make estimates, judgments and assumptions.
These estimates, judgments and assumptions
affect the application of accounting policies and
the reported amounts of assets and liabilities, the
disclosures of contingent assets and liabilities at
the date of the financial statements and reported
amounts of revenues and expenses during the
period. Application of accounting policies that
require critical accounting estimates involving
complex and subjective judgments and the use
of assumptions in these financial statements have
been disclosed below. Accounting estimates could
change from period to period. Actual results could
differ from those estimates. Appropriate changes
in estimates are made as management becomes
aware of changes in circumstances surrounding the
estimates. Changes in estimates are reflected in the
financial statements in the period in which changes
are made and, if material, their effects are disclosed
in the notes to the financial statements.

Significant management judgments

Recognition of deferred tax assets - The extent
to which deferred tax assets can be recognized is
based on an assessment of the probability of the
future taxable income against which the deferred
tax assets can be utilized.

Provisions, contingent liabilities and contingent
assets - The Company is the subject of legal
proceedings and tax issues covering a range of
matters, which are pending in various jurisdictions.
Due to the uncertainty inherent in such matters, it is
difficult to predict the final outcome of such matters.
The cases and claims against the Company often
raise difficult and complex factual and legal issues,
which are subject to many uncertainties, including
but not limited to the facts and circumstances of
each particular case and claim, the jurisdiction and
the differences in applicable law. In the normal
course of business, management consults with
legal counsel and certain other experts on matters
related to litigation and taxes. The Company
accrues a liability when it is determined that an
adverse outcome is probable and the amount of the
loss can be reasonably estimated.

Impairment of financial assets - At each balance
sheet date, based on historical default rates
observed over expected life, the management
assesses the expected credit loss on outstanding
financial assets.

Evaluation of indicators for impairment of assets

- The evaluation of applicability of indicators
of impairment of assets requires assessment of
several external and internal factors which could
result in deterioration of recoverable amount of the
assets.

Leases - The Company evaluates if an arrangement
qualifies to be a lease as per the requirements of Ind
AS 116. Identification of a lease requires significant
judgment. The Company uses significant judgement
in assessing the lease term (including anticipated
renewals) and the applicable discount rate. The
Company determines the lease term as the non¬
cancellable period of a lease, together with both
periods covered by an option to extend the lease
if the Company is reasonably certain to exercise
that option; and periods covered by an option to
terminate the lease if the Company is reasonably
certain not to exercise that option. In assessing
whether the Company is reasonably certain to
exercise an option to extend a lease, or not to
exercise an option to terminate a lease, it considers
all relevant facts and circumstances that create an
economic incentive for the Company to exercise
the option to extend the lease, or not to exercise
the option to terminate the lease. The Company
revises the lease term if there is a change in the
non-cancellable period of a lease. The discount rate
is generally based on the incremental borrowing
rate specific to the lease being evaluated or for a
portfolio of leases with similar characteristics.

Significant estimates

Useful lives of depreciable/amortizable assets -

Management reviews its estimate of the useful lives
of depreciable/amortizable assets at each reporting
date, based on the expected utility of the assets.
Uncertainties in these estimates relate to technical
and economic obsolescence that may change the
utility of certain software, IT equipment and other
plant and equipment.

Defined benefit obligation - Management’s
estimate of the DBO is based on a number of critical
underlying assumptions such as standard rates of
inflation, mortality, discount rate and anticipation
of future salary increases. Variation in these
assumptions may significantly impact the DBO
amount and the annual defined benefit expenses.

Fair value measurements

Management applies valuation techniques to
determine the fair value of financial instruments
(where active market quotes are not available). This
involves developing estimates and assumptions
consistent with how market participants would price
the instrument.

) Current versus non-current classification

The Company presents assets and liabilities in
the balance sheet based on current/ non-current
classification. An asset is treated as current when it
is:

• Expected to be realized or intended to be sold
or consumed in normal operating cycle*

• Held primarily for the purpose of trading

• Expected to be realized within twelve months
after the reporting period, or

• Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability
for at least twelve months after the reporting
period.

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in normal operating
cycle*

• It is held primarily for the purpose of trading

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

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

The Company classifies all other liabilities as non¬
current.

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

’Based on the nature of products and the time
between acquisition of assets for processing and
their realisation in cash and cash equivalents, the
Company has ascertained its operating cycle as 12
months for the purpose of current or non-current
classification of assets and liabilities.

d) Inventory

Inventories are valued as follows:

Raw material, stores and spares

Raw materials, stores and spares are valued at lower
of cost and net realisable value. However, materials
and other items held for use in the production of
inventories are not written down below cost if the
finished products in which they will be incorporated
are expected to be sold at or above cost. Cost of
raw materials, components and stores and spares
is determined on a first in first out (FIFO) basis.
Stores and spares having useful life of more than
twelve months are capitalized as “Property, plant
and equipment” and are depreciated prospectively
over their remaining useful lives in accordance with
In AS 16.

Work in progress and finished goods

Work in progress and finished goods are valued
at lower of cost and net realisable value. Cost
includes raw material cost and a proportion of
direct and indirect overheads up to estimated stage
of completion. Cost is determined on a weighted
average basis.

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

e) Property, plant and equipment

Recognition and initial measurement

Items of property, plant and equipment are
measured at cost less accumulated depreciation
and accumulated impairment losses. The cost
comprises purchase price, borrowing cost
if capitalization criteria are met and directly

attributable cost of bringing the asset to its working
condition for the intended use. Any trade discount
and rebates are deducted in arriving at the purchase
price. Subsequent costs are included in the asset’s
carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future
economic benefits attributable to such subsequent
cost associated with the item will flow to the
Company and the benefit shall be availed over
a period of more than 1 year. All other repair and
maintenance costs are recognized in statement of
profit or loss as incurred.

Subsequent measurement (depreciation and useful
lives)

Depreciation on Plant & Machinery and Computers
is provided on straight-line basis and for all other
categories of Property, Plant and Equipment,
depreciation is provided on written down value
method.

Depreciation is provided on the useful life of the
assets as prescribed in Schedule II of the Companies
Act, 2013 except in respect of the following assets,
where useful life is different than those prescribed
in Schedule II:
’Computers and Mould and dies are classified
under Plant and Machinery in Note 2 to the financial
statements.

The residual values, useful lives and method of
depreciation of are reviewed at each financial year
end and adjusted prospectively, if appropriate.

In case during any financial year, any addition has
been made to any asset, or where any asset has

been sold, discarded, demolished or destroyed,
or significant components replaced; depreciation
on such assets is calculated on a pro rata basis
on individual assets with specific useful life from
the date of such addition or, as the case may be,
up to the date on which such asset has been sold,
discarded, demolished or destroyed or replaced.

De-recognition

An item of property, plant and equipment and any
significant part initially recognized is de-recognized
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain
or loss arising on de-recognition of the asset
(calculated as the difference between the net
disposal proceeds and the carrying amount of the
asset) is included in the statement of profit and loss
when the asset is derecognized.

Transition to Ind AS

On transition to Ind AS, the Company has elected to
continue with the carrying value of all its property,
plant and equipment recognized as at April 01, 2016
measured as per the provisions of previous GAAP
and use that carrying value as the deemed cost of
property, plant and equipment.

f) Intangible assets

Recognition and initial measurement

Intangible assets acquired separately are measured
on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost
less accumulated amortization and accumulated
impairment losses, if any. Internally generated
intangible assets, excluding product development
costs, are not capitalized and expenditure is
reflected in the statement of profit and loss in the
year in which the expenditure is incurred.

Subsequent measurement (Amortization and useful
lives)

All finite-lived intangible assets, including internally
developed intangible assets, are accounted for
using the cost model whereby capitalized costs
are amortized on a straight-line basis over their
estimated useful lives. Residual values and useful
lives are reviewed at each reporting date and any

De-recognition

Gains or losses arising from de-recognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the
carrying amount of the asset and are recognized
in the statement of profit or loss when the asset is
derecognized.

Transition to Ind AS

On transition to Ind AS, the Company has elected to
continue with the carrying value of all its intangible
assets recognized as at April 01, 2016 measured as
per the provisions of previous GAAP and use that
carrying value as the deemed cost of intangible
assets.

g) Investment property

Investment properties are properties held to earn
rentals and/or for capital appreciation. Investment
properties are measured initially at cost including
transaction costs. Subsequent to initial recognition
the investment properties are stated at cost less
accumulated depreciation.

Depreciation is recognized on a straight-line basis
to write down the cost less estimated residual value
of investment properties other than land.

An investment property is derecognized upon
disposal or when the investment property is
permanently withdrawn from use and no future
economic benefits are expected from the disposal.
Any gain or loss arising on de-recognition of the
property (calculated as the difference between the
net disposal proceeds and the carrying amount of
the asset) is included in statement of profit or loss
in the period in which the investment property is
derecognized.

Transition to Ind AS

On transition to Ind AS, the Company has elected to
continue with the carrying value of all its investment

properties recognized as at April 01, 2016 measured
as per the provisions of previous GAAP and use that
carrying value as the deemed cost of investment
properties.

h) LeasesCompany 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 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 assesses
whether:

(i) the contract 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.

At the date of commencement of the lease, the
Company recognises a right-of-use asset (“ROU”)
and a corresponding lease liability for all lease
arrangements in which it is a lessee, except for
leases with a term of twelve months or less (short¬
term leases) and low value leases. For these short¬
term and low value leases, the Company recognizes
the lease payments as an operating expense on a
straight-line basis over the term of the lease.

Certain lease arrangements includes the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that they
will be exercised.

The right-of-use assets are initially recognized 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.
They are 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
underlying asset.

The lease liability is initially measured at amortized
cost at the present value of the future lease
payments. The lease payments are discounted
using the interest rate implicit in the lease or, if
not readily determinable, using the incremental
borrowing rates in the country of domicile of these
leases. Lease liabilities are remeasured with a
corresponding adjustment to the related right of
use asset if the Company changes its assessment if
whether it will exercise an extension or a termination
option.

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.
Rental income from operating lease is recognized
on a straight-line basis over the term of the relevant
lease. Contingent rents are recognized as revenue
in the period in which they are earned.

The Company does not have any finance lease as
a lessor.

i) 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

• I n the absence of a principal market, in the
most advantageous market for the asset or
liability

The principal or the most advantageous market
must be accessible by the Company.

The fair value of an asset or a liability is measured
using the assumptions that market participants

would use when pricing the asset or liability,
assuming that market participants act in their
economic best interest.

A fair value measurement of a non-financial asset
takes into account a market participant’s ability to
generate economic benefits by using the asset in
its highest and best use or by selling it to another
market participant that would use the asset in its
highest and best use.

Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximizing the use of relevant observable inputs
and minimizing 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 recognized in the
financial statements on a recurring basis, company
determines whether transfers have occurred
between levels in the hierarchy by re-assessing
categorization (based on the lowest level input that
is significant to the fair value measurement as a
whole) at the end of each reporting period or each
case.

j) Revenue recognition

Revenue arises mainly from the sale of manufactured
and traded goods. To determine whether to
recognise revenue, the Company follows a 5-step
process:

1. Identifying the contract with a customer

2. Identifying the performance obligations

3. Determining the transaction price

4. Allocating the transaction price to the
performance obligations

5. Recognising revenue when/as performance
obligation(s) are satisfied.

Revenue is measured at fair value of the
consideration received or receivable, exclusive of
any trade discounts, volume rebates and any taxes
or duties collected on behalf of the government
which are levied on sales such as sales tax, value
added tax, etc. Revenue is recognized either at a
point in time or over time, when (or as) the Company
satisfies performance obligations by transferring the
promised goods or services to its customers.

The Company recognises contract liabilities for
consideration received in respect of unsatisfied
performance obligations and reports these amounts
as other liabilities in the balance sheet. Similarly, if
the Company satisfies a performance obligation
before it receives the consideration, the Company
recognises either a contract asset or a receivable in
its balance sheet, depending on whether something
other than the passage of time is required before
the consideration is due.

The Company applies the revenue recognition
criteria to each separately identifiable component
of the revenue transaction as set out below:

Sale of goods and services

Revenue from sale of goods is recognized when
the control of goods is transferred to the buyer
as per the terms of the contract, in an amount that
reflects the consideration the Company expects to
be entitled to in exchange for those goods. Control
of goods refers to the ability to direct the use of and
obtain substantially all of the remaining benefits
from goods. The Company considers whether there
are other promises in the contract that are separate
performance obligations to which a portion of the
transaction price is allocated.

Revenue from services is recognized when
Company satisfies the performance obligations by
transferring the promised services to its customers.

k) Financial instruments

Recognition and initial measurement

Financial assets and financial liabilities are
recognized when the Company becomes a party
to the contractual provisions of the instrument and
are measured initially at fair value adjusted for
transaction costs, except for those carried at fair
value through profit or loss which are measured
initially at fair value.

Subsequent measurement
Financial assets

i. Financial assets carried at amortized cost -

A financial instrument is measured at amortized
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 amortized cost
using the effective interest method.

ii. Financial assets at fair value

• Investments in equity instruments

- Investments in equity instruments
which are held for trading are classified
as at fair value through profit and loss
(FVTPL). For all other equity instruments,
the Company makes irrevocable choice
upon initial recognition, on an instrument-
to-instrument basis, to classify the same
either as at fair value through other
comprehensive income (FVOCI) or fair
value through profit and loss (FVTPL).

• If the Company decides to classify an
equity instrument as at FVOCI, then all
fair value changes on the instrument,
excluding dividends, are recognized in
the other comprehensive income (OCI).
There is no recycling of the amounts
from OCI to statement of profit and loss,
even on sale of investment. However,
the Company transfers the cumulative
gain or loss within equity. Dividends on
such investments are recognized in the
statement of profit or loss unless the
dividend clearly represents a recovery of
part of the cost of the investment.

De-recognition of financial assets

A financial asset is de-recognized 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.

Financial liabilities

Subsequent to initial recognition, all non-derivative
financial liabilities, other than derivative liabilities,
are subsequently measured at amortized cost using
the effective interest method.

De-recognition of financial liabilities

A financial liability is de-recognized when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by an oth er 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 recognized in the
statement of profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset
and the net amount is reported in the balance sheet
if there is a currently enforceable legal right to offset
the recognized amounts and there is an intention to
settle on a net basis, to realize the assets and settle
the liabilities simultaneously.

l) Impairment of financial assets

In accordance with Ind AS 109, the Company applies
Expected Credit Loss (ECL) model for measurement
and recognition of impairment loss for financial
assets.

ECL is the difference between all contractual cash
flows that are due to the Company in accordance
with the contract and all the cash flows that the
Company expects to receive. When estimating the
cash flows, the Company considers the following:

• All contractual terms of the Financial
Assessments (including prepayment and
extension) over the expected life of the assets.

• Cash flows from the sale of collateral held or
other credit enhancements that are integral to
the contractual terms.

Trade receivables

As a practical expedient the Company has adopted
‘simplified approach’ using the provision matrix
method for recognition of expected loss on trade
receivables. The provision matrix is based on three-
years rolling average default rates observed over
the expected life of the trade receivables and is
adjusted for forward-looking estimates. These
average default rates are applied on total credit
risk exposure on trade receivables and outstanding
for more than one year at the reporting date to
determine lifetime Expected Credit Losses.

Other financial assets

For recognition of impairment loss on other financial
assets and risk exposure, the Company determines
whether there has been a significant increase in
the credit risk since initial recognition and if credit
risk has increased significantly, impairment loss is
provided.

m) Investment in joint ventures

Investments in joint ventures are carried at cost less
accumulated impairment losses, if any. Where an
indication of impairment exists, the carrying amount
of the investment is assessed and written down
immediately to its recoverable amount. On disposal
of these investments, the difference between net
disposal proceeds and the carrying amounts are
recognized in the Statement of Profit and Loss.

n) Retirement and other employee benefits
Provident fund

Retirement benefit in the form of provident fund is
a defined contribution scheme. The Company has
no obligation, other than the contribution payable
to the provident fund. The Company recognises
contribution payable to the provident fund scheme
as an expense, when an employee renders the
related service. The Company has no obligation
other than the contribution payable to the Provided
Fund.

Gratuity

A defined benefit plan is a post-employment benefit
plan other than a defined contribution plan. The
Company’s net obligation in respect of the gratuity
plan, which is a defined benefit plan, is calculated
by estimating the ultimate cost to the entity of the
benefit that employees have earned in return for
their service in the current and prior periods. This
requires an entity to determine how much benefit
is attributable to the current and prior periods and
to make estimates (actuarial assumptions) about
demographic variables and financial variables
that will affect the cost of the benefit. The cost of
provid ing benefits un der the d efined benefit plan
is determined using actuarial valuation performed
annually by a qualified actuary using the projected
unit credit method. Actuarial gains/losses resulting
from re-measurements of the liability are included
in other comprehensive income.

Compensated absence

Compensated absence, which is expected to be
utilized within the next 12 months, is treated as short
term employee benefit. The Company measures
the expected cost of such absences as the
additional amount that it expects to pay as a result
of the unused entitlement that has accumulated at
the reporting date.

The Company treats compensated absence
expected to be carried forward beyond twelve
months, as long-term employee benefit for

measurement purposes. Such long-term
compensated absences are provided for based
on the actuarial valuation using the projected unit
credit method at the year-end. Actuarial gains/
losses are immediately taken to the statement of
profit and loss and are not deferred.

Other short-term benefits

Expense in respect of other short-term benefits is
recognized on the basis of amount paid or payable
for the period during which services are rendered
by the employees.

o) Taxes

Tax expense recognized in statement of profit
and loss comprises the sum of deferred tax and
current tax except the ones recognized in other
comprehensive income or directly in equity.

Current tax is determined as the tax payable
in respect of taxable income for the year and
is computed in accordance with relevant tax
regulations. Current income tax relating to items
recognized outside profit or loss is recognized
outside profit or loss (either in other comprehensive
income or in equity).

Deferred tax is recognized in respect of temporary
differences between carrying amount of assets
and liabilities for financial reporting purposes and
corresponding amount used for taxation purposes.
Deferred tax assets on unrealized tax loss are
recognized to the extent that it is probable that
the underlying tax loss will be utilized against
future taxable income. This is assessed based
on the Company’s forecast of future operating
results, adjusted for significant non-taxable income
and expenses and specific limits on the use of
any unused tax loss. Unrecognized deferred tax
assets are re-assessed at each reporting date and
are recognized to the extent that it has become
probable that future taxable profits will allow the
deferred tax asset to be recovered.

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

date. Deferred tax relating to items recognized
outside statement of profit and loss is recognized
outside statement of profit or loss (either in other
comprehensive income or in equity).