3 Material accounting policy information

3.1 Business combinations

Acquisitions of businesses are accounted for
using the acquisition method. The consideration
transferred in a business combination is measured
at fair value, which is calculated as the sum of
the acquisition-date fair values of the assets
transferred by the Company, liabilities incurred
by the Company to the former owners of the
acquiree and the equity interests issued by the
Company in exchange of control of the acquiree.
Acquisition-related costs are generally recognised
in statement of profit and loss as incurred.

At the acquisition date, the identifiable assets
acquired and the liabilities assumed are
recognised at their fair value, except that:

- deferred tax assets or liabilities, and assets
or liabilities related to employee benefit
arrangements are recognised and measured in
accordance with Ind AS 12 Income Taxes and Ind
AS 19 Employee Benefits respectively;

- liabilities or equity instruments related to
share-based payment arrangements of the
acquiree or share-based payment arrangements
of the Company entered into to replace share-
based payment arrangements of the acquiree are
measured in accordance with Ind AS 102 Share-
based Payment at the acquisition date (see note
3.7.3); and

- assets (or disposal groups) that are classified as
held for sale in accordance with Ind AS 105 Non¬
current Assets Held for Sale and Discontinued
Operations are measured in accordance with that
Standard.

3.1.1 Business combination under common
control

The Company has followed the guidance given
under Appendix C of Ind AS 103 (Business
combination of entities under common control),
while preparing these standalone financial
statements.

Business combination involving common control
is accounted by using pooling of interest method.

The pooling of interest method is considered to
involve the following:

(i) The assets and liabilities of the combining
entities are reflected at their carrying
amounts.

(ii) No adjustments are made to reflect fair values,
or recognise any new assets or liabilities.
The only adjustments that are made are to
harmonise accounting policies.

(iii) The financial information in the financial
statements in respect of prior periods should
be restated as if the business combination
had occurred from the beginning of the
preceding period in the financial statements,
irrespective of the actual date of the
combination. In this financial statement, the
effect of transactions, when the entities are
under common control, prior to the appointed
date has been adjusted in the 'other equity'.

The identity of the reserves in the transferor
companies has been maintained in the transferee
Company.

The difference, if any, between the amount
recorded as share capital issued plus any
additional consideration in the form of cash or
other assets and the amount of share capital of the
transferor shall be transferred to capital reserve
and should be presented separately from other
capital reserves with disclosure of its nature and
purpose in the notes.

3.2 Revenue from contracts with customers

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

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

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the

performance obligations in the contract

Step 5: Recognise revenue when (or as) the entity

satisfies a performance obligation

3.2.1 Sale of goods

Revenue is recognised when a promise in a
customer contract (performance obligation) has
been satisfied by transferring control over the
promised goods to the customer. Control over a
promised good refers to the ability to direct the use
of, and obtain substantially all of the remaining
benefits from, those goods. Control is usually
transferred upon shipment, delivery to, upon
receipt of goods by the customer, in accordance
with the delivery and acceptance terms agreed
with the customers and revenue is recognised
at that point in time.. The amount of revenue to
be recognised (transaction price) is based on the
consideration expected to be received in exchange
for goods, excluding amounts collected on behalf
of third parties such as sales tax or other taxes
directly linked to sales. If a contract contains more
than one performance obligation, the transaction
price is allocated to each performance obligation
based on their relative stand-alone selling prices.
Revenue from product sales are recorded net of
allowances for estimated rebates, cash discounts

and estimates of product returns, all of which are
established at the time of sale.

The consideration received by the Company in
exchange for its goods may be fixed or variable.
Variable consideration is only recognised when
it is considered highly probable that a significant
revenue reversal will not occur once the underlying
uncertainty related to variable consideration is
subsequently resolved.

Revenue from sale of goods is recognised when
control of goods is transferred to customers. The
normal credit term is in the range of 15 to 90 days
upon delivery except for some customers who are
on advance payment term.

Profit share revenues

The Company from time to time enters into
marketing arrangements with certain business
partners for the sale of its products in certain
markets. Under such arrangements, the Company
sells its products to the business partners at a base
purchase price agreed upon in the arrangement
and is also entitled to a profit share which is over
and above the base purchase price. The profit
share is typically dependent on the business
partner’s ultimate net sale proceeds or net profits,
subject to any reductions or adjustments that are
required by the terms of the arrangement. Such
arrangements typically require the business
partner to provide confirmation of units sold
and net sales or net profit computations for the
products covered under the arrangement.

Revenue in an amount equal to the base purchase
price and is recognised at that point in time upon
delivery of products to the business partners. An
additional amount representing the profit share
component is recognised as revenue at that point
in time in which corresponds to the ultimate sales
of the products made by business partners only
when the collectability of the profit share becomes
probable and a reliable measurement of the
profit share is available. Otherwise, recognition
is deferred to a subsequent period pending
satisfaction of such collectability and measurability
requirements. In measuring the amount of profit
share revenue to be recognised for each period,
the Company uses all available information and
evidence, including any confirmations from the
business partner of the profit share amount owed
to the Company, to the extent made available
before the date the Company’s Board of Directors
authorises the issuance of its financial statements
for the applicable period.

Sale to distributors

The Company appoints distributors in various
territories who purchases the goods from the
Company and thereafter sells them in the
territory. In case the distributor is acting as an
agent, the Company defers revenue recognition till
the time goods are sold by the distributor to the
end customer. On the other hand, if the distributor
is principal, revenue is recognised at that point in
time when control is transferred to the distributor.

Right to reject or return goods

The Company also sells its products to the
customers with a right to return the goods within
the specified period of time. For contracts that
permit the customer to return an item, revenue
is recognised to the extent that it is highly
probable that a significant reversal in the amount
of cumulative revenue recognised will not occur.
Therefore, the amount of revenue recognised
is adjusted for expected returns, which are
estimated based on the historical data. In these
circumstances, a refund liability and a right to
recover returned goods asset are recognised. The
right to recover returned goods asset is measured
at the former carrying amount of the inventory
less any expected costs to recover goods. The
refund liability is included in other current
liabilities and the right to recover returned goods
is included in inventory. The Company reviews
its estimate of expected returns at each reporting
date and updates the amounts of the asset and
liability accordingly.

Price variations / Incentives

Incentives are accounted based on the assessment
of whether the beneficiary (of the incentive)
is acting as a principal or an agent. Where the
beneficiary is a principal, the incentive is regarded
as consideration paid to the customer and is
reduced from revenue.

However, where the beneficiary is an agent, the
incentive payment is recognised as an expense as
the same is in the nature of commission.

3.2.2 Sale of services

Revenue from services rendered, which primarily
relate to contract research, is recognised in the
statement of profit and loss as the underlying
services are performed. Upfront payments
received under these arrangements are deferred
and recognised as revenue over the expected
period over which the related services are
expected to be performed.

3.2.3 Royalty, sale of licenses and Intellectual
property rights

The Company enters into certain dossier sales,
royalties, licensing and supply arrangements
with various parties. Income from licensing
arrangements is generally recognised over the
term of the contract. Some of these arrangements
include certain performance obligations by the
Company. Revenue from such arrangements is
recognised point in time in the period in which
the Company completes all its performance
obligations.

3.2.4 Export and production linked incentives

Export incentives are accrued for based on
fulfilment of eligibility criteria for availing the
incentives and when there is no uncertainty in
receiving the same. These incentives include
estimated realisable values/benefits from special
import licenses and benefits under specified
schemes as applicable.

3.2.5 Rental income

The Company's policy for recognition of revenue
from operating leases is described in note 3.3.2
below.

3.2.6 Dividend and interest income

Dividend income from investments is recognised
when the shareholder's right to receive payment
has been established (provided that it is probable
that the economic benefits will flow to the
Company and the amount of income can be
measured reliably).

Interest income from a financial asset is
recognised when it is probable that the economic
benefits will flow to the Company and the amount
of income can be measured reliably. Interest
income is accrued on a time basis, by reference
to the principal outstanding and at the effective
interest rate applicable, which is the rate that
exactly discounts estimated future cash receipts
through the expected life of the financial asset
to that asset's net carrying amount on initial
recognition.

3.3 Leases

At inception of a contract, the Company assesses
whether a contract is, or contains, a lease. A contract
is, or contains, a lease if the contract conveys the
right to control the use of an identified asset for
a period of time in exchange for consideration.
To assess whether a contract conveys the right to
control the use of an identified asset, the Company
uses the definition of a lease in Ind AS 116.

3.3.1 The Company as lessee

At commencement or on modification of a contract
that contains a lease component, the Company
allocates the consideration in the contract to each
lease component on the basis of its relative stand¬
alone prices. However, for the leases of property
the Company has elected not to separate non-lease
components and account for the lease and non¬
lease components as a single lease component.

The Company recognises a right-of-use asset and
a lease liability at the lease commencement date.
The right-of-use asset is initially measured at cost,
which comprises the initial amount of the lease
liability adjusted for any lease payments made at
or before the commencement date, plus any initial
direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to
restore the underlying asset or the site on which
it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated
using the straight-line method from the
commencement date to the end of the lease
term, unless the lease transfers ownership of the
underlying asset to the Company by the end of
the lease term or the cost of the right-of-use asset
reflects that the Company will exercise a purchase
option. In that case the right-of-use asset will be
depreciated over the useful life of the underlying
asset, which is determined on the same basis as
those of property and equipment. In addition,
the right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.

The lease liability is initially measured at the
present value of the lease payments that are
not paid at the commencement date, discounted
using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the
Company’s incremental borrowing rate. Generally,
the Company uses its incremental borrowing rate
as the discount rate.

The Company determines its incremental
borrowing rate by obtaining interest rates from
various external financing sources and makes
certain adjustments to reflect the terms of the
lease and type of the asset leased.

Lease payments included in the measurement of
the lease liability comprise the following:

- fixed payments, including in-substance fixed
payments;

- variable lease payments that depend on an index
or a rate, initially measured using the index or rate
as at the commencement date;

- amounts expected to be payable under a residual
value guarantee; and

- the exercise price under a purchase option that
the Company is reasonably certain to exercise,
lease payments in an optional renewal period if
the Company is reasonably certain to exercise
an extension option, and penalties for early
termination of a lease unless the Company is
reasonably certain not to terminate early.

The lease liability is measured at amortised
cost using the effective interest method. It is
remeasured when there is a change in future
lease payments arising from a change in an index
or rate, if there is a change in the Company’s
estimate of the amount expected to be payable
under a residual value guarantee, if the Company
changes its assessment of whether it will exercise
a purchase, extension or termination option or
if there is a revised in-substance fixed lease
payment.

When the lease liability is remeasured in this
way, a corresponding adjustment is made to the
carrying amount of the right-of-use asset, or is
recorded in profit or loss if the carrying amount
of the right-of-use asset has been reduced to zero.

Short-term leases and leases of low-value assets

The Company has elected not to recognise right-
of-use assets and lease liabilities for leases of low-
value assets and short-term leases, including IT
equipment. The Company recognises the lease
payments associated with these leases as an
expense on a straight-line basis over the lease
term.

The Company’s significant leasing arrangements
are mainly in respect of factory land and buildings,
residential and office premises.

3.3.2 The Company as lessor

At inception or on modification of a contract
that contains a lease component, the Company
allocates the consideration in the contract to each
lease component on the basis of their relative
standalone prices.

When the Company acts as a lessor, it determines
at lease inception whether each lease is a finance
lease or an operating lease.

To classify each lease, the Company makes an
overall assessment of whether the lease transfers
substantially all of the risks and rewards incidental
to ownership of the underlying asset. If this is the
case, then the lease is a finance lease; if not, then
it is an operating lease. As part of this assessment,
the Company considers certain indicators such
as whether the lease is for the major part of the
economic life of the asset.

When the Company is an intermediate lessor, it
accounts for its interests in the head lease and
the sub-lease separately. It assesses the lease
classification of a sub-lease with reference to the
right-of-use asset arising from the head lease, not
with reference to the underlying asset. If a head
lease is a short-term lease to which the Company
applies the exemption described above, then it
classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease
components, then the Company applies Ind AS
115 to allocate the consideration in the contract.

The Company recognises lease payments received
under operating leases as income on a straight
line basis over the lease term.

The Company applied the derecognition and
impairment requirements in Ind AS 109 to the net
investment in the lease.

3.4 Foreign currencies transactions and translation

Transactions in foreign currencies are recorded
at the exchange rate prevailing on the date of
transaction. Monetary assets and liabilities
denominated in foreign currencies are translated
at the functional currency closing rates of
exchange at the reporting date.

Exchange differences arising on settlement or
translation of monetary items are recognised in
Statement of Profit and Loss except to the extent
of exchange differences which are regarded as an
adjustment to interest costs on foreign currency
borrowings that are directly attributable to the
acquisition or construction of qualifying assets,
are capitalized as cost of assets.

Non-monetary assets and liabilities that are
measured in terms of historical cost in foreign
currencies are not retranslated. Income and
expense items in foreign currency are translated at
the average exchange rates for the period, unless
exchange rates fluctuate significantly during that
period, in which case the exchange rates at the
dates of the transactions are used.

3.5 Borrowing costs

Borrowing costs include

(i) interest expense calculated using the effective
interest rate method,

(ii) interest on lease liabilities, and

(iii) exchange differences arising from foreign
currency borrowings to the extent that they
are regarded as an adjustment to interest
costs.

Borrowing costs directly attributable to the
acquisition, construction or production of
qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for
their intended use or sale, are added to the cost
of those assets, until such time as the assets are
substantially ready for their intended use or sale.

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

All other borrowing costs are recognised in
statement of profit and loss in the period in which
they are incurred.

3.6 Employee benefits

3.6.1 Short-term employee benefits

All employee benefits falling due wholly within
twelve months of rendering the services are
classified as short-term employee benefits, which
include benefits like salaries, wages, short¬
term compensated absences and performance
incentives and are recognised as expenses in the
period in which the employee renders the related
service.

A liability is recognised for the amount expected
to be paid under short-term cash bonus, if the
Company has a present legal or constructive
obligation to pay this amount as a result of
past service provided by the employee and the
obligation can be estimated reliably.

3.6.2 Post-employment benefits

Payments to defined contribution retirement
benefit plans are recognised as an expense when
employees have rendered service entitling them
to the contributions.

For defined benefit retirement plans, the cost
of providing benefits is determined using the
projected unit credit method, with actuarial
valuations being carried out at the end of each
annual reporting period. Remeasurement,
comprising actuarial gains and losses, the effect

of the changes to the asset ceiling (if applicable)
and the return on plan assets (excluding net
interest), is reflected immediately in the balance
sheet with a charge or credit recognised in other
comprehensive income in the period in which
they occur. Past service cost is recognised in
statement of profit and loss in the period of a plan
amendment. Net interest is calculated by applying
the discount rate at the beginning of the period to
the net defined benefit liability or asset.

The retirement benefit obligation recognised in
the balance sheet represents the actual deficit or
surplus in the Company’s defined benefit plans.
Any surplus resulting from this calculation is
limited to the present value of any economic
benefits available in the form of refunds from the
plans or reductions in future contributions to the
plans.

A liability for a termination benefit is recognised
at the earlier of when the entity can no longer
withdraw the offer of the termination benefit
and when the entity recognises any related
restructuring costs. If benefits are not expected
to be settled wholly within 12 months of the
reporting date, then they are discounted.

3.6.3 Compensated absences

The Company has a policy on compensated
absences which are both accumulating and
non-accumulating in nature. The expected
cost of accumulating compensated absences is
determined by actuarial valuation performed by
an independent actuary at each balance sheet
date using the projected unit credit method on
the additional amount expected to be paid/availed
as a result of the unused entitlement that has
accumulated at the balance sheet date. Expense
on non-accumulating compensated absences is
recognised in the period in which the absences
occur.

3.6.4 Defined contribution plan

A defined contribution plan is a post-employment
benefit plan where the Company’s legal or
constructive obligation is limited to the amount
that it contributes to a separate legal entity. The
Company makes specified monthly contributions
towards Government administered provident fund
scheme. Obligations for contributions to defined
contribution plan are expensed as an employee
benefits expense in the statement of profit and
loss in period in which the related service is
provided by the employee. Prepaid contributions
are recognised as an asset to the extent that a
cash refund or a reduction in future payments is
available.

3.7 Share-based payment arrangements

3.7.1 Share-based payment transactions of the
Company

Equity-settled share-based payments to
employees and others providing similar services
are measured at the fair value of the equity
instruments at the grant date.

The fair value determined at the grant date 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. At the end of
each reporting period, 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 employee benefits reserve.

3.7.2 Cash settled share-based payment
transactions of the Company

The fair value of the amount payable to employees
in respect of cash settled share based payments is
recognised as an expense with the corresponding
increase in liabilities, over the period during which
the employees becoming unconditionally entitled
to payment. The liability is remeasured at each
reporting date and at settlement date based on the
fair value of the underlying options. Any changes
in the liability are recognised in the statement of
profit or loss.

3.7.3 Share-based payment transactions of the
acquiree in a business combination

When the share-based payment awards held by
the employees of an acquiree (acquiree awards)
are replaced by the Company's share-based
payment awards (replacement awards), both the
acquiree awards and the replacement awards
are measured in accordance with Ind AS 102
("market-based measure") at the acquisition
date. The portion of the replacement awards
that is included in measuring the consideration
transferred in a business combination equals
the market-based measure of the acquiree
awards multiplied by the ratio of the portion of
the vesting period completed to the greater of
the total vesting period or the original vesting
period of the acquiree award. The excess of the
market-based measure of the replacement awards
over the market-based measure of the acquiree

awards included in measuring the consideration
transferred is recognised as remuneration cost for
post-combination service.

However, when the acquiree awards expire as a
consequence of a business combination and the
Company replaces those awards when it does
not have an obligation to do so, the replacement
awards are measured at their market-based
measure in accordance with Ind AS 102. All of
the market-based measure of the replacement
awards is recognised as remuneration cost for
post-combination service.

3.8 Income tax

Income tax expense represents the sum of
current tax and deferred tax. The Company has
determined that interest and penalties related to
income taxes, including uncertain tax treatments,
do not meet the definition of income taxes, and
therefore accounted for them under Ind AS 37
Provisions, Contingent Liabilities and Contingent
Assets.

3.8.1 Current tax

Current tax is calculated based on taxable
profit for the year. Taxable profit differs from
‘profit before tax’ as reported in the standalone
statement of profit and loss because of items of
income or expense that are taxable or deductible
in other years and items that are never taxable
or deductible. The Company’s current tax is
calculated using tax rates that have been enacted
or substantively enacted by the end of the
reporting period.

Current tax assets and liabilities are offset only
if there is a legally enforceable right to set off the
recognised amounts, and it is intended to realise
the asset and settle the liability on a net basis or
simultaneously.

3.8.2 Deferred tax

Deferred tax is recognised on temporary
differences between the carrying amounts of
assets and liabilities in the financial statements
and the corresponding tax bases used in the
computation of taxable profit. Deferred tax
liabilities are generally recognised for all taxable
temporary differences. Deferred tax assets are
generally recognised for all deductible temporary
differences to the extent that it is probable that
taxable profits will be available against which
those deductible temporary differences can be
utilised. Such deferred tax assets and liabilities
are not recognised if the temporary difference

arises from the initial recognition (other than in
a business combination) of assets and liabilities in
a transaction that affects neither the taxable profit
nor the accounting profit. In addition, deferred
tax liabilities are not recognised if the temporary
difference arises from the initial recognition of
goodwill.

The carrying amount of deferred tax assets is
reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.

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

The measurement of deferred tax liabilities and
assets reflects the tax consequences that would
follow from the manner in which the Company
expects, at the end of the reporting period, to
recover or settle the carrying amount of its assets
and liabilities.

Deferred tax assets include Minimum Alternate
Tax (MAT) paid in accordance with the tax laws
in India, which is likely to give future economic
benefits in the form of availability of set-off
against future tax liability. Accordingly, MAT is
recognised as deferred tax asset in the Balance
sheet when the asset can be measured reliably
and it is probable that the future economic benefit
associated with the asset will be realised.

Current and deferred tax are recognised in
statement of profit and loss, except when they
relate to items that are recognised in other
comprehensive income or directly in equity, in
which case, the current and deferred tax are also
recognised in other comprehensive income or
directly in equity respectively. Where current tax
or deferred tax arises from the initial accounting
for a business combination, the tax effect is
included in the accounting for the business
combination.

If the amount of taxable temporary differences
is insufficient to recognise a deferred tax asset
in full, then future taxable profits, adjusted for
reversals of existing temporary differences, are
considered.

3.9 Property, plant and equipment

Property, plant and equipment held for use in the
production or supply of goods or services, or for
administrative purposes, are stated in the balance
sheet at cost less accumulated depreciation and
accumulated impairment losses, if any.

Properties in the course of construction for
production, supply or administrative purposes are
carried at cost, less any recognised impairment
loss. Cost includes professional fees and, for
qualifying assets, borrowing costs capitalised in
accordance with the Company’s accounting policy.
Such properties are classified to the appropriate
categories of property, plant and equipment when
completed and ready for intended use. Subsequent
expenditure is capitalised only if it is probable
that the future economic benefits associated
with the expenditure will flow to the Company.
Depreciation of these assets, on the same basis
as other property assets, commences when the
assets are ready for their intended use.

During the transition from previous GAAP to Ind
AS, the carrying value of the previous GAAP as on
the date of transition is considered as the deemed
cost under Ind AS.

The non refundable payments made with respect
to Land taken on lease (where there is an option to
purchase the same at the end of the lease period)
is classified under Property, plant and Equipment
as "Lease hold Land".

Depreciation is recognised so as to write off
the cost of assets (other than freehold land and
properties under construction) less their residual
values over their useful lives, using the straight¬
line method. 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 estimate accounted for on a
prospective basis.

Depreciation on property, plant and equipment
has been provided on the straight-line method
as per the useful life prescribed in Schedule II to
the Companies Act, 2013 except in respect of the
following categories of assets, in whose case the
life of the assets has been assessed to be different
and are as under based on technical advice, taking
into account the nature of the asset, the estimated
usage of the asset, the operating conditions of the
asset, past history of replacement, anticipated
technological changes, manufacturers warranties
and maintenance support, etc.:

Plant and equipments : 3 to 20 years
Factory buildings : 5 to 30 years

Freehold land is not depreciated.

Asset held under finance leases are depreciated
as per Ind AS 116.

Individual assets costing less than ' 5,000 are
depreciated in full in the year of purchase.

An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from
the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item of
property, plant and equipment is determined as
the difference between the sales proceeds and the
carrying amount of the asset and is recognised in
statement of profit and loss.

Depreciation methods, useful lives and residual
values are reviewed at each financial year-end and
adjusted if appropriate.

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

Asset held for sale

The Company categorises Non-current assets
and liabilities as “held for sale”, when there is a
proposal/ intention to sell an asset or group of
assets in its present condition.

The assets held for sale are carried at cost or fair
value less costs related to disposal, which ever is
lower and are not subject to depreciation.

3.10 Investment property

Properties that is held for long-term rentals
or for capital appreciation or both, and that is
not occupied by the Company, 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 the investment property
is replaced, the carrying amount of the replaced
part is derecognised.

Investment property are depreciated using the
straight line method over their estimated useful
lives. Investment properties generally have a
useful life of 25-60 years. The useful life has
been determined based on technical evaluation
performed by the management's expert.

Investment properties are derecognised on
disposal or when the investment properties are
permanently withdrawn from use and no future
economic benefits are expected from its disposal.
The gains or losses from the disposal of investment
properties are determined as difference between
the carrying amount of the investment properties
and the net disposal proceeds and are recognised
in profit or loss in the period in which it is disposed.

Transfers to (or from) investment property are
made only when there is a change in use. Transfers
between investment property, owner-occupied
property do not change the carrying amount of
the property transferred and they do not change
the cost of that property for measurement or
disclosure purposes.

3.11 Intangible assets

3.11.1 Intangible assets acquired separately

Intangible assets with finite useful lives that
are acquired separately are carried at cost less
accumulated amortisation and accumulated
impairment losses. Amortisation is recognised on
a straight-line basis over their estimated useful
lives. The estimated useful life and amortisation
method are reviewed at the end of each reporting
period, with the effect of any changes in estimate
being accounted for on a prospective basis.
Intangible assets with indefinite useful lives that
are acquired separately are carried at cost less
accumulated impairment losses, if any. Intangible
assets with indefinite useful lives are not
amortized and tested for impairment annually.

3.11.2 Internally-generated intangible assets -
research and development expenditure

Expenditure on research activities is recognised
as an expense in the period in which it is incurred.

An internally-generated intangible asset arising
from development (or from the development phase
of an internal project) is recognised if, and only if,
all of the following have been demonstrated:

Ý the technical feasibility of completing the
intangible asset so that it will be available for
use or sale;

Ý the intention to complete the intangible asset
and use or sell it;

Ý the ability to use or sell the intangible asset;

Ý how the intangible asset will generate
probable future economic benefits;

Ý the availability of adequate technical,
financial and other resources to complete the
development and to use or sell the intangible
asset; and

Ý the ability to measure reliably the expenditure
attributable to the intangible asset during its
development.

The amount initially recognised for internally-
generated intangible assets is the sum of the
expenditure incurred from the date when the
intangible asset first meets the recognition criteria
listed above. Where no internally-generated
intangible asset can be recognised, development
expenditure is recognised in statement of profit
and loss in the period in which it is incurred.

Subsequent to initial recognition, internally-
generated intangible assets are reported at cost
less accumulated amortisation and accumulated
impairment losses, on the same basis as intangible
assets that are acquired separately.

3.11.3 Intangible assets acquired in a business
combination

Intangible assets acquired in a business
combination and recognised separately from
goodwill are initially recognised at their fair value
at the acquisition date (which is regarded as their
cost).

Subsequent to initial recognition, intangible
assets acquired in a business combination are
reported at cost less accumulated amortisation
and accumulated impairment losses, on the
same basis as intangible assets that are acquired
separately.

3.11.4 Derecognition of intangible assets

An intangible asset is derecognised on disposal,
or when no future economic benefits are expected
from use or disposal. Gains or losses arising from
derecognition of an intangible asset, measured as
the difference between the net disposal proceeds
and the carrying amount of the asset, are
recognised in statement of profit and loss when
the asset is derecognised.

3.11.5 Useful lives of intangible assets

Intangible assets are amortised over their
estimated useful life on straight line method as
follows:

Registration and Brands : 10 years to 25 years
Software Licenses : 5 years

3.12 Impairment of assets

3.12.1 Impairment of financial assets:

The Company assesses at each date of balance
sheet, whether a financial asset or a group of
financial assets is impaired. Ind AS 109 requires
expected credit losses to be measured through a
loss allowance. The Company recognises lifetime
expected losses for all contract assets and / or all
trade receivables that do not constitute a financing
transaction. For all other financial assets, expected
credit losses are measured at an amount equal
to the twelve-month expected credit losses or at
an amount equal to the life time expected credit
losses if the credit risk on the financial asset has
increased significantly, since initial recognition.

3.12.2 Impairment of investment in subsidiaries
and associates

The Company reviews its carrying value of
investments in subsidiaries and associates at
cost, annually, or more frequently when there is
an indication for impairment. If the recoverable
amount is less than its carrying amount, the
impairment loss is accounted for.

3.12.3 Impairment of non-financial assets

At the end of each reporting period, the Company
reviews the carrying amounts of its tangible and
intangible assets to determine whether there is
any indication that those assets have suffered an
impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in
order to determine the extent of the impairment
loss (if any). For impairment testing, assets are
grouped together into the smallest group of assets
that generates cash inflows from continuing use
that are largely independent of the cash inflows
of other assets or CGUs. When a reasonable and
consistent basis of allocation can be identified,
corporate assets are also allocated to individual
cash-generating units, or otherwise they are
allocated to the smallest group of cash-generating
units for which a reasonable and consistent
allocation basis can be identified.

Intangible assets with indefinite useful lives
and intangible assets not yet available for use
are tested for impairment at least annually, and
whenever there is an indication that the asset may
be impaired.

Recoverable amount is the higher of fair value less
costs of disposal and value in use. 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 for which the estimates
of future cash flows have not been adjusted.

If the recoverable amount of an 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 immediately in statement of profit
and loss.

When an impairment loss subsequently reverses,
the carrying amount of the asset (or a cash¬
generating unit) is increased to the revised
estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the
carrying amount that would have been determined
had no impairment loss been recognised for the
asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognised
immediately in statement of profit and loss.

During the transition from previous GAAP to Ind
AS, the carrying value of the previous GAAP as on
the date of transition is considered as the deemed
cost under Ind AS.

3.13 Inventories

Inventories are valued at the lower of cost and
the net realisable value after providing for
obsolescence and other losses, where considered
necessary. Cost includes all charges in bringing
the goods to the point of sale, including octroi
and other levies, transit insurance and receiving
charges. Cost is determined as follows:

Raw materials, packing materials and stores and
spares: weighted average basis.

Work-in progress: at material cost and an
appropriate share of production overheads.

Finished goods: material cost and an appropriate
share of production overheads and excise duty,
wherever applicable.

Stock-in trade: weighted average basis.

Net realisable 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.