3. Summary of material accounting policies

A. Property, plant and equipment

Property, plant and equipment are stated at their
cost of acquisition / installation / construction net
of accumulated depreciation, and accumulated
impairment losses, if any, except freehold non-mining
land which is carried at cost less accumulated
impairment losses.

Subsequent expenditures 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.

When significant parts of plant and equipment are
required to be replaced at intervals, the Company
depreciates them separately based on their specific
useful lives. Likewise, when a major inspection is
performed, its cost is recognised in the carrying
amount of the property, plant and equipment as a
replacement if the recognition criteria are satisfied.
All other repairs and maintenance are charged to
the statement of profit and loss during the reporting
period in which they are incurred.

The present value of the 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 provisions are met.

Spares which meet the definition of property,
plant and equipment are capitalised as on the date
of acquisition. The corresponding old spares are
derecognized on such date with consequent impact
in the statement of profit and loss.

Property, plant and equipment which are not ready
for their intended use as on the balance sheet
date are disclosed as "Capital work-in-progress".
Directly attributable expenditure related to and

incurred during implementation of Capital projects
to get the assets ready for intended use and for a
qualifying assets is included under "Capital work-in¬
Progress (including related project inventories)”.
The same is allocated to the respective items of
Property Plant and Equipment on completion of
construction (development of projects). Capital work
in progress is stated at cost, net of accumulated
impairment loss, if any. Such items are classified to the
appropriate category of property, plant and equipment
when completed and ready for their intended use.
Advances given towards acquisition / construction of
property, plant and equipment outstanding at each
balance sheet date are disclosed as Capital Advances
under "Other non-current assets".

Capital Expenses incurred by the company on
construction/development of certain assets which
are essential for production, supply of goods or for
the access to any existing Assets of the company
are recognised as Enabling Assets under Property,
Plant and Equipment.

Depreciation on property, plant, and equipment

The Company, based on technical assessment made
by technical expert and management estimate,
depreciates certain items of property, 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. Depreciation is calculated
using "Written down value method” for assets related
to Captive Power Plant and using "Straight line
method” for other assets.

The Company identifies and depreciates cost of
each component / part of the asset separately, if the
component / part has a cost, which is significant to
the total cost of the asset and has a useful life that is
materially different from that of the remaining asset.

Depreciation on an item of property, plant and
equipment sold, discarded, demolished or scrapped,
is provided upto the date on which the said asset is
sold, discarded, demolished or scrapped.

Capitalised spares are depreciated over their own
estimated useful life or the estimated useful life of
the parent asset whichever is lower.

The Company reviews the residual value, useful lives
and depreciation method on each reporting date and,
if expectations differ from previous estimates, the
change is accounted for as a change in accounting
estimate on a prospective basis. 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.

I n respect of an asset for which impairment loss,
if any, is recognised, depreciation is provided on
the revised carrying amount of the asset over its
remaining useful life.

Derecognition of property plant and equipment

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. 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 recognized
in the Statement of Profit and Loss when the asset
is derecognised.

5. Impairment of non-financial assets

The carrying amounts of non-financial assets are
reviewed at each balance sheet date if there is any
indication of impairment based on internal / external
factors. An impairment loss, if any, is recognised

in the statement of profit and loss wherever the
carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is the higher of
the asset's fair value less cost of disposal and value
in use. 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 of or Group of assets. The value in
use calculation is based on a DCF model. The cash
flows are derived from the budget for the next five
years and do not include restructuring activities that
the Company is not yet committed to or significant
future investments that will enhance the asset's
performance of the non-current assets been tested.
The recoverable amount is sensitive to the discount
rate used for the DCF model as well as the expected
future cash-inflows and the growth rate used for
extrapolation purposes. In determining fair value less
costs of disposal, recent market transactions are taken
into account. A previously recognised impairment
loss, if any, is reversed when there is an indication of
reversal, however, the carrying value after reversal is
not increased beyond the carrying value that would
have prevailed by charging usual depreciation /
amortisation if there was no impairment.

C. Inventories

I nventories are valued at the lower of cost and net
realizable value. Costs incurred in bringing each
product to its present location and condition are
accounted for as follows:

I. Raw materials, stores and spare parts, fuel and
packing material:

Cost includes purchase price, other costs incurred
in bringing the inventories to their present location
and condition and includes non-refundable taxes.
Materials and other items held for use in the
production of finished goods 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 is determined on a moving
weighted average basis.

The Company conducts regular reviews of stores and
spares inventory ageing to identify slow-moving and
non-moving items. Inventories with limited movement
and low anticipated future utility are appropriately
classified. The Company applies established

provisioning norms to write down the value of such
inventories, based on the ageing analysis.

II. Work-in-progress and finished goods:

Cost includes direct materials and labour and a
proportion of manufacturing overheads based on
normal operating capacity. Cost is determined on a
moving weighted average basis.

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

D. Fair value measurement

The Company measures its financial instruments at
fair value at each balance sheet date.

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

a) In the principal market for the asset or liability, or

b) 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.

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 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, based
on the lowest level input that is significant to the fair
value measurement as a whole.

External valuers are involved for valuation of
significant assets, such as unquoted financial assets
and financial liabilities and derivatives.

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.

All assets and liabilities for which fair value is
measured as disclosed in the financial statements
are categorised within the fair value hierarchy
described in Note 36.

E. Financial instruments

Financial assets and financial liabilities are initially
measured at fair value with the exception of trade
receivables that do not contain a significant financing
component or for which the Company has applied the
practical expedient, the Company initially measures
a financial asset at its fair value plus, in the case of
a financial asset not at fair value through profit or
loss, transaction costs. 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 the statement of profit and loss) are added
to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable
to the acquisition of financial assets or financial
liabilities at fair value through the statement of profit
and loss are recognised immediately in the statement
of profit and loss.

I. Financial assets

a. Initial recognition and measurement of
financial assets

The Company recognises a financial asset in
its balance sheet when it becomes party to
the contractual provisions of the instrument.
All financial assets are recognised initially at
fair value, plus in the case of financial assets
not recorded at fair value through profit or loss,
transaction costs that are attributable to the
acquisition of the financial asset. All regular
way purchases or sales of financial assets are
recognised and derecognised on a trade date
basis, i.e., the date that the Company commits to
purchase or sell the asset. Regular way purchases
or sales are purchases or sales of financial assets
that require delivery of assets within the time
frame established by regulation or convention in
the marketplace.

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.
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 (G)
Revenue from contracts with customers.

b. Subsequent measurement of financial assets

All recognised financial assets are subsequently
measured in their entirety at either amortised
cost or fair value, depending on the classification
of the financial assets.

Classification of Financial assets

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

Financial assets measured at amortised cost

Financial assets that meet the following
conditions are subsequently measured at
amortised cost using effective interest method
("EIR") (except for debt instruments that are
designated as at fair value through profit or loss
on initial recognition):

a) The asset is held within a business model
whose objective is to hold assets in order to
collect 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.

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.

Financial Assets at Fair Value through Other
Comprehensive Income (FVTOCI)

Financial assets that meet the criteria for initial
recognition at FVTOCI are remeasured at fair
value at the end of each reporting date through
other comprehensive income (OCI).

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

Financial assets that do not meet the
amortised cost criteria or FVTOCI criteria are
measured at FVTPL.

c. Derecognition of financial assets

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

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

b) The Company has transferred its contractual
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.

On derecognition of a financial asset in its
entirety, the difference between the asset's
carrying amount and the sum of the consideration
received and receivable and the cumulative
gain or loss that had been recognised in other
comprehensive income and accumulated in
equity is recognised in the statement of profit
and loss if such gain or loss would have otherwise
been recognised in the statement of profit and
loss on disposal of that financial asset.

d. Impairment of financial assets

The Company applies the expected credit
loss model for recognising impairment loss on
financial assets measured at amortised cost,
trade receivables and other contractual rights
to receive cash or other financial asset.

The Company measures the loss allowance for
a Trade Receivables and Contract Assets by
following 'simplified approach' at an amount equal
to the lifetime expected credit losses. In case of
other financial assets 12-month ECL is used to
provide for impairment loss and where credit risk
has increased significantly, lifetime ECL is used.

The Company considers a financial asset in
default when contractual payments are past due.
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.

II. Financial liabilities and equity instruments
a. Financial liabilities

i. Initial recognition and measurement

The Company recognises financial liability in
its balance sheet when it becomes party to
the contractual provisions of the instrument.
The Company's financial liabilities majorly
includes loans and borrowings, trade and
payables towards purchase of Property,
Plant and Equipment.

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.

Financial liabilities are classified, at initial
recognition, as financial liabilities at fair
value through profit or loss or at amortised
cost as appropriate.

ii. Subsequent measurement of financial
liabilities at amortised cost

Financial liabilities that are not held-for-
trading and are not designated as at FVTPL
are measured at amortised cost at the end of
subsequent reporting periods. The carrying
amounts of financial liabilities that are
subsequently measured at amortised cost
are determined based on the effective
interest rate method.

iii. Subsequent measurement of financial
liabilities at fair value through profit
or loss (FVTPL)

Financial liabilities at fair value through
profit or loss include financial liabilities

held for trading and financial liabilities
designated upon initial recognition as at fair
value through profit or loss.

Financial liabilities are classified as held
for trading if they are incurred for the
purpose of repurchasing in the near term.
This category also includes derivative
financial instruments entered into by the
Company that are not designated as hedging
instruments in hedge relationships as
defined by Ind AS 109. Separated embedded
derivatives are also classified as held for
trading unless they are designated as
effective hedging instruments.

Gains or losses on liabilities held for trading
are recognised in the statement of profit
and loss account.

Financial liabilities designated upon initial
recognition at fair value through profit or
loss are designated as such at the initial
date of recognition, and only if the criteria
in Ind AS 109 are satisfied.

Loans and borrowings

After initial recognition at fair value,
interest-bearing loans and borrowings are
subsequently measured at amortised cost
using the EIR method. Gains and losses are
recognised in the 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.

iv. Derecognition of financial liabilities

A financial liability is derecognised when the
obligation under the liability is discharged
or cancelled or expired. 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