2.1 MATERIAL ACCOUNTING POLICIES AND OTHER
EXPLANATORY NOTES

A. Property, Plant and Equipment:

i. Recognition and measurement

Freehold land is carried at cost and not depreciated. All
other items of property, plant and equipment are measured
at cost less accumulated depreciation and any accumulated
impairment losses. Cost includes expenditure that is directly
attributable to the acquisition of the items.

Income and expenses related to the incidental operations,
not necessary to bring the item to the location and condition
necessary for it to be capable of operating in the manner
intended by management, are recognized in the Statement
of Profit and Loss.

If significant parts of an item of property, plant and equipment
have different useful life, then they are accounted and
depreciated for as separate items (major components) of
property, plant and equipment.

An Item of Property, Plant and Equipment is derecognized
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any
gain or loss on disposal of an item of property, plant and
equipment is recognized in the Statement of Profit and Loss.

ii. Subsequent Expenditure

Subsequent expenditure is capitalized only if it is probable
that the future economic benefits associated with the
expenditure will flow to the Company.

iii. Depreciation

Depreciation is recognised so as to write off the cost of the
assets (other than freehold land) less their residual values
over their useful lives, using the Straight Line Method on the
basis of useful lives specified in part C of Schedule II to the
Companies Act, 2013 except plant and equipment ranging
from 10 - 20 years. The Estimated useful lives, residual
values and depreciation method are reviewed at the end of
each reporting period, with the effect of any changes in the
estimated accounted for on a prospective basis.

B. Investment Property:

Property that is held for long-term rental yields or for capital
appreciation or both, is classified as investment property.
Investment property is measured initially at its cost,
including related transaction costs and where applicable
borrowing costs. Subsequent expenditure is capitalised to
the asset's carrying amount only when it is probable that
future economic benefits associated with the expenditure
will flow to the Company and the cost of the item can be
measured reliably. All other repairs and maintenance costs
are expensed when incurred. When part of an investment

property is replaced, the carrying amount of the replaced
part is derecognised. Investment properties are depreciated
using the straight-line method over their estimated useful
lives. Though the Company measures investment property
using cost based measurement, the fair value of investment
property is disclosed in the notes.

C. Intangible Assets:

i. Recognition and measurement

Intangible Assets are stated at cost of acquisition less
accumulated amortization and accumulated impairment, if
any. Amortization is done over their estimated useful life on
straight line basis from the date that they are available for
intended use, subjected to impairment test.

ii. Amortization

Software, which is not an integral part of the related hardware
is classified as an intangible asset and is amortized over the
useful life of 3 years.

iii. De-recognition of Intangible Assets

Intangible asset is de-recognised on disposal or when no
future economic benefits are expected from its use or
disposal. Gains or losses arising from de-recognition of an
intangible asset, measured as the difference between the
net disposal proceeds and the carrying amount of the asset,
are recognised in the Statement of Profit and Loss when the
asset is de-recognized.

D. Impairment:

i. Non-financial assets

At each balance sheet date, the Company assesses whether
there is any indication that any property, plant and equipment
and intangible assets with finite life may be impaired. If
any such impairment exists, the recoverable amount of an
asset is estimated to determine the extent of impairment,
if any. Where it is not possible to estimate the recoverable
amount of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which
the asset belongs.

Recoverable amount is the higher of fair valueless costs of
disposal and value in use. If the recoverable amount of the
asset (or cash-generating unit) is estimated to be less than
its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount.
An impairment loss is recognised in statement of Profit
and Loss.

E. Leases:

A contract is, or contains, a lease if the contract conveys the
right to control the use of an identified asset for a period of
time in exchange for consideration.

Company as a lessee
(A) Lease Liability

At the commencement date, the Company measures the
lease liability at the present value of the lease payments
that are not paid at that date. The lease payments shall be
discounted using incremental borrowing rate.

(B) Right-of-use assets

Initially recognised at cost, which comprises the initial
amount of the lease liability adjusted for any lease payments
made at or prior to the commencement date of the lease
plus any initial direct costs less any lease incentives.

Subsequent measurement

(A) Lease Liability

Company measure the lease liability by (a) increasing the
carrying amount to reflect interest on the lease liability; (b)
reducing the carrying amount to reflect the lease payments
made; and (c) remeasuring the carrying amount to reflect
any reassessment or lease modifications.

(B) Right-of-use assets

Subsequently measured at cost less accumulated
depreciation and impairment losses. Right-of-use assets are
depreciated from the commencement date on a straight line
basis over the shorter of the lease term and useful life of the
under lying asset.

Impairment

Right of use assets are evaluated for recoverability whenever
events or changes in circumstances indicate that their
carrying amounts may not be recoverable. For the purpose
of impairment testing, the recoverable amount (i.e. the
higher of the fair value less cost to sell and the value-in-use)
is determined on an individual asset basis unless the asset
does not generate cash flows that are largely independent
of those from other assets. In such cases, the recoverable
amount is determined for the Cash Generating Unit (CGU)
to which the asset belongs.

Short term Lease

Short term lease is that, at the commencement date, has
a lease term of 12 months or less. A lease that contains a
purchase option is not a short-term lease. If the Company
elected to apply short term lease, the lessee shall recognise
the lease payments associated with those leases as an
expense on either a straight-line basis over the lease term
or another systematic basis. The lessee shall apply another
systematic basis if that basis is more representative of the
pattern of the lessee's benefit.

As a lessor

Leases for which the Company is a lessor is classified as a
finance or operating lease. Whenever the terms of the lease
transfer substantially all the risks and rewards of ownership
to the lessee, the contract is classified as a finance lease. All
other leases are classified as operating leases.

Lease income is recognised in the statement of profit and
loss on straight line basis over the lease term.

F. Inventories:

Inventories are measured at the lower of Cost and Net
Realizable Value. The cost of inventories is based on the first-
in first-out formula, and includes expenditure incurred in
acquiring the inventories, production or conversion costs and
other costs incurred in bringing them to their present location
and condition. In the case of manufactured inventories and

work-in-progress, costs include an appropriate share of fixed
production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the
ordinary course of business, less the estimated costs of
completion and selling expenses. The Net realisable value of
work-in-progress is determined with reference to the selling
prices of related finished products.

Raw materials, components and other supplies held for use
in the production of finished products are not written down
value below cost except in cases where material prices have
declined and it is estimated that the cost of the finished
products will exceed their net realisable value.

G. Investments and Other Financial Assets:

i. Classification

The Company classifies its financial assets in the following
measurement categories:

• Those to be measured subsequently at fair value (either
through other comprehensive income, or through
Statement of Profit and Loss), and

• Those measured at amortized cost.

The classification depends on the Company's business
model for managing the financial assets and the contractual
terms of the cash flows. For assets measured at fair value,
gains and losses will either be recorded in Statement of Profit
and Loss or other comprehensive income. For investments
in debt instruments, this will depend on the business model
in which the investment is held. For investments in equity
instruments, this will depend on whether the Company has
made an irrevocable election at the time of initial recognition
to account for the equity investment at fair value through
other comprehensive income.

The Company reclassifies debt or equity investments when
and only when its business model for managing those
assets changes.

ii. Measurement

At initial recognition, in case of a financial asset not at fair
value through profit and loss, the Company measures a
financial asset at its fair value plus, transaction costs that
are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at fair
value through Statement of Profit and Loss are expensed in
Statement of Profit and Loss.

(a) Amortized cost: Assets that are held for collection
of contractual cash flows where those cash flows
represent solely payments of principal and interest are
measured at amortized cost.

(b) Fair Value through Other Comprehensive Income
(FVOCI): Assets that are held for collection of
contractual cash flows and for selling the financial
assets, where the assets cash flows represent solely
payments of principal and interest, are measured at
FVOCI. Movements in the carrying amount are taken
through Other Comprehensive Income (OCI), except for
the recognition of impairment gains or losses, interest

revenue and foreign exchange gains and losses which
are recognized in Statement of Profit and Loss. When
the financial asset is derecognized, the cumulative gain
or loss previously recognized in OCI is reclassified from
equity to profit and loss and recognized in other gains/
losses. Interest income from these financial assets is
included in other income using the effective interest
rate method.

(c) Fair value through profit and loss: Assets that do
not meet the criteria for amortized cost or FVOCI are
measured at fair value through Statement of Profit and
Loss. Interest income from these financial assets is
included in other income.

Trade Receivables:

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 profit or loss, transaction costs that are attributable
to the acquisition of the financial asset. However, trade
receivables that do not contain a significant financing
component are measured at transaction price. Purchases
or sales of financial assets that require delivery of assets
within a time frame established by regulation or convention
in the marketplace (regular way trades) are recognised on
the trade date, i.e., the date that the Company commits to
purchase or sell the asset.

iii. Equity Instruments

The Company subsequently measures all equity investments
at fair value. Where the Company's management has elected
to present fair value gains and losses on equity investments
in OCI, there is no subsequent reclassification of fair value
gains and losses to Statement of Profit and Loss. Dividends
from such investments are recognized in Statement of Profit
and Loss as other income when the Company's right to
receive payment is established.

Changes in the fair value of financial assets at fair value
through profit and loss are recognized in other gain/losses
in the Statement of Profit and Loss. Impairment losses
(and reversal of impairment losses) on equity investments
measured at FVOCI are not reported separately from other
changes in fair value.

iv. Derecognition

A financial asset is derecognized only when

(a) The Company has transferred the rights to receive cash
flows from the financial asset or

(b) Retains the contractual rights to receive the cash
flows of the financial asset, but assumes a contractual
obligation to pay the cash flows to one or more
recipients.

H. Cash and Cash Equivalents:

Cash and cash equivalents in the balance sheet comprise
cash at banks and on hand and highly liquid investments
with an original maturity of three months or less, which are
subject to an insignificant risk of changes in value.

Cash flow statement

Cash flows are reported using the indirect method, whereby
profit for the period is adjusted for the effects of transactions
of a non-cash nature, any deferrals or accruals of past or
future operating cash receipts or payments and item of
income or expenses associated with investing or financing
cash flows. The cash flows from the operating, investing and
financing activities of the Company are segregated.

I. Financial Liabilities:

i. Measurement

All financial liabilities are recognized initially at fair value and
in the case of loans, borrowings and payables recognized net
of directly attributable transaction costs.

The Company's financial liabilities include trade and other
payables, loans and borrowings.

ii. Derecognition

A financial liability is derecognized when the obligation
under the liability is discharged or cancelled or expires. Gains
and losses are recognized in Statement of Profit and Loss
when the liabilities are derecognized as well as through the
Effective Interest rate (EIR) amortization process.

J. Foreign Currency Translation:

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

Foreign currency transactions are recorded on initial
recognition in the functional currency, using the exchange
rate at the date of the transaction. At each balance sheet
date, foreign currency monetary items are reported using
the closing exchange rate. Exchange differences that
arise on settlement of monetary items or on reporting
at each balance sheet date of the Company's monetary
items at the closing rate are recognized as income and
expenses in the Statement of Profit and Loss, in the
period in which they arise.

K. 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. The Company assesses promises
in the contract that are separate performance obligations to
which a portion of transaction price is allocated.

Revenue from the sale of goods is recognized at the point in
time when control of the asset is asset is transferred to the
customer, generally on the delivery of the goods.

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, and services rendered
is net of variable consideration on account of various
discounts, schemes, rebates offered by the Company as
part of the contract.

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
component and consideration payable to the customer like
return, allowances, trade discounts, liquidated damages and
volume rebates.

Sales are disclosed excluding net of sales returns, service
tax, value added tax and Goods and Service Tax (GST).

i. Export Incentives

Export incentives are recognized when the right to receive
them as per the terms of the entitlement is established in
respect of exports made.

The benefits accrued under the duty drawback scheme,
Merchandise Export from India Scheme (MEIS) and RoDTEP
as per the Import and export Policy in respect of exports
under the said scheme are recognised when there is a
reasonable assurance that the benefit will be received and
the Company will comply with all attached conditions.
The above benefits have been included under the head
'Export Incentives'.

ii. Other Income

i) Other income is comprised primarily of interest income,
gain/loss on investments and exchange gain/loss on foreign
currency transactions. Interest income is recognized using
the effective interest method.

L. Employee Benefits:

i. Short-term obligations

Liabilities for wages and salaries, including non-monetary
benefits that are expected to be settled wholly within 12
months after the end of the period in which the employees
render the related service are recognised in respect of
employee's services up to the end of the reporting period
and are measured at the amounts expected to be paid when
the liabilities are settled. The liabilities are presented as
current employee benefit obligations in the balance sheet.

ii. Provident Fund

Contribution towards provident fund for employees is made
to the regulatory authorities, where the Company has no
further obligations. Such benefits are classified as Defined
Contribution Schemes as the Company does not carry any
further obligations, apart from the contributions made on a
monthly basis.

iii. Gratuity

The Company provides for gratuity, a defined benefit
plan (the "Gratuity Plan") covering eligible employees
in accordance with the Payment of Gratuity Act, 1972.
The Gratuity Plan provides a lump sum payment to
vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the
respective employee's salary and the tenure of employment.
The gratuity plan in Company is funded through annual
contributions to Life Insurance Corporation of India (LIC)
under its Company's Gratuity Scheme. The liability or asset

recognised in the balance sheet in respect of defined benefit
gratuity plans is the present value of the defined benefit
obligation at the end of the reporting period less the fair
value of plan assets. The Company's liability is actuarially
determined (using the Projected Unit Credit method) at the
end of each year. The present value of the defined benefit
obligation is determined by discounting the estimated future
cash outflows using interest rates of government bonds.
Remeasurement gains and losses arising from experience
adjustments and changes in actuarial assumptions are
charged or credited to equity in other comprehensive
income in the period in which they arise. They are included
in retained earnings in the statement of changes in equity
and in the balance sheet.

iv. Compensated Absences

Entitlement of employees accumulating earned leave and
eligibility of compensation or encashment of the same is
also a defined benefit obligation and is treated as long term
in nature in terms of the policies of the Company for the
same. The value of obligation towards the same is provided
for on the basis of actuarial valuation using projected unit
credit method as at the balance sheet date. Actuarial gain/
losses are immediately taken to the Statement of Profit and
Loss and are not deferred.

M. Borrowing costs:

Borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset
are capitalised during the period of time that is required
to complete and prepare the asset for its intended use or
sale. Qualifying assets are assets that necessarily take a
substantial period of time to get ready for their intended use
or sale.

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

Other borrowing costs are expensed in the period in which
they are incurred.

N. Taxation:

The income tax expense or credit for the period is the tax
payable on the current period's taxable income based on
the applicable income tax rate adjusted by changes in
deferred tax assets and liabilities attributable to temporary
differences.

The current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the end
of the reporting period in India. Management periodically
evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate
on the basis of amounts expected to be paid to the tax
authorities.

Deferred income tax assets and liabilities are recognized
for all temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the
financial statements.

Deferred income tax assets are recognised to the extent
that it is probable that taxable profit will be available against
which the deductible temporary differences and the carry
forward unused tax losses can be utilised.

The carrying amount of deferred income 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 income tax
asset to be utilised.

Deferred tax assets and liabilities are measured using
substantively enacted tax rates expected to apply to taxable
income in the years in which the temporary differences are
expected to be received or settled.