceable right to set off the recognised
amounts, and it is intended to realise the asset and
settle the liability on a net basis or simultaneously.

Deferred Tax

Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities
in the standalone financial statements and the
corresponding tax bases used in the computation of
taxable profits. 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
utilized. Such deferred tax assets and liabilities are not
recognised for temporary differences on the initial
recognition of assets or liabilities in a transaction that:

a. is not a business combination; and

b. at the time of the transaction (i) affects neither
accounting nor taxable profit or loss and (ii) does
not give rise to equal taxable and deductible
temporary differences.

Temporary differences in relation to a right-of-use asset
and a lease liability for a specific lease are regarded as
a net package (the lease) for the purpose of recognising
deferred tax.

Deferred tax assets are recognised for unused tax
losses, unused tax credits and deductible temporary
differences to the extent that it is probable that future
taxable profits will be available against which they can

be used. Future taxable profits are determined based on
the reversal of relevant taxable temporary differences.
If the amount of taxable temporary differences is
insufficient to recognise a deferred tax asset in full,
then future taxable profits, adjusted for reversals of
existing temporary differences, are considered, based
on the business plans for individual subsidiaries in the
Company. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it
is no longer probable that the related tax benefit will
be realised; such reductions are reversed when the
probability of future taxable profits improves.

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 realized, based
on tax rates (and tax laws) that have been enacted
or substantively enacted by the end of the reporting
period.

Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by
the same tax authority on the same taxable entity, or on
different tax entities, but they intend to settle current
tax liabilities and assets on a net basis or their tax assets
and liabilities will be realised simultaneously.

3.11 Statement of Cash flows and Cash
and cash equivalents

Cash comprises cash on hand and in bank. The Company
considers all highly liquid financial instruments, which
are readily convertible into cash and have original
maturities of three months or less from the date of
purchase, to be cash equivalents. Such cash equivalents
are subject to insignificant risk of changes in value.

Cash flows are reported using indirect method, whereby
profit / (loss) before tax is adjusted for the effects of
transaction of non - cash nature and any deferrals or
accruals of past or future cash receipts or payments.
The cash flows from operating, investing and financing
activities of the Company are segregated.

3.12 Property, plant and equipment

The cost of an item of property, plant and equipment
shall be recognised as an asset if, and only 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.

Property, plant and equipment are stated in the
Standalone Balance Sheet at cost, less accumulated
depreciation and impairment losses, if any. Cost
includes purchase price, attributable expenditure

incurred in bringing the asset to its working condition
for the intended use and cost of borrowing till the
date of capitalisation in the case of assets which are
qualifying assets as per Ind AS 23, Borrowing costs.

Properties in the course of construction for production,
supply or administrative purposes are carried at cost,
less any recognised impairment loss. Cost includes
materials cost and direct labour, any other costs directly
attributable to bringing the item to working condition
for its intended use, and estimated costs of dismantling
and removing the item and restoring the site on which
it is located. Depreciation of these assets, on the same
basis as other property assets, commences when the
assets are ready for their intended use.

Transition to Ind AS

The cost property, plant and equipment at 1 April
2016, the Company's date of transition to Ind AS,
was determined with reference to its carrying value
recognised as per the previous GAAP (deemed cost), as
at the date of transition to Ind AS.

Subsequent expenditure

Subsequent expenditure is capitalised only if it is
probable that the future economic benefits associated
with the expenditure will flow to the Company and the
cost of the item can be measured reliably.

Depreciation

Depreciation is calculated on the cost of items of
property, plant and equipment less their estimated
residual values using the straight-line method over
their estimated useful lives, and is generally recognised
in the statement of profit and loss. Depreciation on
additions/(disposals) is provided on a pro-rata basis i.e.
from/ (upto) the date on which asset is ready for use/
(disposed off).

The estimated useful lives of property, plant and
equipment for current and comparative periods are as
follows:

The estimated useful lives, residual values and
depreciation method are reviewed at the end of each
reporting period, with the effect of any changes in
estimate accounted for on a prospective basis. Freehold
Land is not depreciated.

An item of property, plant and equipment is derecognized
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
standalone statement of profit and loss.

3.13 Intangible assets

Intangible assets are measured on initial recognition
at cost and subsequently are carried at cost less
accumulated amortisation and accumulated
impairment losses, if any.

Cost of an intangible asset comprises of purchase price
and attributable expenditure on making the asset ready
for its intended use.

Intangible assets under development are carried at cost,
comprising direct cost and related incidental expenses.
Intangible assets under development are capitalised
only when technical and commercial feasibility of the
project is demonstrated, future economic benefits are
probable, the Company has an intention and ability
to complete and use the asset and the costs can be
measured reliably. The amount capitalised comprises
expenditure that can be directly attributed or allocated
on a reasonable and consistent basis for preparing the
asset for its intended use.

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
standalone statement of profit and loss when the asset
is derecognized.

Subsequent expenditure

Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied in
the specific asset to which it relates and these future
economic benefits associated with the expenditure will
flow to the Company and the cost of the item can be
measured reliably. All other expenditure is recognised
in profit or loss as incurred.

Amortisation

Intangible assets are amortized over their respective
individual estimated useful lives on a straight-line basis,
from the date that they are available for use.

The estimated useful life of an identifiable intangible
asset is as under:

- Computer software is amortised over a period of
3 years

- Developed products are amortised over a period
of 3 years

The estimated useful life and amortisation method
are reviewed periodically at the end of each reporting
period.

Intangible assets under development are not amortised,
but evaluated for potential impairment on an annual
basis or when there are indications that the carrying
value may not be recoverable. Any impairment is
recognised as an expense in the standalone Statement
of Profit and Loss.

If the carrying amount of the assets exceed the
estimated recoverable amount, an impairment is
recognized for such excess amount. The impairment
loss is recognized 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 revaluation
decrease to the extent a revaluation reserve is available
for that asset.

3.14 Impairment of Non-financial assets

The Company assesses at each reporting date
whether there is an indication that non-financial asset
(excluding inventories, contract assets and deferred tax
assets)/ cash generating unit (CGU) may be impaired.
If any indication exists the Company estimates the
recoverable amount of such assets/ CGU and if carrying
amount exceeds the recoverable amount, impairment
is recognised.

For impairment testing, assets are grouped together
into the smallest Company of assets that generates
cash inflows from continuing use that are largely
independent of the cash inflows of other assets or
CGUs.

The recoverable amount is the higher of the fair value
less cost to sell and its value in use. Value in use is
based on the estimated future cash flows, 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 or CGU. An
impairment loss is recognised if the carrying amount
of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognised in profit or loss.

An impairment loss in respect other assets for which
impairment loss has been recognised in prior periods,
the Company reviews at each reporting date whether
there is any indication that the loss has decreased or
no longer exists. An impairment loss is reversed if there

has been a change in the estimates used to determine
the recoverable amount. Such a reversal is made only
to the extent that the asset's carrying amount does
not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no
impairment loss had been recognised.

3.15 Inventories

Inventories are valued at lower of cost, calculated on
"Weighted average" basis and net realisable value. Cost
incurred in bringing each product to its present location
and condition are accounted as follows:

Raw Materials, Packing Materials, Stores and Spares:
Cost includes cost of purchase and other costs incurred
in bringing the inventories to their present location and
condition.

Finished goods and work-in-progress: Cost includes
direct materials, labour and a proportion of
manufacturing overheads based on the normal
operating capacity, but excludes borrowing costs.

Traded goods: Cost includes cost of purchase and
other costs incurred in bringing the inventories to their
present location and condition.

Net realisable value is the estimated selling price of
inventories less all the estimated costs of completion
and the costs necessary to make the sale.

The net realisable value of work-in-progress is
determined with reference to the selling prices of
related finished goods. Raw materials, packing materials
and other supplies held for use in the production of
finished products are not written down below cost
except in cases when a decline in the price of materials
indicates that the cost of the finished products shall
exceed the net realisable value.

The comparison of cost and net realisable value is made
on an item-by-Item basis.