Note 3: Material accounting policy information

a) Material accounting judgements, estimates and
assumptions

The preparation of standalone financial statements in
conformity with Ind AS requires management to make
judgements, estimates and assumptions that affect the
application of accounting policies and the reported
amount of assets, liabilities, income, expenses and
disclosures of contingent assets and liabilities at the
date of these standalone financial statements and the
reported amount of revenues and expenses for the
years presented. Actual results may differ from the
estimates.

Judgements:

I n the process of applying the Company's accounting
policies, management has made the following
judgements, which have the most significant effect on
the amounts recognized in the standalone financial
statements:

Useful lives of property, plant and equipment

The Company reviews the useful life of property, plant
and equipment at the end of each reporting period.
This reassessment may result in change in depreciation
expense in future periods.

Estimates and Assumptions:

The key assumptions concerning the future and
other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing
a material adjustment to the carrying amounts of
assets and liabilities within the next financial year, are
described below. The Company based its assumptions
and estimates on parameters available when the
standalone financial statements were prepared.
Existing circumstances and assumptions about future
developments, however, may change due to market
changes or circumstances arising that are beyond the
control of the Company. Estimates and underlying
assumptions are reviewed at each balance sheet date.
Such changes are reflected in the assumptions when
they occur.

i) Income taxes

The Company is subject to income tax laws as
applicable in India. Significant judgment is required
in determining provision for income taxes. There
are many transactions and calculations for which
the ultimate tax determination is uncertain during
the ordinary course of business. The Company
recognizes liabilities for anticipated tax issues
based on estimates of whether additional taxes
will be due. Where the final tax outcome of these
matters is different from the amounts that were
initially recorded, such differences will impact
the income tax and deferred tax provisions in the
period in which such determination is made.

ii) Contingencies

Contingent liabilities may arise from the ordinary
course of business in relation to claims against
the Company, including legal and other claims.
By virtue of their nature, contingencies will be
resolved only when one or more uncertain future
events occur or fail to occur. The assessment of the
existence, and potential quantum, of contingencies
inherently involves the exercise of significant
judgements and the use of estimates regarding
the outcome of future events.

iii) Defined benefit plans

The present value of the gratuity and
compensated absences are determined using
actuarial valuations. An actuarial valuation involves
making various assumptions that may differ from
actual developments in the future. These include
the determination of the discount rate, future
salary increases and mortality rates. Due to the
complexities involved in the valuation and its
long-term nature, a defined benefit obligation is
highly sensitive to changes in these assumptions.
All assumptions are reviewed at each reporting
date.

The parameter most subject to change is the
discount rate. In determining the appropriate
discount rate for plans operated in India, the
management considers the interest rates of
government bonds in currencies consistent with
the currencies of the post-employment benefit
obligation. The mortality rate is based on publicly
available mortality tables for the specific countries.
Those mortality tables tend to change only at
interval in response to demographic changes.

iv) Employee stock option plan

Estimating fair value for share-based payment
transactions requires determination of the most
appropriate valuation model, which depends
on the terms and conditions of the grant. This
estimate also requires determination of the
most appropriate inputs to the valuation model
including the expected life of the share option
or appreciation right, volatility and dividend
yield and making assumptions about them. The
Company initially measures the cost of cash-
settled transactions with employees using a Black
Scholes model to determine the fair value of the
liability incurred. For cash-settled share-based
payment transactions, the liability needs to be
remeasured at the end of each reporting period
up to the date of settlement, with any changes in
fair value recognised in profit or loss. This requires
a reassessment of the estimates used at the end
of each reporting period. For the measurement of
the fair value of equity-settled transactions with
employees at the grant date, the Company uses a
Black Scholes model. The assumptions and models
used for estimating fair value for share-based
payment transactions are disclosed in Note 44.

v) Provision for expected credit losses (ECL) on
trade receivables

The Company uses a provision matrix to calculate
ECLs for trade receivables. The provision rates are
based on days past due for groupings of various
customer segments that have similar loss patterns
(i.e., by product type and customer type).

The provision matrix is initially based on the
Company's historical observed default rates. The
Company will calibrate the matrix to adjust the
historical credit loss experience with forward¬
looking information. For instance, if forecast
economic condition (i.e., gross domestic products)
are expected to deteriorate over the next year
which can lead to an increased number of defaults
in the manufacturing sector, the historical default
rates are adjusted. At each reporting date, the
historical observed default rates are updated and
changes in the forward-looking estimates are
analysed.

The assessment of the correlation among historical
observed default rates, forecast economic
conditions and ECLs is a significant estimate.
The amount of ECLs is sensitive to changes in

circumstances and forecast economic conditions.
The Company's historical credit loss experience
and forecast of economic conditions may also not
be representative of customer's actual default in
the future. The information about the ECLs on the
Company's trade receivables is disclosed in note
10 to the financial statements.

vi) Valuation of financial instruments

When the fair value of financial assets and financial
liabilities recorded in the Statement of financial
position cannot be derived from active markets,
their fair value is determined using valuation
techniques including the discounted cash flow
model. The inputs to these models are taken from
observable markets where possible, but where this
is not feasible, a degree of judgement is required
in establishing the fair values. The judgements
include consideration of inputs such as liquidity
risks, credit risks and volatility in market. The
changes in assumptions about these factors could
affect the reported fair value of the financial
instruments.

b) Current versus non-current classification

The Company presents assets and liabilities in the

balance sheet based on a current/ non-current

classification.

Assets:

An asset is treated as current when it is:

i) Expected to be realized or intended to be sold or
consumed in normal operating cycle.

ii) Held primarily for the purpose of trading

iii) Expected to be realized within twelve months after
the reporting period, or

iv) Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period.

All other assets are classified as non-current.

Liabilities:

A liability is current when:

i) It is expected to be settled in normal operating
cycle

ii) It is held primarily for the purpose of trading

iii) It is due to be settled within twelve months after
the reporting period, or

iv) There is no unconditional right to defer the
settlement of the liability for at least twelve months
after the reporting period

All other liabilities are classified as non-current.

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

Operating cycle: The operating cycle is the time
between the acquisition of assets for processing and
their realization in cash and cash equivalents. Based on
the operation, the group has identified twelve months
as its operating cycle.

c) Property, plant and equipment (PPE), Investment
property and Intangible assets.

Property, plant and equipment, capital work in progress
are stated at cost less accumulated depreciation and
accumulated impairment losses, if any. Such cost
includes expenditure that is directly attributable to the
acquisition of the asset.

An item of property, plant and equipment and any
significant part initially recognized is de-recognized
upon disposal or when no future economic benefits
are expected from its use. Any gain or loss arising on
de-recognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying
amount of the asset) is included in the statement of
profit and loss within other income or expense (as
applicable).

Subsequent Costs: The cost of replacing a part of an
item of property, plant and equipment is recognized
in the carrying amount of the item of property,
plant and equipment, if it is probable that the future
economic benefits embodied within the part will flow
to the Company and its cost can be measured reliably
with the carrying amount of the replaced part getting
derecognized. The cost for day-to-day servicing of
property, plant and equipment are recognized in
statement of profit and loss as and when incurred.

Decommissioning Costs : The present value of
expected cost for the decommissioning of an asset after
its use is included in the cost of the respective asset if
the recognition criteria for a provision are met.

Capital work in progress: Capital work in progress
comprises the cost of fixed assets that are not ready for
their intended use at the reporting date.

Depreciation: Depreciation on PPE, except leasehold
improvements, is provided on straight-line method
over the useful lives of assets as per Schedule II to the
Companies Act, 2013. Depreciation for assets purchased
/ sold during a period is proportionately charged to
Statement of Profit and Loss. Leasehold improvements
are amortized over the lease term or the remaining
useful life of the assets whichever is lower.

Investment property
Recognition and measurement

Investment property is property held either to earn
rental income or for capital appreciation or for both,
but not for sale in the ordinary course of business,
use in the production or supply of goods or services
or for administrative purposes. Investment property
comprises freehold land and building.

Investment properties are measured initially at cost,
including transaction costs. Subsequent to initial
recognition, investment properties are stated at cost
less accumulated depreciation and accumulated
impairment loss, if any.

The Company measures investment property using cost
based measurement and the fair value of investment
property is disclosed in the notes. Fair values are
determined based on an annual evaluation performed
by an accredited external independent valuer.

Investment properties are derecognized either when
they have been disposed of or when they are permanently
withdrawn from use and no future economic benefit is
expected from their disposal. The difference between
the net disposal proceeds and the carrying amount of
the asset is recognized in the Statement of Profit and
Loss in the period of derecognition.

Depreciation

Depreciation on Investment Property (except freehold
land) is provided, under the Straight Line Method, pro

rata to the period of use, based on useful lives specified
in Schedule II to the Companies Act, 2013. Freehold
land is not depreciated. (Refer table above)

Intangible assets
Recognition and measurement

Intangible assets that are acquired by the Company are
measured initially at cost. Intangible assets with finite
useful lives are measured at cost less accumulated
amortization and accumulated impairment losses, if any.

Amortization: Intangible assets, with infinite lives, are
amortized over their respective individual estimated
useful lives on a straight-line basis, commencing from
the date the assets are available to the Company for
their use. In case of the trade mark capitalized, the
Company is amortizing it over period of 5 years from
the date of capitalization. Specialized softwares are
amortized over a period of 3-5 years or license period
whichever is earlier.

d) Borrowing costs

Borrowing costs consists of interest and amortization
of ancillary costs that an entity incurs in connection
with the borrowing of funds. 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 occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with
the borrowing of funds. Borrowing cost also includes
exchange differences to the extent regarded as an
adjustment to the borrowing costs.

Interest income earned on the temporary investment
of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs
eligible for capitalization.

e) Foreign currency transaction

Functional and presentation currency

The Company's standalone financial statements
are presented in Indian Rupees (?) which is also the
Company's functional currency. Functional currency is
the currency of the primary economic environment in
which a Company operates and is normally the currency
in which the Company primarily generates and expends
cash. All the financial information presented in ' in
lakhs except where otherwise stated.

Initial recognition

Transactions in foreign currencies are translated into the
functional currency of the Company at the exchange
rates at the dates of the transactions or an average rate
if the average rate approximates the actual rate at the
date of the transaction.

Measurement at the reporting date

Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at
the exchange rate at the reporting date. Non-monetary
assets and liabilities that are measured at fair value in
a foreign currency are translated into the functional
currency at the exchange rate when the fair value
was determined. Non-monetary assets and liabilities
that are measured in terms of historical cost are not
retranslated.

f) Revenue recognition

Revenue from contracts with customers is recognized
when control of the goods or services are transferred
to the customer at an amount that reflects the
consideration to which the Company expects to be
entitled in exchange for those goods or services.
Revenue excludes value added tax or other sales taxes
and is after deduction of any trade discounts.

When the consideration in a contract includes a variable
amount, the amount of consideration is estimated to
which the Company will be entitled in exchange for
transferring the goods or services to the customer.
The variable consideration is estimated at contract
inception and constrained until it is highly probable
that a significant revenue reversal in the amount of
cumulative revenue recognized will not occur when the
associated uncertainty with the variable consideration is
subsequently resolved.

The Company does not expect to have any contracts
where the period between the transfer of the promised
goods or services to the customer and payment by the
customer exceeds one year. As a consequence, it does
not adjust any of the transaction prices for the time
value of money.

The Company recognises revenue to depict the
transfer of promised goods or services to customers
in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for
those goods or services. A 5-step approach is used to
recognise revenue as below:

Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligation in contract
Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance
obligations in the contract

Step 5: Recognise revenue when (or as) the entity
satisfies a performance obligation

The Company recognises contract liabilities for
consideration received in respect of unsatisfied
performance obligations and reports these amounts as
other liabilities in its standalone balance sheet. Similarly,
if the Company satisfies a performance obligation
before it receives the consideration, the Company
recognises either a contract asset or a receivable in
its standalone balance sheet, depending on whether
something other than the passage of time is required
before the consideration is due.

(i) Rendering of services

Income from corporate and sourcing support
services rendered to group companies are
recognized as the services are rendered based on
a cost plus mark-up in accordance with the terms
of respective arrangements.

' Unbilled revenue' included in other financial
assets represent revenue in excess of billings as
of the Balance Sheet date. 'Unearned revenues'
included in financial liabilities represent billing in
excess of revenue recognized.

(ii) Sale of goods

Revenue is recognised when a customer obtains
control of the goods which is ordinarily upon
shipment or delivery at the customer premises
and on completion of performance obligation.
Revenue is recognised at a transaction price
allocated to the extent of performance obligation
satisfied after deduction of any trade discounts,
volume rebates and any taxes or duties collected
on behalf of the government which are levied on
sales such as goods and services tax, etc. For certain
contracts that permit the customer to return an
item, revenue is recognised to the extent that it is
probable that a significant reversal in the amount
of cumulative revenue recognised will not occur.
As a consequence, for those contracts for which

the Company is unable to make a reasonable
estimate of return, revenue is recognised when the
return period lapses or a reasonable estimate can
be made.

g) Other income

Rental income

Rental income is recognized when services are rendered
and same becomes chargeable. Service Income
comprises amounts billed for leasing out the property
and other support services rendered to entities in
accordance with terms of agreements entered into with
them.

Other income

i) I nterest income from a financial asset is recognized
when it is probable that the economic benefits
will flow to the Company and the amount of
income can be measured reliably. Interest income
is accrued on a time basis, by reference to the
principal outstanding and at the effective interest
rate applicable, which 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.

ii) Dividend income is recognized when the right to
receive payment is established.

iii) Any other income is recognized on an accrual
basis.

h) Leases

The Company assesses at contract inception whether
a contract is, or contains, a lease. 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.

Company as a lessee

The Company applies a single recognition and
measurement approach for all leases, except for short¬
term leases and leases of low-value assets. The Company
recognizes lease liabilities to make lease payments and
right-of-use assets representing the right to use the
underlying assets.

(a) Right-of-use assets

Right-of-use assets are recognized at the
commencement date of the lease (that is the
date the underlying asset is available for use).
Right-of-use assets are measured at cost, less any
accumulated depreciation and any impairment

losses, and adjusted for any remeasurement of
lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognized,
initial direct costs incurred, and lease payments
made at or before the commencement date less
any lease incentives received. Right-of-use assets
are depreciated on a straight-line basis over the
lease terms and the estimated useful lives of the
assets.

I f ownership of the leased asset transfers to the
Company by the end of the lease term or the
cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated
useful life of the asset.

(b) Lease liabilities

Lease liabilities are recognized at the
commencement date of the lease at the present
value of lease payments to be made over the
lease term. The lease payments include fixed
payments (including in-substance fixed payments)
less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and
amounts expected to be paid under residual value
guarantees. The lease payments also include the
exercise price of a purchase option reasonably
certain to be exercised by the Company and
payments of penalties for termination of a lease, if
the lease term reflects the Company exercising the
option to terminate. The variable lease payments
that do not depend on an index or a rate are
recognized as an expense in the period in which
the event or condition that triggers the payment
occurs.

I n calculating the present value of lease payments,
the Company uses its incremental borrowing rate
at the lease commencement date because the
interest rate implicit in the lease is not readily
determinable. After the commencement date, the
amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount
of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change
in lease payments (e.g., a change to future lease
payments resulting from a change in an index or
rate) or a change in assessment of an option to
purchase the underlying asset.

(c) Short term leases

The Company applies the short-term lease
recognition exemption to its short-term leases

of machinery and equipment (that is those leases
that have a lease term of 12 months or less from
the commencement date and do not contain a
purchase option). It also applies the recognition
exemption for leases of low-value assets to leases
of office equipment and laptop computers that are
considered to be of low value.

Lease payments on short-term leases and leases of
low-value assets are recognized as an expense on
a straight-line basis over the lease term.

Company as a lessor

When the Company acts as a lessor, it classifies at lease
inception (or when there is a lease modification) each of
its leases as either an operating lease or a finance lease.

Leases in which the Company does not transfer
substantially all the risks and rewards incidental to
ownership of an asset are classified as operating
leases. When a contract contains lease and non-lease
components, the Company allocates the consideration
in the contract to each component on a relative stand¬
alone selling price basis. Rental income is accounted
for on a straight-line basis over the lease terms and is
included in revenue in the statement of profit or loss
due to its operating nature. Initial direct costs incurred
in negotiating and arranging an operating lease are
added to the carrying amount of the leased asset and
recognized over the lease term on the same basis as
rental income. Contingent rents are recognized as
revenue in the period in which they are earned.

Leases are classified as finance leases when substantially
all of the risks and rewards of ownership transfer from
the Company to the lessee. At the inception of a finance
lease, the cost of the leased asset is capitalized at the
present value of the minimum lease payments and
recorded together with the obligation, excluding the
interest element, to reflect the purchase and financing.
Assets held under capitalized finance leases, including
prepaid land lease payments under finance leases,
are included in property, plant and equipment, and
depreciated over the shorter of the lease terms and the
estimated useful lives of the assets. The finance costs
of such leases are charged to the statement of profit or
loss so as to provide a constant periodic rate of charge
over the lease terms.

i) Employee's benefits

Short term employee benefits: All employee benefits
expected to be settled wholly within twelve months
of rendering the service are classified as short-term

employee benefits. When an employee has rendered
service to the Company during an accounting period,
the Company recognizes the undiscounted amount of
short-term employee benefits expected to be paid in
exchange for that service as an expense unless another
Ind AS requires or permits the inclusion of the benefits
in the cost of an asset. Benefits such as salaries, wages,
bonus and ex-gratia etc. are recognized in Statement
of profit and loss in the period in which the employee
renders the related service.

Defined contribution plan

A defined contribution plan is a post-employment
benefit plan under which an entity pays fixed
contributions to a statutory authority and will have no
legal or constructive obligation to pay further amounts.
Provident Fund and Employee State Insurance Schemes
are defined contribution plans and contributions paid /
payable are recognized as an expense in the Statement
of Profit and Loss during the year in which the employee
renders the related service.

Defined benefit plan

A defined benefit plan is a post-employment benefit
plan other than a defined contribution plan.

The Company has an obligation towards gratuity,
a defined benefit retirement plan covering eligible
employees. The plan provides for a lump sum payment
to vested employees at retirement, death while in
employment or on termination of employment of an
amount based on the respective employee's salary and
the tenure of employment. The Company accounts for
the liability for gratuity benefits payable in future based
on an independent actuarial valuation report using the
projected unit credit method as at the year end.

The obligations are measured at the present value of
the estimated future cash flows. The discount rate is
generally based upon the market yields available on
Government bonds at the reporting date with a term
that matches that of the liabilities.

Re-measurements, comprising actuarial gains and
losses including, the effect of the changes to the asset
ceiling (if applicable), is reflected immediately in Other
Comprehensive Income in the Statement of Profit and
Loss. All other expenses related to defined benefit
plans are recognized in Statement of Profit and Loss
as employee benefit expenses. Gains or losses on the
curtailment or settlement of any defined benefit plan
are recognized when the curtailment or settlement
occurs.

Other long term benefits

Long term compensated absences are provided for on
the basis of actuarial valuation, using the projected unit
credit method, at the end of each financial year. Actuarial
gains/ losses, if any, are recognized immediately in the
Statement of Profit and Loss.

j) Share based payment/Cash-settled share-based
payments

The Company has equity-settled share-based
remuneration plans for its employees. Where
employees are rewarded using share-based payments,
the fair value of employees' services is determined
indirectly by reference to the fair value of the equity
instruments granted. This fair value is appraised at the
grant date and excludes the impact of non-market
vesting conditions (for example profitability and sales
growth targets and performance conditions).

All share-based remuneration is ultimately recognised
as an expense in profit or loss with a corresponding
credit to equity. If vesting periods or other vesting
conditions apply, the expense is allocated over the
vesting period, based on the best available estimate of
the number of share options expected to vest.

Upon exercise of share options, the proceeds received,
net of any directly attributable transaction costs,
are allocated to share capital up to the nominal (or
par) value of the shares issued with any excess being
recorded as share premium.

For cash-settled share-based payments, the fair value
of the amount payable to employees is recognised
as employee benefits expense with a corresponding
increase in liabilities, over the vesting period. The
liability is remeasured at each reporting period up to,
and including the settlement date, with changes in fair
value recognised in employee benefits expense.

The Company has created an Employee Benefit Trust
for providing share-based payment to its employees.
The Company uses the Trust as a vehicle for distributing
shares to employees under the employee remuneration
schemes. The Trust buys shares of the Company
from the market, for giving shares to employees. The
Company treats Trust as its extension and shared held
by the Trust are treated as treasury stock.

Own equity instruments that are reacquired (treasury
stock) are recognised at cost and deducted from Equity.
No gain or loss is recognised in profit and loss on the
purchase, sale, issue or cancellation of the Group's own

equity instruments. Any difference between the carrying
amount and the consideration, if reissued, is recognised
in capital reserve. Share options exercised during the
reporting year are satisfied with treasury shares.

Where stock options are issued to employees of
subsidiaries/ step down subsidiaries, and such
subsidiary/ step down subsidiary does not have an
obligation to settle the transaction, the transaction
is treated as a parent's equity contribution to the
subsidiary/ step down subsidiary and presented as
'deemed investment' under investment in subsidiaries.