C. MATERIAL ACCOUNTING POLICIES

1. Property, plant and equipment (PPE)

Property, plant and equipment are stated at cost, net
of recoverable taxes, trade discount and rebates less
accumulated depreciation and impairment losses, if any. For
this purpose, cost includes deemed cost which represent the
carrying value of property, plant and equipment recognised
at 1st April 2016 measured as per the previous GAAP. Such
cost includes purchase price, borrowing cost and any cost
directly attributable to bringing the assets to its working
condition for its intended use.

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

Assets are classified to the appropriate categories of
property, plant and equipment when completed and ready
for intended use.

Expenses incurred relating to project, including borrowing
cost net of income earned during the project development
stage prior to its intended use, are considered as pre -
operative expenses and recognised as cost and included in
carrying amount under Capital Work - in - Progress.

Spare parts are capitalized when they meet the definition
of PPE, i.e., when the Company intends to use these during
more than a period of 12 months.

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 assets. Any gain
or loss on disposal/derecognition of an item of property,
plant and equipment is recognised in profit or loss.

2. Investment property

Investment properties are land and buildings that is held for
long-term rental yields or for capital appreciation or both,
and that is not occupied by the Company, is classified as
investment property. Investment Property are stated at cost,
net of recoverable taxes, trade discount and rebates less
accumulated depreciation and impairment losses, if any. For
this purpose, cost includes deemed cost which represent the
carrying value of property, plant and equipment recognised

at 1st April 2016 measured as per the previous GAAP. Such
cost includes purchase price, borrowing cost and any cost
directly attributable to bringing the assets to its working
condition for its intended us.

Depreciation on Investment Property is provided over the
estimated useful lives as specified in note 1(B)(8) below.
The residual values, estimated useful lives and depreciation
method of investment properties are reviewed, and adjusted
on prospective basis as appropriate, at each reporting date.
The effects of any revision are included in the Standalone
Statement of Profit and Loss when the changes arise.

Investment Property or any significant part initially
recognised of such property is derecognised upon disposal
or when no future economic benefits are expected from its
use or do not meet the criteria of investment property i.e.
when the investment property is permanently withdrawn
from use. 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 income statement when the asset is derecognised.

3. Depreciation

Depreciable amount for assets is the cost of an asset,
or other amount substituted for cost, less its estimated
residual value. Depreciation has been provided on such cost
of assets less their residual values on straight line method
on the basis of estimated useful life of assets as prescribed
in Schedule II of the Act.

Estimated useful lives of the property, plant and equipment
as estimated by the management is the same as prescribed
in Schedule II and the same are as follows:

Assets held under financial leases are depreciated over their
expected useful lives on the same basis as owned assets or,
wherever shorter, the term of relevant lease.

Depreciation on additions (disposals) is provided on a pro
rata basis that is from (up to) the date on which asset is
ready for use (disposed of) except that, assets costing upto
Rs. 5,000 each are fully depreciated in the year of purchase.

The estimated useful lives and methods of depreciation of
property, plant and equipment are reviewed annually at
each financial year end taking into account commercial and
technological obsolescence as well as normal wear & tear
and adjusted prospectively, if appropriate.

4. Intangible Assets

Intangible Assets are stated at cost of acquisition net
of recoverable taxes, trade discount and rebates less
accumulated amortisation/depletion and impairment loss,
if any. Such cost includes purchase price, borrowing costs,
and any cost directly attributable to bringing the asset to its
working condition for the intended use.

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

Following initial recognition, intangible assets are carried at
cost less any accumulated amortisation and accumulated
impairment losses, if any.

An item of intangible asset is derecognised upon disposal
or when no future economic benefits are expected to arise
from the continued use of asset.

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.

The Company has elected to continue with the carrying
value of all of its intangible assets recognised as on April
1, 2016 measured as per the previous GAAP and use that
carrying value as its deemed cost as of transition date.

Internally generated intangible assets, excluding capitalized
development costs, are not capitalized and expenditure is
reflected in the statement of profit and loss for the year in
which the expenditure is incurred.

Amortization is calculated to write off the cost of intangible
assets less their estimated residual values over the estimated
useful lives using the Straight-Line Method (SLM) and is
included in Depreciation and Amortization expense in the
Statement of Profit and Loss unless such expenditure forms
part of carrying value of another asset. The estimated useful
lives of computer software are considered not exceeding
five years.

The amortisation period and the amortisation method for
an intangible asset are reviewed at least at the end of each
reporting period and adjusted prospectively, if appropriate.

Intangible assets not ready for the intended use on the date
of the Balance Sheet are disclosed as "Intangible Assets
under Development".

5. I impairment of tangible and intangible assets other
than goodwill

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.

I mpairment loss is recognized when the carrying amount
of an asset exceeds recoverable amount. Impairment losses
are recognised in the Statement of Profit and Loss.

For assets excluding goodwill, an assessment is made at
each reporting date to determine whether there is an
indication that previously recognized impairment losses no
longer exist or have decreased.

If such indication exists, the Company estimates the asset's
or CGU's recoverable amount. A previously recognised
impairment loss is reversed. The reversal is limited so
that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that
would have been determined, net of depreciation, had
no impairment loss been recognised for the asset in prior
years.

6. Leases

Company as a Lessee

The Company assesses whether a contract contains a lease,
at inception of a contract. A contract is, or contains, a lease
if the contract conveys the right to control the use of an
identified asset for a define period of time in exchange
for consideration. To assess whether a contract conveys
the right to control the use of an identified assets, the
Company assesses whether: (i) the contact involves the use
of an identified asset (ii) the Company has substantially all
of the economic benefits from use of the asset through the
period of the lease and (iii) the Company has the right to
direct the use of the asset.

As a lessee, 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
earlier of the end of the useful life of the right of use asset
or the end of the lease term. The estimated useful lives of
right of use assets are 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. For leases with reasonably
similar characteristics, the Company, on a lease-by-lease
basis, may adopt either the incremental borrowing rate
specific to the lease or the incremental borrowing rate for
the portfolio as a whole.

Lease payments included in the measurement of the lease
liability comprise the fixed payments, including in-substance
fixed payments and lease payments in an optional renewal
period if the Company is reasonably certain to exercise an
extension option;

The lease liability is measured at amortised cost using the
effective interest method.

The Company has elected not to recognise right of use
assets and lease liabilities for short-term leases that have
a lease term of 12 months or less and leases of low-value
assets. The Company recognises the lease payments
associated with these leases as an expense on a straight¬
line basis over the lease term. The Company applied a
single discount rate to a portfolio of leases of similar assets
in similar economic environment with a similar end date.

Company as a Lessor

Leases in which the Company does not transfer substantially
all the risks and rewards of ownership of an asset are
classified as operating leases. Where the Company is a

lessor under an operating lease, the asset is capitalised
within property, plant and equipment and depreciated over
its useful economic life. Payments received under operating
leases are recognised in the Statement of Profit and Loss
on a straight-line basis over the term of the lease. Leases
are classified as finance leases when substantially all of the
risks and rewards of ownership transfer from the Company
to the lessee. Amounts due from lessees under finance
leases are recorded as receivables at the Company's net
investment in the leases. Finance lease income is allocated
to accounting periods so as to reflect a constant periodic
rate of return on the net investment outstanding in respect
of the lease.

7. Inventories

Inventories are valued at cost or net realisable value,
whichever is lower. The basis of determining the cost for
various categories of inventory are as follows:

(a) Raw materials, Chemicals, Components, stores &
spares and Stock in Trade - Cost includes cost of
purchase (Net of recoverable taxes) and other costs
incurred in bringing the inventories to their present
location and condition. Cost is determined on FIFO
basis.

( b) Stock in process and finished goods- Direct cost plus
appropriate share of overheads.

(c) Saleable Scrap/Waste/By products - At estimated
realisable value.

(d) Inter unit goods transfer - transfer price

(e) Import Entitlement / Licences - At estimated realisable/
Utilisation value

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

The net realisable value of work-in-progress is determined
with reference to the selling prices of related finished
products.

Normal Excess/ shortages, if any, arising on physical
verification are absorbed in the respective consumption
accounts.

8. Foreign Currency Transaction and translation

The Company's financial statements are presented in Indian
Rupee (INR/Rupees), which is also the Company's functional

currency. Transactions in foreign currencies are recorded on
initial recognition at the exchange rate prevailing on the
date of the transaction.

In case of advance receipts/payments in a foreign currency,
the spot exchange rate to use on initial recognition of the
related asset, expense or income on the derecognition of
a non-monetary asset or non-monetary liability relating to
advance consideration, shall be the date when an entity
has received or paid advance consideration in a foreign
currency.

Foreign Currency monetary items of the Company,
outstanding at the Balance Sheet date are restated at the
year-end rates. Non-monetary items which are carried
at historical cost denominated in a foreign currency
are reported using the exchange rate at the date of the
transaction. Non-monetary items measured at fair value in
a foreign currency are translated using the exchange rates
at the date when the fair value is determined.

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
recognised as income or expenses in the period in which
they arise.

Investment in overseas Wholly Owned Subsidiaries are
carried in Balance Sheet at the rates prevailing on the dates
of transaction.

9. Investment in Subsidiaries and Associates

Investment in subsidiaries and associates are carried at cost
less accumulated impairment, if any.

10. Fair Value measurement

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 which can be accessed by the
Company for the asset or liability.

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.

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.

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.

11. 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 profit or loss, transaction costs that are attributable
to the acquisition of the financial asset. Purchases or sales
of financial assets that require delivery of assets within a
time frame established by regulation or convention in the
market place (regular way trades) are recognised on the
trade date, i.e., the date that the Company commits to
purchase or sell the asset.

Subsequent measurement

Subsequent measurement is determined with reference
to the classification of the respective financial assets.
Based on the business model for managing the financial
assets and the contractual cash flow characteristics of
the financial asset, the Company classifies financial assets
as subsequently measured at amortised cost, fair value

through other comprehensive income or fair value through
profit and loss.

Debt instruments at amortised cost

Debt instruments such as trade and other receivables,
security deposits and loans given are measured at the
amortised cost if both the following conditions are met:

• The asset is held within a business model whose
objective is to hold assets for collecting contractual
cash flows, and

• 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.

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 profit or loss. The losses arising from impairment are
recognised in the profit or loss.

Debt instruments at Fair value through Other
Comprehensive Income (FVOCI)

A 'debt instrument' is classified as at the FVTOCI if both of
the following criteria are met:

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

• The asset's contractual cash flows represent SPPI.

Debt instruments included within the FVTOCI category are
measured initially as well as at each reporting date at fair
value. Fair value movements are recognized in the other
comprehensive income (OCI).

Debt instruments at Fair value through Profit or Loss
(FVTPL)

FVTPL is a residual category for debt instruments excluding
investments in subsidiary and associate companies. Any
debt instrument, which does not meet the criteria for
categorization as at amortized cost or as FVTOCI, is
classified as at FVTPL.

After initial measurement, any fair value changes including
any interest income, foreign exchange gain and losses,
impairment losses and other net gains and losses are
recognised in the Statement of Profit and Loss.

Equity investments

All equity investments in scope of Ind-AS 109 are measured
at fair value. Equity instruments which are held for trading
are classified as at FVTPL. For all other equity instruments,
the company decides to classify the same either as at
FVTOCI or FVTPL. The company makes such election on an
instrument-by-instrument basis. The classification is made
on initial recognition and is irrevocable.

Equity instruments included within the FVTPL category are
measured at fair value with all changes recognized in the
Profit or loss.

De-recognition

A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
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:

• The Company has transferred substantially all the risks
and rewards of the asset, or

• The Company has neither transferred nor retained
substantially all the risks and rewards of the asset, but
has transferred control of the asset.

On de-recognition, any gains or losses on all debt
instruments (other than debt instruments measured at
FVOCI) and equity instruments (measured at FVTPL) are
recognised in the Statement of Profit and Loss. Gains
and losses in respect of debt instruments measured at
FVOCI and that are accumulated in OCI are reclassified to
profit or loss on de-recognition. Gains or losses on equity
instruments measured at FVOCI that are recognised and
accumulated in OCI are not reclassified to profit or loss on
de-recognition.

12. Impairment of financial assets

The Company applies expected credit loss (ECL) model for
measurement and recognition of impairment loss on the
following financial assets and credit risk exposure:

a) Financial assets that are debt instruments, and are
measured at amortised cost e.g., loans, debt securities,
deposits, trade receivables and bank balance.

b) Financial assets measured at fair value through other
comprehensive income.

I n case of other assets (listed as a) above), the company
determines if there has been a significant increase in credit
risk of the financial asset since initial recognition. If the
credit risk of such assets has not increased significantly,
an amount equal to 12-month ECL is measured and
recognized as loss allowance. However, if credit risk has
increased significantly, an amount equal to lifetime ECL is
measured and recognized as loss allowance.

13. Financial Liabilities

Initial recognition and measurement

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 bank overdrafts,
and derivative financial instruments.

Subsequent measurement

The measurement of financial liabilities depends on their
classification, as described below:

Financial Liabilities at Fair Value through Profit or
Loss (FVTPL)

Financial liabilities at fair value through profit or loss include
financial liabilities designated upon initial recognition as at
fair value through profit or loss.

Financial liabilities designated upon initial recognition at
fair value through profit or loss are designated 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 is
recognized in OCI. These gains/ losses are not subsequently
transferred to profit or 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 or loss.

Financial Liabilities at amortised cost

Financial liabilities classified and measured at amortised
cost such as loans and borrowings are initially recognized
at fair value, net of transaction cost incurred. After initial
recognition, financial liabilities are subsequently measured
at amortised cost using the Effective interest rate (EIR)
method. Gains and losses are recognised in profit or 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.

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 de¬
recognition 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 or loss.

14. Derivative financial instruments

The Company uses derivative financial instruments to
manage the commodity price risk and exposure on account
of fluctuation in interest rate and foreign exchange rates.
Such derivative financial instruments are initially recognized
at fair value on the date on which a derivative contract is
entered into and are subsequently measured at fair value
with changes being recognized in Statement of Profit and
Loss. Derivatives are carried as financial assets when the
fair value is positive and as financial liabilities when the fair
value is negative.

Any gains or losses arising from changes in the fair value of
derivatives are taken through profit and loss.

15. Borrowings

Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any differences between the
proceeds (net of transaction costs) and the redemption
amount is recognised in Profit or loss over the period of the
borrowing using the effective interest method. Fees paid
on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable
that some or all of the facilities will be drawn down. In this
case, the fee is deferred until the drawdown occurs.

The borrowings are removed from the Balance sheet when
the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying
amount of the financial liability that has been extinguished
or transferred to another party and the consideration
paid including any noncash asset transferred or liabilities
assumed, is recognised in profit or loss as other gains/
(losses).

Borrowings are classified as current liabilities unless the
group has an unconditional right to defer settlement
of the liability of at least 12 months after the reporting
period. Where there is a breach of a material provision of
a long-term loan arrangement on or before the end of the
reporting period with the effect that the liability becomes
payable on demand on the reporting date, the entity does
not classify the liability as current, if the lender agreed,
after the reporting period and before the approval of the
financial statement for issue, not to demand payment as a
consequence of the breach.

16. Borrowing costs

Borrowing costs consist of interest and other costs that an
entity incurs in connection with the borrowing of funds.
Borrowing cost also includes exchange differences to the
extent regarded as an adjustment to the borrowing costs.

Borrowing costs, allocated to and utilised for qualifying
assets (that necessarily takes a substantial period of time
to get ready for its intended use), pertaining to the period
from commencement of activities relating to construction/
development of the qualifying asset upto the date of
capitalisation (asset is ready for intended use) of such asset
is added to the cost of the assets.

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

All other borrowing costs are expensed in the period in
which they occur.

17. Offsetting of financial instruments

Financial assets and financial liabilities are offset, and the
net amount is reported in the standalone 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. The legally enforceable right must not
be contingent on future events and must be enforceable
in the normal course of business and in the event of
default, insolvency or bankruptcy of the company, or the
counterparty.