2.1 SUMMARY OF MATERIAL ACCOUNTING POLICIES:a. CURRENT VERSUS NON-CURRENTCLASSIFICATION:

The Company presents assets and liabilities in

the Balance Sheet based on current/non-current

classification.

An asset is treated as current when it is:

• Expected to be realised or intended to be sold
or consumed in the normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realised within twelve months
after the reporting period; or

• 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.

A liability is current when:

• It is expected to be settled in the normal
operating cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months
after the reporting period; or

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

The terms of the liability that could, at the option of
the counterparty, result in its settlement by the issue
of equity instruments do not affect its classification.
The Company classifies all other liabilities as non¬
current.

Deferred tax assets and liabilities are classified as
non-current assets and liabilities respectively.

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

b. FOREIGN CURRENCIES:

The Company's financial statements are presented in
which is also the Company's functional currency.
The Company determines the functional currency
and items included in the financial statements are
measured using that functional currency.

Transactions and balances

Transactions in foreign currencies are initially
recorded in the Company's functional currency
at the exchange rates prevailing on the date the
transaction first qualifies for recognition.

Monetary assets and liabilities denominated in
foreign currencies are restated in the functional
currency at the exchange rates prevailing on the
reporting date of financial statements.

Exchange differences arising on settlement of such
transactions and on translation of monetary items
are recognised in the Statement of Profit and Loss.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rates on the dates of the initial
transactions.

In determining the spot exchange rate to use on
initial recognition of the related asset, expense or

income (or part of it) on the derecognition of a non¬
monetary asset or non-monetary liability relating to
advance consideration, the date of the transaction is
the date on which the Company initially recognises
the non-monetary asset or non-monetary liability
arising from the advance consideration. If there
are multiple payments or receipts in advance, the
Company determines the transaction date for each
payment or receipt of advance consideration.

c. 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 financial
instruments and unquoted financial assets
measured at fair value, and for non- recurring fair
value measurement.

External valuers are involved for valuation of
significant assets, such and unquoted financial assets.
Involvement of external valuers is decided upon
annually by the Management after discussion with
and approval by the Company's Audit Committee.
Selection criteria include market knowledge,
reputation, independence and whether professional
standards are maintained. The Management decides,
after discussions with the Company's external
valuers, which valuation techniques and inputs to
use for each case.

At each reporting date, the Management analyses
the movements in the values of assets and liabilities
which are required to be remeasured 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.

- Disclosures for valuation methods, significant
accounting judgements, estimates and
assumptions (refer note 34 and 35)

- Quantitative disclosures of fair value
measurement hierarchy (refer note 34.2)

- Financial instruments (including those carried
at amortised cost) (refer note 34.1)

d. PROPERTY, PLANT AND EQUIPMENT (PPE):

PPE and Capital work in progress (CWIP) are stated
at cost, net of accumulated depreciation and
accumulated impairment losses, if any. The cost
comprises purchase price and borrowing costs if
capitalisation criteria are met, the cost of replacing
part of the property, plant and equipment and
directly attributable cost of bringing the asset to its
working condition for the intended use. Each part of
an item of property, plant and equipment with a cost
that is significant in relation to the total cost of the
item is depreciated separately. This applies mainly to
components for machinery. When significant parts
of PPE are required to be replaced at intervals, the
Company recognises such parts as individual assets
with specific useful lives and depreciates them
accordingly. Likewise, when a major overhauling
is performed, its cost is recognised in the carrying
amount of the PPE as a replacement if the recognition
criteria are satisfied. Any trade discounts and rebates
are deducted in arriving at the purchase price.
Subsequent costs are included in Asset's carrying
amount or recognised as separate Assets, as
appropriate, only when it is probable that future
economic benefit associated with the item will
flow to the Company and the cost of item can be
measured reliably. All other expenses on existing
property, plant and equipment, including day-to¬
day repair and maintenance expenditure and cost of
parts replaced, are charged to the Statement of Profit
and Loss for the period during which such expenses
are incurred.

CWIP comprises of cost of PPE that are yet not
installed and not ready for their intended use at the
Balance Sheet date.

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 applicable.

The Company calculates depreciation on items of
property, plant and equipment on a straight-line
basis using the rates arrived at based on the useful
lives defined under Schedule II of the Companies
Act, 2013, except in respect of following fixed assets:

(i) Long Term Lease hold land is amortised over a
period of 99 years, being the lease term.

(ii) Furnace and X-ray machines are depreciated
at an annual rate of 20% to bring the
depreciation rates in line with the useful life
of assets as estimated by the Technical Team
of the Company (against the useful life as per
schedule II-15 years).

An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected from its use or
disposal. Any gain or loss arising on derecognition 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 when the asset is derecognised.

e. INTANGIBLE ASSETS:

I ntangible Assets acquired separately are measured
on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost, less
any accumulated amortisation and accumulated
impairment losses, if any.

Intangible assets in the form of software are
amortised on a straight-line basis over six years. The
amortisation period and the amortisation method
for an intangible asset with a finite useful life are
reviewed at least at the end of each reporting period.
Changes in the expected useful life or the expected
pattern of consumption of future economic benefits
embodied in the asset are considered to modify the
amortisation period or method, as appropriate, and
are treated as changes in accounting estimates. The
amortisation expense on intangible assets with finite
lives is recognised in the Statement of Profit and
Loss.

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 and Loss when the asset is
derecognised.

f. BORROWING COSTS:

Borrowing costs directly attributable to the
acquisition, construction or production of an asset
that necessarily takes a substantial period of time to
get ready for its intended use or sale are capitalised
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.

g. 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
group of assets. When 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.

I n 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 fair value
less costs of disposal, recent market transactions are
taken into account. 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 CGUs
to which the individual assets are allocated. These
budgets and forecast calculations generally cover a
period of five years. For longer periods, a long-term
growth rate is calculated and applied to project
future cash flows after the fifth year. To estimate cash
flow projections beyond periods covered by the most
recent budgets/forecasts, the Company extrapolates
cash flow projections in the budget using a steady
or declining growth rate for subsequent years, unless
an increasing rate can be justified. In any case, this
growth rate does not exceed the long-term average

growth rate for the products, industries, or country
or countries in which the entity operates, or for the
market in which the asset is used.

h. LEASES:

The determination of whether an arrangement is
(or contains) a lease is based on the substance of
the arrangement at the inception of the lease. The
arrangement is, or contains, a lease if fulfilment
of the arrangement is dependent on the use of a
specific asset or assets and the arrangement conveys
a right to use the asset or assets, even if that right is
not explicitly specified in an arrangement.

Company as a lessor:

Leases in which the Company does not transfer
substantially all the risk and rewards incidental to
ownership of an asset are classified as operating
leases. Rental income arising is accounted on a
straight-line basis over the lease term.

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:

If ownership of the leased 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. The right-of-use assets
are also subject to impairment. Refer to the
accounting policies in relating to Impairment
of non-financial assets.

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.
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 terminating the lease, if the
lease term reflects the Company exercising the
option to terminate. Variable lease payments
that do not depend on an index or a rate
are recognised as expenses (unless they are
incurred to produce inventories) in the period
in which the event or condition that triggers
the payment occurs.

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, offices
and windmills (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). It also applies the lease of
low-value assets recognition exemption to
leases of office equipment that are considered
to be low value amounting to ?2 Lakhs. Lease
payments on short-term leases and leases of

low-value assets are recognised as expense on
a straight-line basis over the lease term.

i. FINANCIAL INSTRUMENTS:

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

Financial assets

Initial recognition and measurement

All financial assets are recognised initially at fair
value plus, in the case of financial assets not
recorded at fair value through Statement of Profit
and Loss, transaction costs that are attributable to
the acquisition of the financial asset.

The classification of financial assets at initial
recognition depends on the financial asset's
contractual cash flow characteristics and the
Company's business model for managing them. With
the exception of trade receivables that do not contain
a significant financing component or for which the
Company has applied the practical expedient, are
measured at the transaction price determined under
Ind AS 115. Refer to the accounting policies in section
2.1(k) Revenue from contracts with customers.

Subsequent measurement

For purposes of subsequent measurement, financial
assets are classified in three categories:

- Financial assets instruments at amortised cost
(debt instruments)

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

- Financial assets at fair value through profit
or loss (FVTPL) (Derivatives and Equity
Instruments)

Financial assets at amortised cost (debt
instruments)

A 'financial assets' 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.

This category is the most relevant to the Company.
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 Statement of Profit
and Loss. The losses arising from impairment are
recognised in the Statement of Profit and Loss. This
category generally applies to trade, loans and other
receivables.

Financial Assets at FVTOCI

Financial assets that meet the following conditions
are measured initially as well as at the end of each
reporting date at fair value, recognised in other
comprehensive income (OCI).

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

b) The contractual terms of the asset that give rise
on specified dates to cash flows that represent
solely payment of principal and interest.

Financial Assets at FVTPL

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.

This category includes derivative instruments
and investments in equity instruments which the
Company had not irrevocably elected to classify at fair
value through OCI. Dividends on such investments
are recognised in the statement of profit and loss
when the right of payment has been established.
Financial Assets included within the FVTPL
category are measured at fair value with all changes
recognised in the statement of Profit and Loss.

Investment in subsidiaries

I nvestment in subsidiaries are measured at cost less
impairment as per Ind AS 27 - 'Separate Financial
Statements'.

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.

Equity investments

All equity investments in scope of Ind AS 109
are measured at fair value. For all other equity
instruments, the Company may make an irrevocable
election to present in other comprehensive income
subsequent changes in the fair value. The Company
makes such election on an instrument-by-instrument
basis. The classification is made on initial recognition
and is irrevocable.

If the Company decides to classify an equity
instrument as at FVTOCI, then all fair value changes on
the instrument, excluding dividends, are recognised
in the other comprehensive income (OCI). There is no
recycling of the amounts from OCI to Statement of
Profit and Loss, even on sale of investment. However,
the Company may transfer the cumulative gain or
loss within equity.

Equity instruments included within the FVTPL
category are measured at fair value with all changes
recognised in the Statement of Profit and Loss.

Derecognition

A financial asset (or, where applicable, a part of a
financial asset or part of similar financial assets)
is primarily derecognised (i.e. removed from the
Company's Balance Sheet) 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.

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 asset, nor transferred control of the asset, the
Company continues to recognise the transferred
asset to the extent of the Company's continuing
involvement. In that case, the Company also
recognises an associated liability. The transferred
asset and the associated liability are measured on a
basis that reflects the rights and obligations that the
Company has retained.

Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset
and the maximum amount of consideration that the
Company could be required to repay.

Impairment of financial assets

Further disclosures relating to impairment of
financial assets are also provided in the following
notes:

- Disclosures for significant assumptions - see
note 2.2

- Financial Assets at FVTPL - see note 2.1 (i)

- Trade receivables and contract assets - see
note 6 and 2.1(k)

The Company recognises an allowance for expected
credit losses (ECLs) for all debt instruments not held
at fair value through profit or loss. ECLs are based
on the difference between the contractual cash
flows due in accordance with the contract and all
the cash flows that the Company expects to receive,
discounted at an approximation of the original
effective interest rate. The expected cash flows will
include cash flows from the sale of collateral held or
other credit enhancements that are integral to the
contractual terms.

ECLs are recognised in two stages. For credit
exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs
are provided for credit losses that result from default
events that are possible within the next 12-months (a
12-month ECL). For those credit exposures for which
there has been a significant increase in credit risk
since initial recognition, a loss allowance is required
for credit losses expected over the remaining life of
the exposure, irrespective of the timing of the default
(a lifetime ECL).

For trade receivables and contract assets, the
Company follows 'simplified approach' for
recognition of impairment loss allowance on trade
receivables.

Under the simplified approach the Company does
not track changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime ECLs at
each reporting date, right from its initial recognition.
Lifetime ECL are the expected credit losses resulting
from all possible default over the expected life of a
financial instrument.

The Company considers a financial asset in default
when contractual payments are overdue. However,
in certain cases, the Company may also consider
a financial asset to be in default when internal or
external information indicates that the Company
is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit
enhancements held by the Company. A financial
asset is written off when there is no reasonable
expectation of recovering the contractual cash flows.
ECL impairment loss allowance (or reversal)
recognised during the period is recognised as
income/ expense in the Statement of Profit and
Loss. This amount is reflected under the head 'other
expenses' in the Statement of Profit and Loss.

The Balance Sheet presentation for various financial
instruments is described below:

Financial assets measured at amortised cost:

ECL is presented as an allowance, i.e., as an integral
part of the measurement of those assets in the
Balance Sheet. The allowance reduces the net
carrying amount. Until the asset meets write-off
criteria, the Company does not reduce impairment
allowance from the gross carrying amount.

Financial liabilities & Equity InstrumentsClassification as debt or equity

Financial liabilities and equity instruments issued
by the Company are classified according to the
substance of the contractual arrangements entered
into and the definitions of a financial liability and an
equity instrument.

Equity instruments

An equity instrument is any contract that evidences
a residual interest in the assets of the Company after
deducting all of its liabilities. Equity instruments are
recorded at the proceeds received, net of direct issue
costs.

Initial recognition and measurement

Financial liabilities are classified, at initial recognition,
as financial liabilities at fair value through Statement
of Profit and Loss, loans and borrowings, payables, or

as derivatives designated as hedging instruments in
an effective hedge, as appropriate.

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 cash
credit facilities from banks and derivative financial
instruments.

Subsequent measurement

For purposes of subsequent measurement, financial
liabilities are classified in two categories:

- Financial liabilities at fair value through profit
or loss

- Financial liabilities at amortised cost (loans and
borrowings)

Financial liabilities at fair value through Statement of
Profit and Loss.

Financial liabilities at fair value through Profit and
Loss include financial liabilities held for trading
and financial liabilities designated upon initial
recognition at fair value through Profit and 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.

Gains or losses on liabilities held for trading are
recognised in the Statement of Profit and Loss.
Financial liabilities designated upon initial
recognition at fair value through statement of Profit
and Loss are designated as such at the initial date
of recognition and only if the criteria in Ind AS 109
are satisfied. For liabilities designated as FVTPL, fair
value gains/ losses attributable to changes in own
credit risk are recognised in OCI. These gains/ loss
are not subsequently transferred to Profit and Loss.
However, the Company may transfer the cumulative
gain or loss within equity. All other changes in fair
value of such liability are recognised in the Statement
of Profit and Loss.

Loans and borrowings

After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised
cost using the effective interest rate (EIR) method.
Gains and losses are recognised in Statement of

Profit and 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. This category generally
applies to borrowings.

Financial guarantee contracts

Financial guarantee contracts issued by the
Company are those contracts that require a payment
to be made to reimburse the holder for a loss it
incurs because the specified debtor fails to make a
payment when due in accordance with the terms of
a debt instrument. Financial guarantee contracts are
recognised initially as a liability at fair value, adjusted
for transaction costs that are directly attributable
to the issuance of the guarantee. Subsequently, the
liability is measured at the higher of the amount
of loss allowance determined as per impairment
requirements of Ind AS 109 and the amount
recognised less cumulative amortisation.

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 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.

Reclassification of financial assets

The Company determines classification of financial
assets and liabilities on initial recognition. After
initial recognition, no reclassification is made for
financial assets which are equity instruments and
financial liabilities. For financial assets which are debt
instruments, a reclassification is made only if there is
a change in the business model for managing those
assets. Changes to the business model are expected
to be infrequent. The Company's senior management
determines change in the business model as a result
of external or internal changes which are significant
to the Company's operations. Such changes are
evident to external parties. A change in the business
model occurs when the Company either begins or

ceases to perform an activity that is significant to
its operations. If the Company reclassifies financial
assets, it applies the reclassification prospectively
from the reclassification date which is the first day
of the immediately next reporting period following
the change in business model. The Company does
not restate any previously recognised gains, losses
(including impairment gains or losses) or interest.

Offsetting of 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.

j. INVENTORIES:

I nventories are valued at the lower of cost and net
realisable value after providing for obsolescence
and other losses, wherever considered necessary.
However, 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. Cost of finished goods and work in
progress include cost of direct materials and labour
and a proportion of manufacturing overheads based
on the normal operating capacity but excluding
borrowing costs. Scrap is valued at net realisable
value. Cost is determined on a Weighted Average
method.

Cost includes direct materials and labour and a
proportion of manufacturing overheads based on
normal operating capacity, incurred in bringing them
in their respective present location and condition.
Net realisable value is the estimated selling price in
the ordinary course of business less estimated cost
of completion and the estimated costs necessary to
make the sale.

k. REVENUE:

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.

The Company has generally concluded that it is
the principal in its revenue arrangements, because
it typically controls the goods or services before
transferring them to the customer.

The specific recognition criteria described below

must also be met before revenue is recognised.

i) Sale of Goods

Revenue from sale of goods is recognised at
the point in time when control of the asset
is transferred to the customer, generally on
delivery of the goods. The normal credit term is
0 to 180 days upon delivery, usually backed by
financial arrangements in some cases.

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 for the sale
of goods, the Company considers the effects
of variable consideration, the existence of
significant financing components, noncash
consideration, and consideration payable to
the customer (if any). Revenue from the sale of
goods is measured at the amount of transaction
price (net of variable consideration) allocated to
the consideration received or receivable, net of
GST, trade discounts & other taxes, adjustments
for late delivery charges and material returned/
rejected.

Variable Consideration

If the consideration in a contract includes a
variable amount, the Company estimates the
amount of consideration to which it will be
entitled in exchange for transferring the goods
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 recognised will not
occur when the associated uncertainty with
the variable consideration is subsequently
resolved. Some contracts for the sale of goods
provide customers with a right of liquidated
damages. The liquidated damages give rise to
variable consideration.

The Company applies the practical expedient
for short-term advances received from
customers. That is, the promised amount of
consideration is not adjusted for the effects of
a significant financing component if the period
between the transfer of the promised good or
service and the payment is one year or less.

ii) The Company accounts for pro forma credits,
refunds of duty of customs or refunds of GST
incentive receivables in the year of admission
of such claims by the concerned authorities.
Benefits in respect of Export Licenses are
recognised on application. Export benefits are
accounted for as other operating income in the
year of export based on eligibility and when
there is no uncertainty on receiving the same.

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

iv) Interest Income is recognised on time
proportion basis taking into account the
amounts outstanding and the rates applicable.
Interest income is included under the head
"other income" in the Statement of Profit and
Loss.

v) Revenue from windmills is recognised on unit
generation basis, in accordance with the terms
of power purchase agreements.

Contract balancesContract assets

A contract asset is the right to consideration in
exchange for goods or services transferred to the
customer. If the Company performs by transferring
goods or services 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 (i) Financial
instruments - initial recognition and subsequent
measurement.

Contract liabilities (Advance from customers)

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 (advance from customers) are
recognised as revenue when the Company performs
under the contract.

l. RETIREMENT AND OTHER EMPLOYEE BENEFITS:
i) Employee benefits

Employee benefits include Provident Fund,
Employee State Insurance scheme, Gratuity,
Compensated absences and Share based
payments.

Retirement benefits in the form of provident
fund and superannuation fund are defined
contribution plans. The Company has no
obligation, other than the contributions
payable to provident fund and superannuation
fund. The Company recognises contribution
payable to these funds as an expense, when an
employee renders the related service.

In respect of gratuity liability, the Company
operates defined benefit plan wherein
contributions are made to a separately
administered fund. The costs of providing
benefits under this plan are determined on the
basis of actuarial valuation at each reporting
date being carried out using the projected unit
credit method.

Re-measurements, comprising of actuarial
gains and losses, the effect of the asset ceiling,
excluding amounts included in net interest on
the net defined benefit liability and the return
on plan assets (excluding amounts included in
net interest on the net defined benefit liability),
are recognised immediately in the Balance
Sheet with a corresponding debit or credit to
retained earnings through OCI in the period in
which they occur. Re-measurements are not
reclassified to Statement of Profit and Loss in
subsequent periods.

Net interest is calculated by applying the
discount rate to the net defined benefit liability
or asset. The Company recognises the following
changes in the net defined benefit obligation
as an expense in the Statement of Profit and
Loss:

- Service costs comprising current service
costs; and

- Net interest expense or income

The liability in respect of unused leave
entitlement of the employees as at the
reporting date is determined on the basis of

an independent actuarial valuation carried out
and the liability is recognised in the Statement
of Profit and Loss. The Company presents the
entire leave as a current liability in the Balance
Sheet, since it does not have an unconditional
right to defer its settlement for 12 months after
the reporting date. Actuarial gain and loss is
recognise in full in the period in which they
occur in the Statement of Profit and Loss.

ii) Share based payments

The Company operates a equity settled,
employee share based compensation plans,
under which the Company receives services
from employees as consideration for equity
shares of the Company. The Company has
granted stock options to its employees and
employees of its subsidiary.

Equity settled share based payments to
employees are measured at the fair value at the
date of grant using an appropriate valuation
model. Details regarding the determination
of the fair value of equity settled share-based
transactions are set out in note 26. The fair value,
determined at the date of grant of the equity
settled share-based payments, is expensed
on a straight line basis over the vesting
period, based on the Company's estimate of
equity instruments that will eventually vest,
with a corresponding increase in equity. The
increase in equity recognised in connection
with share-based payment transaction is
presented as a separate component in equity
under "share-based payment reserve". The
cumulative expense recognised for equity-
settled transactions at each reporting date
until the vesting date reflects the extent to
which the vesting year has expired and the
Company's best estimate of the number of
equity instruments that will ultimately vest. At
the end of each reporting year, the Company
revises its estimate of the number of equity
instruments expected to vest. The impact of
the revision of the original estimates, if any,
is recognised in statement of profit and loss
such that the cumulative expense reflects
the revised estimate, with a corresponding
adjustment to the equity settled share based
payment reserve.

The dilutive effect of outstanding options is
reflected as additional share dilution in the
computation of diluted earnings per share.

The expense relating to options granted to the
employees of subsidiary is not cross charged
to the subsidiary. Therefore, the fair value
of the employees' services received by this
subsidiary (determined by reference to the
fair value of the options as at the Grant Date)
is recognised as an 'investment in subsidiaries'
with a corresponding increase in other equity.

m. TAXES:

Tax expense comprises of current income tax and
deferred tax.

Current income tax:

Current income tax assets and liabilities are measured
at the amount expected to be recovered from or
paid to 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 the Statement of Profit and Loss is
recognised outside the Statement of Profit and 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 tax is provided using the liability method
on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable
temporary differences, except:

> When the deferred tax liability arises from the
initial recognition of goodwill or an asset or
liability in a transaction that is not a business
combination and, at the time of the transaction,
affects neither the accounting profit nor taxable
Profit and Loss.

> In respect of taxable temporary differences
associated with investments in subsidiaries,
when the timing of the reversal of the
temporary differences can be controlled and it
is probable that the temporary differences will
not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible
temporary differences. Deferred tax assets are
recognised to the extent that it is probable that
taxable profit will be available against the deductible
temporary differences, except:

> When the deferred tax asset arises from the
initial recognition of goodwill or an asset or
liability in a transaction that is not a business
combination and, at the time of the transaction,
affects neither the accounting profit nor taxable
profit or loss.

> I n respect of deductible temporary differences
associated with investments in subsidiaries,
deferred tax assets are recognised only to the
extent that it is probable that the temporary
differences will reverse in the foreseeable
future and taxable profit will be available
against which the temporary differences can
be utilised.

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.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.

Deferred tax relating to items recognised outside the
Statement of Profit and Loss is recognised outside
the Statement of Profit and Loss (either in other
comprehensive income or in equity). Deferred tax
items are recognised in correlation to the underlying
transaction either in OCI or directly in equity.