2.3 Summary of Material Accounting Policies

a) Property, Plant and Equipment

Property, plant and equipment are stated
either at deemed cost as considered on
the date of transition to Ind AS or at cost of
acquisition / construction together with any
incidental expenses related to acquisition and
appropriate borrowing costs, less accumulated
depreciation and accumulated impairment
loss, if any. An impairment loss is recognized
where applicable, when the carrying value of
tangible assets of cash generating unit exceed
its recoverable value or value in use, whichever
is higher.

Subsequent costs are included in the asset's
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with
the item will flow to the Company and the
cost of the item can be measured reliably. The
carrying amount of the replaced component is
derecognised when replaced. All other repairs

and maintenance are charged to the statement
of profit and loss during the reporting period
in which they are incurred, if any.

Capital work in progress is stated at cost,
net of accumulated impairment loss, if any.

The Company, based on technical assessment
made by technical expert and management
estimate, depreciates certain items of plant
and equipment over estimated useful lives
which are different from the useful life
prescribed in Schedule II to the Companies
Act, 2013. The management believes that
these estimated useful lives are realistic and
reflect fair approximation of the period over
which the assets are likely to be used.

The Company depreciates its Property, plant
and equipment under straight line method
over the useful life of assets. 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.

An item of property, plant and equipment
and any significant part initially recognised is
derecognised upon disposal or when no future
economic benefits are expected from its use or
disposal. Depreciation for assets purchased /
sold during the year is proportionately charged.
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 income
statement when the asset is derecognised.

The residual values, useful lives and methods of

depreciation of property, plant and equipment
are reviewed at each financial year end and
adjusted prospectively, if appropriate.

The Company buys old / new machines and
puts them on trial run for manufacturing
high precision engineered products until the
output reaches the desired level of precision.
Losses on account of such trial run (net of sale
proceeds / realisable value of the output during
trial run phase) are capitalised with the cost of
underlying machines which is considered as
a necessary cost for bringing the machines to
their desired level of operation from quality
standpoint.

Advances paid towards the acquisition of
property, plant and equipment outstanding
at each balance sheet date are classified as
'Capital Advances' under other non-current
assets and the cost of property, plant and
equipment not ready to use are disclosed
under 'Capital Work-in-progress'.

b) Intangible assets

Intangible assets have a finite useful life and are
stated at cost less accumulated amortisation,
impairment loss, if any.

Computer Software for internal use, which is
primarily acquired from third party vendors, is
capitalised. Subsequent costs associated with
maintaining such software are recognised as
expense as incurred. Cost of software includes
license fees and cost of implementation /
system integration services, where applicable.

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
recognised in the Statement of profit or loss
when the asset is derecognised.

Goodwill is initially measured at cost,
being the excess of the aggregate of the
consideration transferred over the fair value of
net identifiable assets acquired and liabilities
assumed. Consideration transferred includes
the fair values of the assets transferred,
liabilities incurred by the Company to the

previous owners of the acquiree, and equity
interests issued by the Company.

After initial recognition, goodwill is measured
at cost less any accumulated impairment
losses, if any. For the purpose of impairment
testing, goodwill acquired in a business
combination is, from the acquisition date,
allocated to each of the Company's cash¬
generating units that are expected to benefit
from the combination, irrespective of whether
other assets or liabilities of the acquire are
assigned to those units.

A cash generating unit to which goodwill
has been allocated is tested for impairment
annually or when there is an indication that
the unit may be impaired. If the recoverable
amount of the cash generating unit is less than
its carrying amount, the impairment loss is
allocated first to reduce the carrying amount
of any goodwill allocated to the unit and then
to the other assets of the unit pro rata based on
the carrying amount of each asset in the unit.
Any impairment loss for goodwill is recognised
in statement of profit and loss. An impairment
loss recognised for goodwill is not reversed in
subsequent periods.

c) Impairment of non-financial assets

The Company assesses at each reporting date
whether there is an indication that an asset
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. 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. In assessing value
in use, the estimated future cash flows are
discounted to their present value using a pre¬
tax discount rate that reflects current market
assessments of the time value of money and
the risks specific to the asset. In determining
net selling price, recent market transactions
are taken into account, if available. If no such
transactions can be identified, an appropriate
valuation model is used.

The Company bases its impairment calculation
on detailed budgets and forecast calculations
which are prepared separately for each of the
Company's cash-generating units to which the
individual assets are allocated. Impairment
losses of continuing operations, including
impairment on inventories, are recognised in
the Statement of Profit and Loss. For assets,
an assessment is made at each reporting date
to determine whether there is an indication
that previously recognised impairment losses
no longer exist or have decreased. If such
indication exists, the Company estimates
the asset's or CGU's recoverable amount.
A previously recognised impairment loss is
reversed only if there has been a change in
the assumptions used to determine the asset's
recoverable amount since the last impairment
loss was recognised. The reversal is limited
so that the carrying amount of the asset
does not exceed its recoverable amount, nor
exceed the carrying amount that would have
been determined, net of depreciation, had no
impairment loss been recognised for the asset
in prior years.

Such reversal is recognised in the Statement of
Profit and Loss.

Intangible assets with indefinite useful lives
are tested for impairment annually at the CGU
level, as appropriate, and when circumstances
indicate that the carrying value may be
impaired. After impairment, depreciation is
provided on the revised carrying amount of
the asset over its remaining useful life.

The Company assesses where climate risks
could have a significant impact, such as the
introduction of emission-reduction legislation
that may increase manufacturing costs. These
risks in relation to climate-related matters
are included as key assumptions where they
materially impact the measure of recoverable
amount. These assumptions have been
included in the cash-flow forecasts in assessing
value-in-use amounts.

d) Revenue Recognition

Revenue from contracts with customers is
recognised 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
towards satisfaction of a performance

obligation is measured at the amount of
transaction price (net of variable consideration)
allocated to that performance obligation. The
transaction price of goods sold or services
rendered is net of variable consideration on
account of returns, discounts, volume rebates,
goods and service tax excluding amount
collected on behalf of third parties. The
Company has concluded that it is the principal
in all of its revenue arrangements since it is the
primary obligor as it has pricing latitude and is
also exposed to inventory and credit risks.

The Company recognises revenue when the
amount of revenue can be reliably measured, it
is probable that future economic benefits will
flow to the Company regardless of when the
payment is being made and specific criteria
have been met for each of the Company's
activities as described below.

Sale of Products

Revenue from sale of products is recognized
when the Company transfers the control
of goods to the customer as per the terms
of contract and the amount of revenue
can be measured reliably and recovery of
consideration is probable. The Company
considers whether there are other promises
in the contract that are separate performance
obligations to which a portion of the transaction
price needs to be allocated. In determining the
transaction price, the Company considers the
effects of variable consideration, the existence
of significant financing component, non-cash
considerations and consideration payable to
the customer (if any). In case of export sales,
the Company believes that the control gets
transferred to the customer on the date of
bill of lading / date of discharge from port as
applicable except in cases where the Company
itself is the consignee.

Export incentives

Exports entitlements are recognised when
the right to receive credit as per the terms of
the schemes is established in respect of the
exports made by the Company and when
there is no significant uncertainty regarding
the ultimate collection of the relevant export
proceeds.

Interest Income

For all debt 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. Interest
income is included in finance income in the
statement of profit and loss.

Dividend Income

Revenue is recognised when the Company's
right to receive the payment is established,
which is generally when shareholders approve
the dividend.

Die design and preparation charges

Revenues from die design and preparation
charges are recognized on approval of die
designs by the Customers.

Foreign exchange difference on operating
assets and liabilities

Exchange differences arising on operating
items (such as trade payables, trade receivables,
forward contracts on receivables) including
realised exchange difference are classified as
other operating income.

Contract balances

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. However, trade receivables do not
contain a significant financing component and
are measured at transaction price.

Contract liabilities

A contract liability is the obligation to transfer
goods or services 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 or
services 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.

e) Government Grants

Government grants are recognised where

there is reasonable assurance that the grant
will be received and all attached conditions
will be complied with. When the grant relates
to an expense item, it is recognised as income
on a systematic basis over the periods that
the related costs, for which it is intended to
compensate, are expensed. When the grant
relates to an asset in the form of the duty
benefit availed under Export Promotion
Capital Goods (EPCG) scheme, it is accounted
for as Government grant and its amortised on
the basis of fulfilment of underlying export
obligations. Also refer note 23.

Government grants such as for export
benefit scheme and other grants, for which
related costs are recognised as expense, are
recognised in the Statement of Profit and Loss
on matching principle.

Government grants such as for GST Subsidy
are recorded at fair value and are recognised
in the Statement of Profit and Loss as an when
due.

The Company considers government grant as
part of it's operations and hence considered as
other operating revenues.

f) Inventories

Inventories are valued at the lower of cost
and net realisable value after providing for
obsolescence, if any. Costs incurred in bringing
each product to its present location and
conditions are accounted for as follows:

(i) Raw materials, Stores and Spares: These are
valued at lower of cost and net realisable
value. However, material and other items
held for use in 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. Cost includes cost of purchase
and other costs incurred in bringing the
inventories to their present location and
condition. Cost is determined on weighted
average method.

(ii) Finished goods and work in progress:
These are valued at lower of cost and
net realisable value. Cost includes cost
of direct materials and labour and a
proportion of manufacturing overheads
based on the normal operating capacity.
Cost of finished goods also includes excise
duty. Cost is determined on weighted

average method.

(iii) Scrap: Scrap is valued at Net Realisable
Value.

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

g) Leases

The Company assesses at contract inception
whether a contract is, or contains, a lease. A
contract is, or contains, a lease if it conveys the
right to control the use of an identified asset for
a period of time in exchange for consideration.

Company as a Lessee

i) Right-of-use assets

The Company recognises right-of-use
assets at the commencement date of the
lease (i.e., the date the underlying asset is
available for use). Right-of-use assets are
measured at cost, less any accumulated
depreciation and impairment losses, and
adjusted for any remeasurement of lease
liabilities. The cost of right-of-use assets
includes the amount of lease liabilities
recognised, 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 shorter of the lease term and
the estimated useful lives of the assets, as
follows:

Plant and machinery 3 to 5 years

If ownership of the right-of-use asset
transfers to the Company at 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.

ii) Lease Liabilities

At the commencement date of the lease,
the Company recognises lease liabilities
measured 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.

In 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 the lease payments
(e.g., changes to future payments resulting
from a change in an index or rate used
to determine such lease payments) or a
change in the assessment of an option to
purchase the underlying asset.

iii) Short-term leases and leases of low-value
assets

The Company applies the short-term lease
recognition exemption to its short-term
leases of machinery and equipment (i.e.,
those leases that have a lease term of 12
months or less from the commencement
date and do not contain a purchase
option).

Company as a Lessor

Leases in which the Company does not
transfer substantially all the risks and rewards
of ownership of an asset are classified as
operating leases.Rental income arising is
accounted for on a straight-line basis over
the lease terms. Initial direct costs incurred in
negotiating and arranging an operating lease
are added to the carrying amount of the leased
asset, i.e., asset given on lease, and recognised
over the lease term on the same basis as rental
income. Contingent rents are recognised 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. Amounts due from lessees under
finance leases are recorded as receivables
at the Company's net investment in the
leases. Finance lease income is allocated to

accounting periods so as to reflect a constant
periodic rate of return on the net investment
outstanding in respect of the lease.

h) 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:

The Company recognizes a financial asset in
its Balance Sheet when it becomes party to
the contractual provisions of the instrument.
Financial assets and financial liabilities are
initially measured at fair value other than
Trade Receivables which are measured at
Transaction Price (other than trade receivables
containing significant financing component).
Transaction costs that are directly attributable
to the acquisition or issue of financial assets and
financial liabilities (other than financial assets
and financial liabilities at fair value through
profit or loss) are added to or deducted from
the fair value of the financial assets or financial
liabilities, as appropriate. For financial assets
and financial liabilities at fair value through
profit or loss, directly attributable transaction
costs are immediately recognised in the
Statement of Profit and Loss.

Subsequent measurement:

For subsequent measurement, the Company
classifies a financial asset in accordance with
the below criteria:

i. The Company's business model for
managing the financial asset and

ii. The contractual cash flow characteristics
of the financial asset.

Based on the above criteria, the Company
classifies its financial assets into the
following categories:

i. Financial assets measured at amortized
cost

ii. Financial assets measured at fair value
through other comprehensive income
(FVTOCI)

iii. Financial assets measured at fair value
through profit or loss (FVTPL)

i. Financial assets measured at amortized
cost:

A financial asset is measured at the amortized
cost if both the following conditions
are met:

a) The Company's business model
objective for managing the financial
asset is to hold financial assets in order
to collect contractual cash flows, and

b) The contractual terms of the financial
asset give rise on specified dates the
right to receive cash flows that are
solely payments of principal and
interest on the principal amount
outstanding.

This category applies to cash and bank
balances, trade receivables, loans and
other financial assets of the Company
(Refer Note 40 for further details).
Such financial assets are subsequently
measured at amortized cost using
the effective interest method and
are subject to impairment as per
the accounting policy applicable
to 'Impairment of financial assets'.
Under the effective interest method,
the future cash receipts are exactly
discounted to the initial recognition
value using the effective interest
rate. The cumulative amortization
using the effective interest method
of the difference between the initial
recognition amount and the maturity
amount is added to the initial
recognition value (net of principal
repayments, if any) of the financial
asset over the relevant period of
the financial asset to arrive at the
amortized cost at each reporting
date. The corresponding effect of the
amortization under effective interest
method is recognized as interest
income over the relevant period of the
financial asset. The same is included
under other income in the Statement
of Profit and Loss.

The amortized cost of a financial asset is also
adjusted for loss allowance, if any.

ii. Financial assets measured at FVTOCI:

A financial asset is measured at FVTOCI if both
of the following conditions are met:

a) The Company's business model
objective for managing the financial
asset is achieved both by collecting
contractual cash flows and selling the
financial assets, and

b) The contractual terms of the financial
asset give rise on specified dates the
right to receive cash flows that are
solely payments of principal and
interest on the principal amount
outstanding.

On Derecognition of such financial
assets, cumulative gain or loss
previously recognized in OCI is
not reclassified from the equity to
Statement of Profit and Loss. However,
the Company may transfer such
cumulative gain or loss into retained
earnings within equity.

iii. Financial assets measured at FVTPL:

Financial assets in this category are those
that are held for trading and have been
either designated by management upon
initial recognition or are mandatorily
required to be measured at fair value
under Ind AS 109 i.e. they do not meet
the criteria for classification as measured
at amortised cost or FVOCI. Management
only designates an instrument at FVTPL
upon initial recognition, if the designation
eliminates, or significantly reduces,
the inconsistent treatment that would
otherwise arise from measuring the
assets or liabilities or recognising gains
or losses on them on a different basis.
Such designation is determined on an
instrument-by-instrument basis.

Financial assets at fair value through profit
or loss are carried in the balance sheet at
fair value with net changes in fair value
recognised in the statement of profit and
loss.

Interest earned on instruments designated
at FVTPL is accrued in interest income,
using the EIR, taking into account any
discount/ premium and qualifying
transaction costs being an integral part
of instrument. Interest earned on assets
mandatorily required to be measured at
FVTPL is recorded using the contractual
interest rate.

This is a residual category applied to
all other investments of the Company
excluding investments in subsidiary
companies (Refer Note 40 for further
details). Such financial assets are
subsequently measured at fair value at
each reporting date. Fair value changes
are recognized in the Statement of Profit
and Loss.

De-recognition:

A financial asset or, where applicable, a
part of a financial asset or part of a group
of similar financial assets is derecognized
i.e. removed from the Company's Balance
Sheet when any of the following occurs:

i. The contractual rights to cash flows from
the financial asset expires; or

ii. The Company transfers its contractual
rights to receive cash flows of the financial
asset and has substantially transferred all
the risks and rewards of ownership of the
financial asset;

iii. The Company retains the contractual
rights to receive cash flows but assumes
a contractual obligation to pay the cash
flows without material delay to one or
more recipients under a 'pass-through'
arrangement (thereby substantially
transferring all the risks and rewards of
ownership of the financial asset);

iv. The Company neither transfers nor
retains substantially all risk and rewards
of ownership and does not retain control
over the financial asset.

When the Company has transferred
its rights to receive cash flows from an
asset or has entered into a pass-through
arrangement, it evaluates if and to what
extent it has retained the risks and
rewards of ownership. When it has neither
transferred nor retained substantially all of
the risks and rewards of the financial asset,
but retains control of the financial asset,
the Company continues to recognize
such financial asset to the extent of its
continuing involvement in the financial
asset. In that case, the Company also
recognizes an associated liability. The
financial asset and the associated liability
are measured on a basis that reflects the
rights and obligations that the Company

has retained.

On Derecognition of a financial asset
[except as mentioned in (ii) above for
financial assets measured at FVTOCI]
difference between the carrying amount
and the consideration received is
recognized in the Statement of Profit and
Loss.

Impairment of financial assets:

The Company assesses on a forward
looking basis the expected credit losses
associated with its assets which are
not fair valued through profit or loss.
The impairment methodology applied
depends on whether there has been a
significant increase in credit risk. Note
41A details how the Company determines
whether there has been a significant
increase in credit risk.

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.

Financial Liabilities

Initial recognition, measurement and
presentation

Financial liabilities are initially measured
at fair value. Transaction costs that are
directly attributable to the acquisition
or issue of financial liabilities (other than
financial liabilities at fair value through
profit or loss) are deducted from the
fair value of the financial liabilities, as
appropriate. For financial liabilities at
fair value through profit or loss, directly
attributable transaction costs are
immediately recognised in the Statement
of Profit and Loss.

Subsequent measurement:

All financial liabilities of the Company are
subsequently measured at amortized cost
using the effective interest method (Refer
Note 40 for further details).

Under the effective interest method,
the future cash payments are exactly
discounted to the initial recognition
value using the effective interest rate.
The cumulative amortization using the

effective interest method of the difference
between the initial recognition amount
and the maturity amount is added to the
initial recognition value (net of principal
repayments, if any) of the financial liability
over the relevant period of the financial
liability to arrive at the amortized cost at
each reporting date. The corresponding
effect of the amortization under effective
interest method is recognized as interest
expense over the relevant period of the
financial liability. The same is included
under finance cost in the Statement of
Profit and Loss.

Derecognition:

A financial liability is derecognized
when the obligation under the liability
is discharged or cancelled or expires.
When an existing financial liability is
replaced by another 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 between the carrying amount
of the financial liability derecognized and
the consideration paid is recognized in
the Statement of Profit and Loss.

i) Fair Value Measurement

The Company measures financial
instruments at fair value in accordance
with the accounting policies mentioned
above. 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.

All assets and liabilities for which fair value
is measured or disclosed in the financial
statements are categorized within the
fair value hierarchy that categorizes into
three levels, described as follows, the
inputs to valuation techniques used to
measure value. The fair value hierarchy
gives the highest priority to quoted prices
in active markets for identical assets or
liabilities (Level 1 inputs) and the lowest
priority to unobservable inputs (Level 3
inputs).

Level 1 — quoted (unadjusted) market
prices in active markets for identical assets
or liabilities

Level 2 — inputs other than quoted prices
included within Level 1 that are observable
for the asset or liability, either directly or
indirectly

Level 3 — inputs that are unobservable for
the asset or liability

For assets and liabilities that are recognized
in the financial statements at fair value on
a recurring basis, the Company determines
whether transfers have occurred between
levels in the hierarchy by re-assessing
categorization at the end of each reporting
period and discloses the same.

j) Investment in Subsidiary Companies and
joint ventures

A subsidiary is an entity that is controlled by
another entity. Investment in subsidiaries
are carried at cost or at deemed cost as
considered on the date of transition to Ind- AS
less provision for impairment loss, if any. The
details of such investments are given in Note 7.

A joint venture is a type of joint arrangement
whereby the parties that have joint control
of the arrangement have rights to the net
assets of the joint venture. Joint control is
the contractually agreed sharing of control
of an arrangement, which exists only when
decisions about the relevant activities require
unanimous consent of the parties sharing
control.

Impairment of investments

The Company reviews its carrying value
of investments carried at cost annually, or
more frequently when there is indication for
impairment. If the recoverable amount is less
than its carrying amount, the impairment loss
is recorded in the Statement of Profit and Loss.

When an impairment loss subsequently
reverses, the carrying amount of the

Investment is increased to the revised estimate
of its recoverable amount, so that the increased
carrying amount does not exceed the cost of
the Investment. A reversal of an impairment
loss is recognised immediately in Statement of
Profit or Loss.

k) Foreign Currency Transactions and
Balances

Initial Recognition:

On initial recognition, transactions in foreign
currencies entered into by the Company are
recorded in the functional currency (i.e. Indian
Rupees), by applying to the foreign currency
amount, the spot exchange rate between the
functional currency and the foreign currency
at the date of the transaction.

Measurement of foreign currency items at
reporting date:

Foreign currency transactions are translated
into the functional currency using the
exchange rates at the dates of the transactions.
The gains or losses resulting from such
translations are recognized in the Statement of
Profit and Loss and classified in the same line
item as the underlying transaction reported
as Foreign exchange difference on operating/
non-operating assets and liabilities, net. At
the year end, monetary assets and liabilities
denominated in foreign currencies are
restated at the year end exchange rates. Non¬
monetary assets and non-monetary liabilities
denominated in a foreign currency are
measured at historical cost are translated at
the exchange rate prevalent at the date of the
transaction. The related revenue and expense
are recognized using the same exchange rate.
The exchange differences (other than relating
to long-term foreign currency monetary items
recognised up to March 31, 2017) arising from
settlement of foreign currency transactions
and the year end restatement are recognised
in profit and loss.

Exchange differences arising on reporting of
long-term foreign currency monetary items
recognised up to March 31, 2017 (i) relating
to acquisition of depreciable capital assets is
adjusted to the carrying amount of such assets
(to be depreciated over the balance life of the
related asset).

l) Income Taxes

Tax expense is the aggregate amount included

in the determination of profit or loss for the
period in respect of current tax and deferred
tax.

Current Income tax:

Tax expense comprises current and deferred
tax. Current income-tax is measured at the
amount expected to be paid to or recovered
from the taxation authorities. The tax rates
and tax laws used to compute the amount
are those that are enacted or substantively
enacted, at the reporting date.

Current income tax relating to items recognised
outside profit or loss is recognised outside
profit or loss (either in other comprehensive
income or in equity). Current tax items are
recognised in correlation to the underlying
transaction either in OCI or directly in equity.
Management periodically evaluates positions
taken in the tax returns with respect to
situations in which applicable tax regulations
are subject to interpretation and establishes
provisions where appropriate.

Deferred tax:

Deferred income tax is provided, using
the Balance sheet method, on temporary
differences arising between the tax bases of
assets and liabilities and their carrying amounts
in the standalone financial statements.
Deferred income tax is not accounted for if it
arises from initial recognition of an asset or
liability in a transaction that at the time of the
transaction affects neither accounting profit/
loss nor taxable profit (tax loss). Deferred
income tax is determined using tax rates (and
laws) that have been enacted or substantially
enacted by the end of the reporting period.

Deferred tax assets are recognised for all
deductible temporary differences and unused
tax losses only if it is probable that future
taxable amounts will be available to utilise
those temporary differences and losses.

Current and deferred tax is recognised in
statement of profit and loss, except to the
extent that it relates to items recognised
in other comprehensive income or directly
in equity, if any. In this case, the tax is also
recognised in other comprehensive income or
directly in equity, respectively.

The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced
to the extent that it is no longer probable that

sufficient taxable profit will be available to
allow all or part of the deferred tax asset to
be utilised. Unrecognised deferred tax assets
are re-assessed at each reporting date and are
recognised to the extent that it has become
probable that future taxable profits will allow
the deferred tax asset to be recovered.

Minimum alternate tax (MAT) paid in a year is
charged to the statement of profit and loss as
current tax for the year. The deferred tax asset
is recognised for MAT credit available only to
the extent that it is probable that the Company
will pay normal income tax during the specified
period, i.e., the period for which MAT credit is
allowed to be carried forward. In the year in
which the Company recognizes MAT credit as
an asset, it is created by way of credit to the
statement of profit and loss and shown as part
of deferred tax assets. The Company reviews
the "MAT credit entitlement" asset at each
reporting date and writes down the asset to
the extent that it is no longer probable that it
will pay normal tax during the specified period.

In assessing the recoverability of deferred
tax assets, the Company relies on the same
forecast assumptions used elsewhere
in the financial statements and in other
management reports, which, among other
things, reflect the potential impact of climate-
related development on the business, such
as increased cost of production as a result of
measures to reduce carbon emission.

Presentation of current and deferred tax:

The Company offsets current tax assets and
current tax liabilities, where it has a legally
enforceable right to set off the recognized
amounts and where it intends either to settle
on a net basis, or to realize the asset and settle
the liability simultaneously. In case of deferred
tax assets and deferred tax liabilities, the
same are offset if the Company has a legally
enforceable right to set off corresponding
current tax assets against current tax liabilities
and the deferred tax assets and deferred tax
liabilities relate to income taxes levied by the
same tax authority on the Company.