2. Material accounting policies

(i) Classification of assets and liabilities into current/
non-current

Assets and Liabilities in the balance sheet have been
classified as either current or non-current.

An asset has been classified as current if (a) it is expected
to be realized in, or is intended for sale or consumption
in, the Company’s normal operating cycle; or (b) it is
held primarily for the purpose of being traded; or (c) it is
expected to be realized within twelve months after the
reporting date; or (d) it is cash or cash equivalent unless
it is restricted from being exchanged or used to settle a
liability for at least twelve months after the reporting date.
All other assets have been classified as non-current.

A liability has been classified as current when (a) it is
expected to be settled in the Company’s normal operating
cycle; or (b) it is held primarily for the purpose of being
traded; or (c) it is due to be settled within twelve months
after the reporting date; or (d) the Company does not have
an unconditional right to defer settlement of the liability
for at least twelve months after the reporting date. All
other liabilities have been classified as non-current.

Deferred tax assets and liabilities are classified as non¬
current assets and liabilities.

An operating cycle is the time between the acquisition of
assets for processing and their realization in cash or cash
equivalents. The Company has identified twelve months
as its operating cycle.

(ii) Property, plant and equipment

Property, plant and equipment (PPE) are stated at cost,
net of accumulated depreciation and accumulated
impairment losses, if any. The cost comprises purchase
price, freight, duties, taxes, borrowing costs, if recognition
criteria are met, and any directly attributable cost incurred
to bring the asset to its working condition for the intended
use. Any trade discounts and rebates are deducted in
arriving at the purchase price.

Subsequent expenditure is capitalised only if it is probable
that the future economic benefits associated with the
expenditure will flow to the Company. When significant
parts of plant and equipment are required to be replaced
at intervals, the Company depreciates them separately
based on their specific useful lives. Likewise, when a
major inspection is performed, its cost is recognised
in the carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied. All
other repair and maintenance costs are recognised in profit
or loss as incurred. Replaced assets held for disposal are
stated at lower of their carrying amount and fair value less
costs to sell, and depreciation on such assets ceases and
shown under "Assets held for sale”.

Items of stores and spares that meet the definition of
PPE are capitalized at cost. Otherwise, such items are
classified as inventories.

Gains or losses arising from derecognition of the assets
are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are
recognized in the statement of profit and loss when the
asset is derecognized.”

Expenditure on new projects and substantial expansion

Expenditure directly relating to construction activity is
capitalized. Other indirect expenditure incurred during
the construction period which are not related to the
construction activity nor are incidental thereto are charged
to the statement of profit and loss. Income earned during
construction period, if any, is deducted from the total of
the indirect expenditure.

(iii) Depreciation on property, plant and equipment

a. Depreciation on property, plant and equipment is
calculated on a straight-line basis using the rates
arrived at based on the useful lives estimated by
the Management. The identified components are
depreciated separately over their useful lives; the
remaining components are depreciated over the life of
the principal asset. The Company has used the following
useful life to provide depreciation on its property, plant
and equipment based on technical evaluation done.

If significant parts of an item of property, plant and
equipment have different useful lives, then they are
accounted for as separate component of property,
plant and equipment. These are estimated by the
management supported by independent assessment
by professionals.

b. Premium on land held on leasehold basis considered
as Right of Use Asset is amortized over the
period of lease.

c. The classification of plant and machinery into
continuous and non-continuous process is done as
per technical certification by the management and
depreciation thereon is provided accordingly.

d. The residual values and useful lives of property, plant
and equipment are reviewed at each financial year
end and adjusted prospectively, if appropriate.

(iv) Intangible assets and amortisation

Intangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated
amortization and accumulated impairment losses, if
any. Intangible assets with finite lives are amortised on
a straight line basis over the estimated useful economic
life. The amortization period and the amortization
method for an intangible asset with a finite useful life
are reviewed at least once at the end of each reporting

period. If the expected useful life of the asset is different
from previous estimates, the amortization period is
changed accordingly. If there has been a change in the
expected pattern of economic benefits from the asset, the
amortization method is changed to reflect the changed
pattern. Such changes are accounted for in accordance
with Ind AS-8 "Accounting Policies, Changes in Accounting
Estimates and Errors”.

Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset
and are recognized in the statement of profit and loss
when the asset is derecognized.

The following are the acquired intangible assets:

Software:

The management of the Company assessed the useful
life of software as finite and cost of software is amortized
over their estimated useful life of three years on
straight line basis.

(v) Impairment of Non-Financial Assets

The Company assesses at each reporting date whether
there is an indication that an asset (except inventories and
deferred tax assets) may be impaired. If any indication
exists, or when annual impairment testing for an asset is
required, the Company estimates the asset’s recoverable
amount. An asset’s recoverable amount is the higher
of an asset’s or cash-generating unit’s (CGU) fair value
less costs of disposal 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 CGU (or the asset).The
recoverable amount is determined for an individual asset,
unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups
of assets. Where the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount.

After impairment, depreciation is provided on the revised
carrying amount of the asset over its remaining useful life.

(vi) Leases

At inception of the contract, the Company assesses
whether a contract is, or contains, a lease. A contract
is, or contains, a lease if the contract coveys 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:

- The contract involves use of an identified asset,
whether specified explicitly or implicitly;

- The Company has the right to obtain substantially
all of the economic benefits from use of the asset
throughout the period of use;

- The Company has right to direct the use of the
asset by either having right to operate the asset
or the Company having designed the asset in a
way that predetermines how and for what purpose
it will be used.

Accounting as a lessee

The Company recognizes a right-of-use asset and a lease
liability at the lease commencement date. The right-of-
use asset is initially measured at cost, which comprises
the initial amount of the lease liability adjusted for any
lease payments made on or before the commencement
date, plus any initial direct costs incurred and an estimate
of cost to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is
located, less any lease incentive received.

The right-of-use asset is subsequently measured at cost less
accumulated depreciation, accumulated impairment losses,
if any and adjusted for any remeasurement of the lease
liability. The right-of-use asset is depreciated using straight
line method from the commencement date to the earlier
of the end of the useful life of the right-of-use asset or the
end of lease term. The estimates of useful lives of right-of-
use assets are determined on the same basis as those of
property, plant and equipment. In addition, the right-of-use
asset is periodically reduced by impairment losses, if any,
and adjusted for certain remeasurements of lease liability.

The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily
determined, the Company’s incremental borrowing rate.
The lease liability is subsequently measured at amortised
cost. The lease payments shall include fixed payments,
variable lease payments, residual value guarantees,
exercise price of a purchase option where the Company
is reasonably certain to exercise that option and payment
of penalties for terminating the lease, if the lease term
reflects the lessee exercising an option to terminate the
lease. The lease liability is subsequently remeasured by
increasing the carrying amount to reflect interest on lease
liability, reducing the carrying amount to reflect the lease
payments made and remeasuring the carrying amount
to reflect any reassessment or lease modifications or to
reflect revised in-substance fixed lease payments.

The Company has elected not to recognize right-of-use
asset and lease liabilities for short term leases that have
a lease term of 12 months or less and leases of low value
assets. The Company recognizes the lease payments
associated with these leases as an expense on straight
line basis over the lease term.”

(vii) Foreign currency transactions

(a) Functional and presentation currency

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

(b) Initial recognition

Transactions in foreign currencies are initially
recorded by the Company at the functional currency
spot rates at the date the transaction.

(c) Conversion

Foreign currency monetary items are translated
using the functional currency spot rates of exchange
at the reporting date. Non-monetary items that are
measured in terms of historical cost denominated in
a foreign currency are translated using the exchange
rate at the date of the initial recognition.

(d) Exchange differences

Exchange differences arising on settlement or
translation of monetary items are recognised in the
statement of profit and loss.

(viii) Derivative financial instruments

Initial recognition and subsequent measurement

The Company uses derivative financial instruments, such
as forward currency contracts to hedge its foreign currency
risks. Such derivative financial instruments are initially
recognised at fair value on the date on which a derivative
contract is entered into and are subsequently re-measured
at fair value at the end of each reporting period. Derivatives
are carried as financial assets when the fair value is positive
and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of
derivatives are taken directly to profit and loss.

(ix) Fair value measurement

The Company measures financial instruments, such as,
derivatives, at fair value at each balance sheet date.

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 fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability
takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most
advantageous market for the asset or liability

The principal or the most advantageous market must be
accessible by the Company.

The fair value of an asset or a liability is measured using
the assumptions that market participants would use
when pricing the asset or liability, assuming that market
participants act in their economic best interest.

A fair value measurement of a non-financial asset takes
into account a market participant’s ability to generate
economic benefits by using the asset in its highest and
best use or by selling it to another market participant that
would use the asset in its highest and best use.

The Company uses valuation techniques that are
appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the
use of relevant observable inputs and minimising the use
of unobservable inputs.

All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based
on the lowest level input that is significant to the fair value
measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active
markets for identical assets or liabilities

Level 2 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
directly or indirectly observable

Level 3 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is unobservable

For assets and liabilities that are recognised in the
financial statements on a recurring basis, the Company
determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the
fair value measurement as a whole) at the end of each
reporting period.

The Company’s management determines the policies and
procedures for both recurring fair value measurement,
such as derivative instruments and unquoted financial
assets measured at fair value, and for non-recurring
measurement, such as assets held for distribution in
discontinued operation.

External valuers are involved for valuation of significant
assets, and significant liabilities, if any.

At each reporting date, the management analyses the
movements in the values of assets and liabilities which
are required to be re-measured or re-assessed as per the

Company’s accounting policies. For this analysis, the
management verifies the major inputs applied in the latest
valuation by agreeing the information in the valuation
computation to contracts and other relevant documents.

The management, in conjunction with the Company’s
external valuers, also compares the change in the fair
value of each asset and liability with relevant external
sources to determine whether the change is reasonable.

For the purpose of fair value disclosures, the Company
has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset
or liability and the level of the fair value hierarchy as
explained above.

This note summarises accounting policy for fair value.
Other fair value related disclosures are given in the
relevant notes.

(x) Financial instruments

A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.

Financial Assets

Initial recognition and measurement:

All financial assets except trade receivables are recognised
initially at fair value plus, in the case of financial assets not
recorded at fair value through profit and loss, transaction
costs that are attributable to the acquisition of the
financial asset. Transaction costs of financial assets
carried at fair value through profit or loss are expensed in
profit and loss. Purchases or sales of financial assets that
require delivery of assets within a time frame established
by regulation or convention in the market place (regular
way trades) are recognised on the trade date, i.e., the date
that the Company commits to purchase or sell the asset.
Trade receivables are measured at transaction price in
accordance with Ind AS 115.

Subsequent measurement:

Financial assets being financial instruments:

Subsequent measurement of financial instruments
depends on the Company’s business model for managing
the asset and the cash flow characteristics of the asset.
For the purposes of subsequent measurement, financial
instruments are classified in three categories:

- Financial instruments at amortised cost;

- Financial instruments at fair value through other
comprehensive income (FVTOCI);

- Financial instruments at fair value through profit
and loss (FVTPL).

Financial instruments at amortised cost:

A financial instrument is measured at the amortised cost
if both the following conditions are met:

a) The asset is held within a business model whose
objective is to hold assets for collecting contractual
cash flows, and

b) Contractual terms of the asset give rise on specified
dates to cash flows that are solely payments
of principal and interest (SPPI) on the principal
amount outstanding.

After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method. Amortised cost
is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included
in finance income in the profit or loss. The losses arising
from impairment are recognised in the profit or loss.

Financial instrument at FVTOCI:

A financial instrument is classified as at the FVTOCI if
both of the following criteria are met:

a) The objective of the business model is achieved both
by collecting contractual cash flows and selling the
financial assets, and

b) The asset’s contractual cash flows represent selely
payments of principal and interest (SPPI).

Financial instruments included within the FVTOCI
category are measured initially as well as at each reporting
date at fair value. Fair value movements are recognized
in the other comprehensive income (OCI). However, the
Company recognizes interest income, impairment losses
& reversals and foreign exchange gain or loss in the profit
and loss. On derecognition of the asset, cumulative gain or
loss previously recognised in OCI is reclassified from the
equity to the statement of profit and loss. Interest earned
whilst holding FVTOCI financial instrument is reported as
interest income using the EIR method.

Financial instrument at FVTPL:

FVTPL is a residual category for financial instruments.
Any financial instrument, which does not meet the criteria
for categorisation as at amortised cost or as FVTOCI,
is classified as at FVTPL. In addition, the Company
may elect to designate a financial instrument, which
otherwise meets amortized cost or FVTOCI criteria, as at
FVTPL. However, such election is allowed only if doing
so reduces or eliminates a measurement or recognition
inconsistency (referred to as 'accounting mismatch’).
Financial instruments included within the FVTPL category

are measured at fair value with all changes recognized in
the statement of profit and loss.

Derecognition:

A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
primarily derecognised when:

- The rights to receive cash flows from the asset
have expired, or

- The Company has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under a 'pass¬
through' arrangement and either (a) the Company has
transferred substantially all the risks and rewards of
the asset, or (b) the Company has neither transferred
nor retained substantially all the risks and rewards of
the asset, but has transferred control of the asset.

Impairment of Financial Assets:

The Company assesses on a forward looking basis
the expected credit losses (ECL) associated with its
assets carried at amortised cost and FVTOCI financial
instruments. The impairment methodology applied
depends on whether there has been a significant increase
in credit risk since initial recognition.

For trade receivables only, the Company applies the
simplified approach permitted by Ind AS 109 'Financial
Instruments', which requires expected lifetime losses to
be recognised from initial recognition of the receivables.

The application of simplified approach does not require
the Company to track changes in credit risk. Rather,
it recognises impairment loss allowance based on
lifetime ECLs at each reporting date, right from its
initial recognition.

For recognition of impairment loss on other financial
assets and risk exposure, the Company determines that
whether there has been a significant increase in the
credit risk since initial recognition. If credit risk has not
increased significantly, 12-month ECL is used to provide
for impairment loss. However, if credit risk has increased
significantly, lifetime ECL is used. If, in a subsequent
period, credit quality of the instrument improves such that
there is no longer a significant increase in credit risk since
initial recognition, then the Company reverts to recognising
impairment loss allowance based on 12-month ECL.

Financial Liabilities

Initial recognition and measurement:

Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, payables, or as derivatives. All financial

liabilities are recognised initially at fair value and, in the
case of loans and borrowings and payables, net of directly
attributable transaction costs. The Company's financial
liabilities include trade and other payables, loans and
borrowings including derivative financial instruments.

Subsequent Measurement:

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

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss
(FVTPL) include financial liabilities held for trading and
financial liabilities designated upon initial recognition as
at fair value through profit or loss. Financial liabilities are
classified as held for trading if they are incurred for the
purpose of repurchasing in the near term. This category
also includes derivative financial instruments entered
into by the Company that are not designated as hedging
instruments in hedge relationships as defined by Ind AS
109 'Financial instruments'.

Gains or losses on liabilities held for trading are recognised
in the profit or loss.

Loans and borrowings

After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised cost
using the EIR method. Gains and losses are recognised
in profit or loss when the liabilities are derecognised as
well as through the EIR amortisation process. Amortised
cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included
as finance costs in the statement of profit and loss.

Derecognition:

A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
financial liability 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 the derecognition of the original liability
and the 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.

(xi) Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise
cash at banks and on hand and short-term deposits with
an original maturity of three months or less, that are
readily convertible to known amount of cash and which
are subject to an insignificant risk of changes in value.

(xii) Inventories

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

ii. The cost is determined as follows:

(a) Raw Materials, Stores, Spare Parts,
Chemical, Fuel Oil and Packing Materials:
Weighted average method

(b) Intermediaries: Material cost on weighted
average method and appropriate manufacturing
overheads based on normal operating capacity

(c) Finished goods (manufactured): Material cost
on weighted average method and appropriate
manufacturing overheads based on normal
operating capacity

(d) Traded goods: Weighted average method

iii. By-products such as treated gypsum are measured
at net realizable value, adjusted against the cost
of main product.

iv. Net realizable value is the estimated selling price
including applicable subsidy in the ordinary course
of business less estimated costs of completion and
the estimated costs necessary to make the sale.

v. Materials and other items held for use in the
production of inventories are not written down below
cost if the finished products in which they will be
incorporated are expected to be sold at or above cost.

(xiii) Borrowing cost

Borrowing costs include interest and other ancillary
costs incurred in connection with the arrangement of
borrowings. Borrowing cost also includes exchange
differences to the extent regarded as an adjustment to the
borrowing costs.

Borrowing costs directly attributable to the acquisition
or construction of an asset that necessarily takes a
substantial period of time to get ready for its intended
use are capitalized as part of the cost of the respective
asset. All other borrowing costs are expensed in the
period they occur.

(xiv) Revenue Recognition

The Company earns revenue primarily from sale of
fertilizers. The following specific criteria must also be met
before revenue is recognised:

Sale of goods

At contract inception, Company assess the goods
promised in a contract with a customer and identify as
a performance obligation each promise to transfer to the
customer. Revenue is recognised upon transfer of control
of promised products to customers in an amount of the
transaction price that is allocated to that performance
obligation and that reflects the consideration which
the Company expects to receive in exchange for
those products.

The Company considers the terms of the contract and
its customary business practices to determine the
transaction price. The transaction price is the amount of
consideration to which an entity expects to be entitled in
exchange for transferring promised goods to a customer
net of returns, excluding amounts collected on behalf of
third parties (for example, taxes) and excluding discounts
and incentives, as specified in the contract with customer.

With respect to sale of products revenue is recognised at a
point in time when the performance obligation is satisfied
and the customer obtains the control of goods which is
usually dispatch/delivery of goods, based on contracts
with customers. There is no significant financing
components involved on contract with customers.
Invoices are usually payable within the credit period as
agreed with respective customers.

Contract balances
Contract assets

A contract asset is the right to consideration in exchange
for goods transferred to the customer. If the Company
performs by transferring goods to a customer before the
customer pays consideration or before payment is due, a
contract asset is recognised for the earned consideration
that is conditional.

Trade receivables

A receivable represents the Company’s right to an
amount of consideration that is unconditional (i.e.,
only the passage of time is required before payment of
the consideration is due). Refer to accounting policies
of financial assets in note (x) to material accounting
policies on Financial instruments - initial recognition and
subsequent measurement.

Contract liabilities

A contract liability is the obligation to transfer goods
to a customer for which the Company has received

consideration (or an amount of consideration is due) from
the customer. If a customer pays consideration before
the Company transfers goods to the customer, a contract
liability is recognised when the payment is made or the
payment is due (whichever is earlier). Contract liabilities
are recognised as revenue when the Company performs
under the contract.

Subsidy income

Concessions in respect of Urea as notified under the
New Pricing Scheme is recognized with adjustments
for escalation/de-escalation in the prices of inputs and
other adjustments as estimated by the management in
accordance with the known policy parameters in this regard.

Subsidy for DAP Muriate of Potash (MOP) and Complex
Fertilizers are recognized as per rates notified by the
Government of India in accordance with Nutrient Based
Subsidy Policy and other guidelines issued from time to
time, where there is reasonable assurance of complying
with the conditions of the policy.

Subsidy on freight charges for DAP, MOP and Complex
Fertilizers is recognized based on rates notified by the
Government of India with the known policy parameters in
this regard and included in subsidy.

(xiv) (a) Interest Income

For all financial instruments measured at amortised
cost, interest income is recorded using the effective
interest rate (EIR). EIR is the rate that exactly discounts
the estimated future cash payments or receipts over
the expected life of the financial instrument or a shorter
period, where appropriate, to the gross carrying amount
of the financial asset or to the amortised cost of a
financial liability. When calculating the effective interest
rate, the Company estimates the expected cash flows
by considering all the contractual terms of the financial
instrument (for example, prepayment, extension,
call and similar options) but does not consider the
expected credit losses. Interest income is included
in finance income in the statement of profit and loss.
Interest income is recognized on a time proportion
basis taking into account the amount outstanding
and the applicable EIR. Claims receivable on account
of interest from dealers on delayed payments are
accounted for to the extent the Company is reasonably
certain of their ultimate collection.

(xiv) (b) Dividend Income

Dividend income is recognised when the Company’s
right to receive the payment is established.

(xiv) (c) Insurance claims

Claims receivable on account of insurance are
accounted for to the extent the Company is
reasonably certain of their ultimate collection.

(xv) Government grants and subsidies

Grants and subsidies [other than subsidy income
considered in point (xiv) above] from the government are
recognized when there is reasonable assurance that (i)
the Company will comply with the conditions attached to
them, and (ii) the grant/ subsidy will be received.

Where the grant or subsidy relates to revenue, it is recognized
as income on a systematic basis in the statement of profit
and loss over the periods necessary to match them with
the related costs, which they are intended to compensate.
Where the grant relates to an asset, it is recognized as
deferred income and released to income in equal amounts
over the expected useful life of the related asset.

(xvi) Employee benefits
Share-based payments

Share-based compensation benefits are provided to
employees via PPL Employees Stock Option Plan 2021
("ESOP 2021”). The fair value of the options granted
under ESOP 2021 is recognised as an employee benefits
expense in the statement of profit and loss with a
corresponding increase in equity. The fair value at grant
date is determined using the Black Scholes Model which
takes into account the exercise price, the term of the
option, the share price at grant date and expected price
volatility of the underlying share, the expected dividend
yield and risk-free interest rate for the term of the option.

The total expense is recognised over the vesting period,
which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each period,
the entity revises its estimates for the remaining vesting
period of the number of options that are expected to vest
based on the service conditions. It recognises the impact
of the revision to original estimates in the remaining
vesting period, if any, in the statement of profit or loss,
with a corresponding adjustment to equity.

Short term employee benefits

Short-term employee benefit obligations are measured on
an undiscounted basis and are expensed as the related
service is provided. A liability is recognised for the amount
expected to be paid, if the Company has a present legal or
constructive obligation to pay this amount as a result of
past service provided by the employee, and the amount of
obligation can be estimated reliably.

Defined Contribution Plan

Retirement benefit in the form of contribution to pension
fund, superannuation fund and national pension scheme
are defined contribution scheme. The Company has no
obligation, other than the contribution payable to these
schemes. The Company recognizes contribution payable
to these fund schemes as an expenditure, when an

employee renders the related service. If the contribution
payable to the scheme for service received before the
balance sheet date exceeds the contribution already
paid, the deficit payable to the scheme is recognized as
a liability after deducting the contribution already paid. If
the contribution already paid exceeds the contribution due
for services received before the balance sheet date, then
excess is recognized as an asset to the extent that the
pre- payment will lead to, for example, a reduction in future
payment or a cash refund.

Defined Benefit Plans

i) Liability for Gratuity and Post Retirement Medical
Benefits are provided for on the basis of actuarial
valuation carried at the end of each financial year.
The gratuity plan and post employment medical
benefit plan has been funded by policy taken from
Life Insurance Corporation of India.

ii) Liability for Provident fund is provided for on the
basis of actuarial valuation carried at the end of each
financial year. The difference between the actuarial
valuation of the provident fund of employees at the
year end and the balance of own managed fund
is provided for as liability in the books in terms of
the provisions under Employee Provident Fund and
Miscellaneous Provisions Act, 1952.

iii) 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 benefits expense in the statement
of profit and loss.

Remeasurement gains and losses arising from experience
adjustments and changes in actuarial assumptions are
recognised in the period in which they occur, directly in
other comprehensive income and such re-measurement
gain / (loss) are not reclassified to the statement of profit
and loss in the subsequent periods. They are included in
retained earnings in the statement of changes in equity.”

Other long term benefits

Liability for accumulated compensated absences are
provided for on the basis of actuarial valuation carried at
the end of each financial year. The Company measures the
expected cost of accumulated compensated absences as
the additional amount that it expects to pay as a result
of the unused entitlement that has accumulated at the

reporting date. The Company treats accumulated leave
expected to be carried forward beyond twelve months as
long term employee benefit for measurement purpose.

(xvii) Income tax

Income tax expense comprises current and deferred tax.
It is recognised in profit or loss except to the extent that
it relates to a business combination, or items recognised
directly in equity or in Other comprehensive income.

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 is recognised in respect of temporary
differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
corresponding amounts used for taxation purposes.
Deferred tax is also recognised in respect of carried
forward tax losses and tax credits. Deferred tax is not
recognised for:

• temporary differences on the initial recognition of
assets or liabilities in a transaction that:

- is not a business combination; and

- 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;

• taxable temporary differences arising on the initial
recognition of goodwill.

Deferred tax is measured at the tax rates that are expected
to apply to the period when the asset is realised or the
liability is settled, based on the laws that have been
enacted or substantively enacted by the reporting date.

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.

(xviii) Segment Reporting Policies

Operating segments are reported in a manner consistent
with the internal reporting provided to the Chief Operating
Decision Maker. Chief Operating Decision Maker review
the performance of the Company according to the nature
of products manufactured, traded and services provided,
with each segment representing a strategic business
unit that offers different products and serves different
markets. The analysis of geographical segments is based
on the locations of customers.

The Company prepares its segment information in
conformity with the accounting policies adopted for
preparing and presenting financial statements of the
Company as a whole.

(xix) Earnings per share

Basic earnings per share are calculated by dividing
the net profit or loss for the year attributable to equity
shareholders of the Company by the weighted average
number of the equity shares outstanding during the year.

For the purpose of calculating diluted earnings per
share, net profit or loss for the year attributable to equity
shareholders of the Company and the weighted average
number of shares outstanding during the year are adjusted
for the effect of all dilutive potential equity shares.

(xx) Contingent liabilities

A contingent liability is a possible obligation that arises
from past events and the existence of which will be
confirmed only by the occurrence or non-occurrence of
one or more uncertain future events not wholly within the
control of the enterprise. A contingent liability is also a
present obligation that arises from past events but outflow
of resources embodying economic benefits is not probable.