2.1 Basis of compliance

The Standalone Financial Statements comply, in all
material aspects, with Indian Accounting Standards ('Ind
AS') notified under Section 133 of the Companies Act,
2013 ('the Act') read with Rule 3 of the Companies (Indian
Accounting Standards) Rules, 2015 as amended from time
and time and other relevant provisions of the Act.

2.2 Basis of preparation and presentation

The Standalone Financial Statements have been prepared
on the historical cost basis, except for certain financial
instruments and defined benefit plans which are
measured at fair value at the end of each reporting period.
Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
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.

All assets and liabilities have been classified as current
and non-current as per the Company's normal operating
cycle which is based on the nature of businesses and the
time elapsed between deployment of resources and the
realisation of cash and cash equivalents. The Company
has considered an operating cycle of 12 months.

2.3 Critical accounting estimates, assumptions and
judgements

The preparation of the Standalone Financial Statements
requires management to make estimates, assumptions
and judgments that affect the reported balances of
assets and liabilities and disclosures as at the date of

the Standalone Financial Statements and the reported
amounts of income and expense for the periods presented.

The estimates and associated assumptions are based
on historical experience and other factors that are
considered to be relevant. Actual results may differ
from these estimates considering different assumptions
and conditions.

Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimates are
revised and future periods are affected.

2.3.1 Judgements

Information about judgements made in applying
accounting policies that have the most material
effects on the amounts recognised in the financial
statements is included in the following notes:

Revenue from contracts with customers:

Revenue is measured based on the consideration
specified in a contract with a customer. The
Company recognises revenue when it transfers
control over a good or service to a customer based
on lead time assessment for transfer of goods from
one location to other location subject to inco terms.

2.3.2 Accounting estimates and assumptions

The estimates and assumptions that have a
significant risk of causing a material adjustment to
the carrying values of assets and liabilities within
the next financial year are discussed below.

a) Impairment of goodwill, property plant
and equipment and other intangible assets

Goodwill, property plant and equipment
and other Intangible assets are tested for
impairment at least on an annual basis or
more frequently, whenever circumstances
indicate that the recoverable amount of the
cash generating unit ('CGU') is less than its
carrying value. The impairment indicators,
the estimation of expected future cash flows
and the determination of the fair value of CGU
require the Management to make material
estimates, assumptions and judgments. These
are in respect of revenue growth rates and
operating margins used to calculate projected

of the amount of potential loss. Litigation
provisions are reviewed at each accounting
period and revisions made for the changes in
facts and circumstances. Contingent liabilities
are disclosed in the notes forming part of the
Standalone Financial Statements. Contingent
assets are not disclosed in the Standalone
Financial Statements unless an inflow of
economic benefits is probable.

2.4 Foreign currency translation

The functional currency of the Company (i.e. the currency
of the primary economic environment in which the
Company operates) is the Indian Rupee in (H). The financial
statements have been rounded off to the nearest H crore.

On initial recognition, all foreign currency transactions are
recorded at exchange rates prevailing on the date of the
transaction. Monetary assets and liabilities, denominated
in a foreign currency, are translated at the exchange rate
prevailing on the balance sheet date and the resultant
exchange gains or losses are recognised in the Standalone
Statement of Profit and Loss.

2.5 Property, plant and equipment

An item of property, plant and equipment ('PPE') is
recognised as an asset if it is probable that the future
economic benefits associated with the item will flow to
the Company and its cost can be measured reliably. These
recognition principles are applied to the costs incurred
initially to acquire an item of PPE, to the pre-operative and
trial run costs incurred (net of sales), if any and also to the
costs incurred subsequently to add to, replace part of, or
service it and subsequently carried at cost less accumulated
depreciation and accumulated impairment losses, if any.

Cost of any item of property, plant and equipment
comprises its purchase price, including import duties and
non-refundable purchase taxes, after deducting trade
discounts and rebates, any directly attributable cost of
bringing the item of its working condition for its intended
use and estimated costs of dismantling and removing the
item and restoring the site on which it is located.

The cost of PPE includes interest on borrowings directly
attributable to the acquisition, construction or production
of a qualifying asset. A qualifying asset is an asset that
necessarily takes a substantial period of time to be made
ready for its intended use or sale. Borrowing costs and
other directly attributable cost are added to the cost of
those assets until such time as the assets are substantially
ready for their intended use, which generally coincides
with the commissioning date of those assets.

The present value of the expected cost for the
decommissioning of an asset after its use is included in
the cost of the respective asset if the recognition criteria
for a provision is met.

Machinery spares that meet the definition of PPE are
capitalised and depreciated over the useful life of the
principal item of an asset.

All other repair and maintenance costs, including regular
servicing, are recognised in the Standalone Statement of
Profit and Loss as incurred. When a replacement occurs,
the carrying value of the replaced part is de-recognised.
Where an item of property, plant and equipment
comprises major components having different useful lives,
these components are accounted for as separate items.

PPE acquired and ready to use for projects are capitalised
and depreciation thereon is included in the project cost
till the project is ready for commissioning.

The cost of PPE/Intangible Asset at April 1, 2016, the
Company's date of transition to Ind AS, was determined
with reference to its carrying value recognised as per
the previous GAAP (deemed cost), as at the date of
transition to Ind AS.

Depreciation methods, estimated useful lives and
residual value

Depreciation on PPE (except leasehold improvements)
is calculated using the straight-line method to allocate
their cost, net of their residual values, over their estimated
useful lives. However, leasehold improvements are
depreciated on a straight-line method over the shorter
of their respective useful lives or the tenure of the lease
arrangement. Freehold land is not depreciated.

Schedule II to the Act prescribes the useful lives for
various class of assets. For certain class of assets, based
on technical evaluation and assessment, Management
believes that the useful lives adopted by it reflect the
periods over which these assets are expected to be used.
Accordingly for those assets, the useful lives estimated by
the management are different from those prescribed in
the Schedule. Management's estimates of the useful lives
for various class of PPE are as given below:

Useful lives and residual values of assets are reviewed at
the end of each reporting period.

Losses arising from the retirement of, and gains or losses
arising from disposal/adjustments of PPE are recognised
in the Standalone Statement of Profit and Loss.

2.6 Intangible assets

Intangible assets comprise software licenses, product
registration fees and rights to use railway wagon.

Intangible assets are measured on initial recognition
at cost and subsequently are carried at cost less
accumulated amortisation and accumulated impairment
losses, if any.

The intangible assets with a finite useful life are amortised
using straight line method over their estimated useful
lives. The management's estimates of the useful lives for
various class of Intangibles are as given below:

The estimated useful life is reviewed annually by
the management.

Gains or losses arising from the retirement or disposal
of an intangible asset are determined as the difference
between the net disposal proceeds and the carrying
amount of the asset and recognised as income or expense
in the Standalone Statement of Profit and Loss.

2.7 Capital work-in-progress ('CWIP') and intangible
assets under development

Projects under commissioning and other CWIP/ intangible
assets under development are carried at cost, comprising
direct cost, related incidental expenses and attributable
borrowing cost.

Subsequent expenditures relating to property, plant and
equipment are capitalised only when it is probable that
future economic benefit associated with these will flow to the
Company and the cost of the item can be measured reliably.

Advances given to acquire property, plant and equipment
are recorded as non-current assets and subsequently
transferred to CWIP on acquisition of related assets.

2.8 Investment property

Investment properties are land and buildings that
are held for long term lease rental yields and/ or
for capital appreciation. Investment properties are
initially recognised at cost including transaction costs.
Subsequently investment properties comprising buildings
are carried at cost less accumulated depreciation and
accumulated impairment losses, if any.

Depreciation on buildings is provided over the estimated
useful lives as specified in note 2.5 above. 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.

An investment property is de-recognised when either the
investment property has been disposed of or do not meet
the criteria of investment property i.e. when the investment
property is permanently withdrawn from use and no future
economic benefit is expected from its disposal. The difference
between the net disposal proceeds and the carrying amount
of the asset is recognised in the Standalone Statement of
Profit and Loss in the period of de-recognition.

2.9 Research and development expenses

Research expenses are charged to the Standalone Statement
of Profit and Loss as expenses in the year in which they are
incurred. Development costs are capitalised as an intangible
asset under development when the following criteria are met:

• the project is clearly defined, and the costs are
separately identified and reliably measured;

• the technical feasibility of the project
is demonstrated;

• the ability to use or sell the products created during
the project is demonstrated;

• the intention to complete the project exists and use
or sale of output manufactured during the project;

• a potential market for the products created during
the project exists or their usefulness, in case of
internal use, is demonstrated, such that the project
will generate probable future economic benefits; and

• adequate resources are available to complete
the project.

These development costs are amortised over the
estimated useful life of the projects or the products they
are incorporated within. The amortisation of capitalised
development costs begins as soon as the related product
is released to production.

2.10 Non-current assets held for sale and discontinued
operations

Non-current assets (including disposal groups) are
classified as held for sale if their carrying amount will be
recovered principally through a sale transaction rather
than through continuing use and a sale is considered
highly probable.

Non-current assets classified as held for sale are
measured at lower of their carrying amount and fair value
less cost to sell.

Non-current assets classified as held for sale are not
depreciated or amortised from the date when they are
classified as held for sale.

Non-current assets classified as held for sale and the
assets and liabilities of a disposal group classified as held
for sale are presented separately from the other assets
and liabilities in the Standalone Balance Sheet.

A discontinued operation is a component of the entity that
has been disposed off or is classified as held for sale and:

• represents a separate major line of business or
geographical area of operations and;

• is part of a single co-ordinated plan to dispose of
such a line of business or area of operations.

The results of discontinued operations are presented
separately in the Standalone Statement of Profit and Loss.

2.11 Financial instruments

2.11.1 Investments and other financial assets:
Classification

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

• those to be measured subsequently at
fair value (either through OCI, or through
profit or loss), and

• those measured at amortised cost.

• those measured at carrying cost for equity
instruments subsidiaries and joint ventures.

The classification depends on the Company's
business model for managing the financial assets

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

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

Debt instruments

Measurement

A financial asset or financial liability is initially
measured at fair value plus, for an item not at fair
value through profit and loss (FVTPL), transaction
costs that are directly attributable to its acquisition
or issue. Transaction costs of financial assets carried
at fair value through profit or loss are expensed in
the Standalone Statement of Profit and Loss.

Trade receivables and debt securities issued are
initially recognised when they are originated. All
other financial assets and financial liabilities are
initially recognised when the Company becomes a
party to the contractual provisions of the instrument.

Subsequent measurement of debt instruments
depends on the Company's business model for
managing the asset and the cash flow characteristics of
the asset. There are three measurement categories into
which the Company classifies its debt instruments:

• Amortised cost

Assets that are held for collection of contractual
cash flows, where those cash flows represent
solely payments of principal and interest,
are measured at amortised cost. A gain or
loss on a debt investment (unhedged) that is
subsequently measured at amortised cost is
recognised in the Standalone Statement of
Profit and Loss when the asset is derecognised
or impaired. Interest income from these
financial assets is included in other income
using the effective interest rate ('EIR') method.

• Fair value through other comprehensive
income ('FVTOCI')

Assets that are held for collection of
contractual cash flows and for selling the

financial assets, where the assets' cash flows
represent solely payments of principal and
interest, are measured at FVTOCI. Movements
in the carrying amount are recorded
through OCI, except for the recognition of
impairment gains or losses, interest revenue
and foreign exchange gains or losses which
are recognised in the Standalone Statement
of Profit and Loss. When the financial asset
is derecognised, the cumulative gain or loss
previously recognised in OCI is reclassified
from equity to the Standalone Statement of
Profit and Loss. Interest income from these
financial assets is included in other income
using the EIR method.

• Fair value through profit or loss ('FVTPL')

Assets that do not meet the criteria for
amortised cost or FVTOCI are measured at
FVTPL. A gain or loss on a debt investment
(including current investments) that is
subsequently measured at FVTPL (unhedged)
is recognised net in the Standalone Statement
of Profit and Loss in the period in which it
arises. Interest income from these financial
assets is included in other income.

Equity instruments

The Company subsequently measures all equity
investments at fair value, except investment in
subsidiaries and joint ventures which are measured
at cost. Where the Company's management has
elected to present fair value gains and losses on
equity investments in OCI, there is no subsequent
reclassification of fair value gains and losses to the
Standalone Statement of Profit and Loss. When the
financial asset is derecognised, the cumulative gain
or loss previously recognised in OCI is reclassified
to equity. Dividends from such investments are
recognised in the Standalone Statement of Profit
and Loss within other income when the Company's
right to receive payments is established. Impairment
losses (and reversal of impairment losses) on equity
investments measured at FVTOCI are not reported
separately from other changes in fair value.

Cash and cash equivalents

The Company considers all highly liquid investments,
which are readily convertible into known amounts
of cash, that are subject to an insignificant risk
of change in value with a maturity within three
months or less from the date of purchase, to be
cash equivalents. Cash and cash equivalents consist

An equity instrument is any contract that evidences
a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments
issued by the Company are recorded at the proceeds
received, net of direct issue costs.

2.11.3 Financial liabilities

The Company's financial liabilities comprise
borrowings, lease liabilities, trade payables and
other liabilities. These are initially measured at fair
value, net of transaction costs, and are subsequently
measured at amortised cost using the EIR method.
The EIR is a method of calculating the amortised
cost of a financial liability and of allocating interest
expense over the relevant period at effective interest
rate. The effective interest rate is the rate that exactly
discounts estimated future cash payments through
the expected life of the financial liability, or, where
appropriate, a shorter period.

Changes to the carrying amount of a financial
liability as a result of renegotiation or modification
of terms that do not result in derecognition of the
financial liability, is recognised in the Standalone
Statement of Profit and Loss.

Derecognition of financial liabilities

The Company derecognises financial liabilities when,
and only when, its obligations are discharged, cancelled
or they expire. The Company also derecognize a
financial liability when its terms are modified and the
cashflow of the modified liability are substantially
difference, in which case a new financial liability based
on the modified terms is recognized at fair value.

On recognition of a financial liability, the difference
between the carrying amount extinguished and
consideration paid (including any non-cash assets
transferred or liability assumed) is recognized in
profit or loss.

Presentation

Borrowings are classified as current liabilities unless
the Company has an unconditional right to defer
settlement of the liability for at least 12 months after
the reporting period.

Trade and other payables are presented as current
liabilities unless payment is not due within 12
months after the reporting period.

2.11.4 Derivatives and hedging activities

In the ordinary course of business, the Company
uses certain derivative financial instruments to
reduce business risks which arise from its exposure
to foreign exchange and interest rate fluctuations
associated with borrowings (cash flow hedges).
When the Company opts to undertake hedge
accounting, the Company documents, at the
inception of the hedging transaction, the economic
relationship between hedging instruments and
hedged items including whether the hedging
instrument is expected to offset changes in cash
flows or fair values of hedged items. The Company
documents its risk management objective and
strategy for undertaking various hedge transactions
at the inception of each hedge relationship.

Derivatives are initially recognised at fair value
on the date the derivative contract is entered
into and are subsequently remeasured to their
fair value at the end of each reporting period. The
accounting for subsequent changes in fair value
depends on whether the derivative is designated
as a hedging instrument, and if so, the nature of
the item being hedged and the type of hedge
relationship designated.

Cash flow hedges that qualify for hedge accounting

The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash
flow hedges, is recognised through OCI and as cash
flow hedging reserve within equity, limited to the
cumulative change in fair value of the hedged item
on a present value basis from the inception of the
hedge. The gain or loss relating to the ineffective
portion is recognised immediately in the Standalone
Statement of Profit and Loss.

Amounts accumulated in equity are reclassified
to the Standalone Statement of Profit and Loss on
settlement. When the hedged forecast transaction
results in the recognition of a non-financial asset, the
amounts accumulated in equity with respect to gain
or loss relating to the effective portion of the spot
component of forward contracts, both the deferred
hedging gains and losses and the deferred aligned
forward points are included within the initial cost
of the asset. The deferred amounts are ultimately
recognised in the Standalone Statement of Profit
and Loss as the hedged item affects profit or loss.

When a hedging instrument expires, is sold or
terminated, or when a hedge no longer meets
the criteria for hedge accounting, then hedge
accounting is discontinued prospectively and
any cumulative deferred gain or loss and deferred
costs of hedging in equity at that time remains in

equity until the forecast transaction occurs. When
the forecast transaction is no longer expected to
occur, the cumulative gain or loss and deferred
costs of hedging that were reported in equity
are immediately transferred to the Standalone
Statement of Profit and Loss.

Derivatives that are not designated as hedges

When derivative contracts to hedge risks are
not designated as hedges, such contracts are
accounted through FVTPL.

As at the year end, there were no designated
accounting hedges.

The entire fair value of a hedging derivative is
classified as a Non-current asset or liability when the
remaining maturity of the hedged item exceeds 12
months; it is classified as a current asset or liability
when the remaining maturity of the hedged item
does not exceed 12 months.

2.11.5 Financial guarantee contracts

Financial guarantee contracts are recognised
as a financial liability at the time of issuance of
guarantee. The liability is initially measured at fair
value and is subsequently measured at the higher
of the amount of loss allowance determined, or the
amount initially recognised less, the cumulative
amount of income recognised.

2.11.6 Offsetting of financial instruments

Financial assets and financial liabilities are offset and
the net amount presented in the balance sheet when,
and only when, the Company currently has a legally
enforceable right to set off the amounts and it intends
to either to settle them on a net basis or to realise the
asset and settle the liability simultaneously.

2.11.7 Fair value of financial instruments

In determining the fair value of its financial
instruments, the Company uses a variety of methods
and assumptions that are based on market conditions
and risks existing at each reporting date. The methods
used to determine fair value include discounted cash
flow analysis, available quoted market prices and
dealer quotes. All methods of assessing fair value
result in general approximation of value.

2.12 Impairment

Investments in subsidiaries and joint ventures

The Company reviews its carrying value of investment
in subsidiaries and joint ventures carried at cost (net

of impairment, if any) when there is indication for
impairment. If the recoverable amount is less than its
carrying amount, the impairment loss is accounted for
in the Standalone Statement of Profit and Loss. The
recoverable amount requires estimates of operating
margin, discount rate, future growth rate, terminal values,
etc. based on management's best estimate.

Other financial assets (other than at fair value)

The Company assesses on a forward-looking basis the
expected credit losses associated with its assets carried at
amortised cost and debt instruments carried at FVTOCI.
The impairment methodology applied depends on
whether there has been a significant increase in credit risk.
In respect of trade receivables, the Company applies the
simplified approach permitted by Ind AS 109 - Financial
Instruments, which requires expected lifetime losses to
be recognised upon initial recognition of the receivables.
For all other financial assets, expected credit losses are
measured at an amount equal to the 12-months expected
credit losses or at an amount equal to the lifetime
expected credit losses if the credit risk on the financial
asset has increased significantly since initial recognition.
The gross carrying amount of a financial asset is written
off (either partially or in full) to the extent that there is
no realistic prospect of recovery. Financial assets that are
written off could still be subject to enforcement activities
in order to comply with the Company's procedures.

PPE, CWIP, intangible assets and goodwill

For the purpose of assessing impairment, the smallest
identifiable group of assets that generates cash inflows
from continuing use that are largely independent of
the cash inflows from other assets or groups of assets is
considered as a cash generating unit ("CGU"). The carrying
values of assets / CGU at each balance sheet date are
reviewed to determine whether there is any indication
that an asset may be impaired. If any indication of such
impairment exists, the recoverable amount of such assets /
CGU is estimated and in case the carrying amount of these
assets exceeds their recoverable amount, an impairment
loss is recognised in the Standalone Statement of Profit
and Loss. The recoverable amount is the higher of the
net selling price and their value in uswe. Value in use is
arrived at by discounting the future cash flows to their
present value based on an appropriate discount factor.
Assessment is also done at each balance sheet date as
to whether there is indication that an impairment loss
recognised for an asset in prior accounting periods no
longer exists or may have decreased, consequent to
which such reversal of impairment loss is recognised in
the Standalone Statement of Profit and Loss.

The Company reviews its carrying value of goodwill
annually, or more frequently when there is indication
for impairment. If the recoverable amount is less than
its carrying amount, the impairment loss is accounted
for in the Standalone Statement of Profit and Loss. An
impairment loss recognised for goodwill is not reversed
in a subsequent period.

2.13 Inventories

Inventories comprises of raw materials, work-in-progress,
finished goods, stock-in-trade, stores, spare parts and
packing materials. Inventories are valued at lower of
cost (on weighted average basis) and net realisable
value after providing for obsolescence and other losses,
where considered necessary on an item-by-item basis.
Cost includes all charges in bringing the goods to their
present location and condition, including other levies,
transit insurance and receiving charges. Work-in-progress
and finished goods include appropriate proportion of
overheads and, where applicable, taxes and duties. Net
realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion
and the estimated costs necessary to make the sale.

The comparison of cost and net realizable value is made on
an item-to-item basis. The net realizable value of work-in¬
progress is determined with reference to the selling prices
of related finished goods. Raw materials, components and
other supplies held for use in the production of finished
products are not written down below cost except in
cases when a decline in the price of materials indicates
that the cost of the finished products shall exceed the net
realizable value.

2.14 Revenue from contracts with customers

2.14.1 Sale of goods

Revenue from the sale of goods is recognised at
the point in time when control is transferred to the
customer which is usually on dispatch / delivery of
goods, based on contracts with the customers.

Revenue towards satisfaction of performance
obligation is measured based on the transaction
price, which is the consideration, adjusted for
volume discounts, price concessions, incentives,
and returns, if any, as specified in the contracts with
the customers. Revenue excludes taxes collected
from customers on behalf of the government.
Accruals for discounts/incentives and returns are
estimated (using the most likely method) based on
accumulated experience and underlying schemes
and agreements with customers. Due to the short

nature of credit period given to customers, there is
no financing component in the contract.

2.14.2 Sale of scrap

Revenue from sale of scrap is recognised when control
over the goods is transferred to the customers.

2.14.3 Interest income

For all debt instruments measured either at
amortised cost or at FVTOCI, interest income is
recorded using the EIR method.

2.14.4 Dividend income

Dividend income is accounted for when Company's
right to receive the income is established.

2.14.5 Insurance claims

Insurance claims are accounted for based on
claims submitted and to the extent that there is no
uncertainty in receiving the claims.

2.15 Leases

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.

2.16 Employee benefits plans

Employee benefits consist of provident fund, superannuation
fund, gratuity fund, compensated absences, long service
awards, post-retirement medical benefits, directors'
retirement obligations and family benefit scheme.

2.16.1 Post-employment benefit plans
Defined contribution plans

Payments to a defined contribution retirement
benefit scheme for eligible employees in the form
of superannuation fund are charged as an expense
as they fall due. Such benefits are classified as
Defined Contribution Schemes as the Company
does not carry any further obligations, apart from
the contributions made.

Defined benefit plans

Contributions to a Provident Fund are made to Tata
Chemicals Limited Employees' Provident Fund Trust,
administered by the Company, and are charged
to the Standalone Statement of Profit and Loss as
incurred. The Trust invests in specific designated
instruments as permitted by Indian law. The
remaining portion is contributed to the government
administered pension fund. The Company is liable

for the contribution and any shortfall in interest
between the amount of interest realised by the
investments and the interest payable to members
at the rate declared by the Government of India in
respect of the Trust administered by the Company.

For defined benefit schemes in the form of gratuity
fund, provident fund, post-retirement medical
benefits, pension liabilities (including directors') and
family benefit scheme, the cost of providing benefits
is actuarially determined using the projected unit
credit method, with actuarial valuations being
carried out at each balance sheet date.

The retirement benefit obligation recognised in the
Standalone Balance Sheet represents the present
value of the defined benefit obligation as reduced
by the fair value of scheme assets. The present value
of the said obligation is determined by discounting
the estimated future cash outflows, using market
yields of government bonds of equivalent term and
currency to the liability.

The interest income / (expense) are calculated by
applying the discount rate to the net defined benefit
liability or asset. The net interest income / (expense)
on the net defined benefit liability is recognised in
the Standalone Statement of Profit and Loss.

Remeasurements, comprising of actuarial gains
and losses, the effect of the asset ceiling (if any), are
recognised immediately in the Standalone Balance
Sheet with a corresponding charge or credit to
retained earnings through OCI in the period in which
they occur. Remeasurements are not reclassified
to the Standalone Statement of Profit and Loss in
subsequent periods.

Changes in the present value of the defined benefit
obligation resulting from plan amendments
or curtailments are recognised immediately in
the Standalone Statement of Profit and Loss as
past service cost.

2.16.2 Short-term employee benefits

The short-term employee benefits expected to
be paid in exchange for the services rendered by
employees is recognised during the period when the
employee renders the service. These benefits include
compensated absences such as paid annual leave and
performance incentives which are expected to occur
within twelve months after the end of the period in
which the employee renders the related services.

The cost of compensated absences is accounted
as under:

(a) In case of accumulating compensated
absences, when employees render service
that increase their entitlement of future
compensated absences; and

(b) In case of non - accumulating compensated
absence, when the absences occur.

2.16.3 Other long-term employee benefits

Compensated absences which are not expected to
occur within twelve months after the end of the
period in which the employee renders the related
services are recognised as a liability. The cost of
providing benefits is actuarially determined using
the projected unit credit method, with actuarial
valuations being carried out at each balance sheet
date. Long Service Awards are recognised as a
liability at the present value of the obligation at the
balance sheet date. All gains/losses due to actuarial
valuations are immediately recognised in the
Standalone Statement of Profit and Loss.

2.17 Employee separation compensation

Compensation paid / payable to employees who have
opted for retirement under a Voluntary Retirement
Scheme including ex-gratia is charged to the Standalone
Statement of Profit and Loss in the year of separation.

2.18 Borrowing costs

Borrowing costs are interest and ancillary costs incurred
in connection with the arrangement of borrowings.
General and specific borrowing costs attributable to
acquisition and construction of qualifying assets is added
to the cost of the assets upto the date the asset is ready
for its intended use. Capitalisation of borrowing costs is
suspended and charged to the Standalone Statement
of Profit and Loss during extended periods when
active development activity on the qualifying assets is
interrupted. All other borrowing costs are recognised in
the Standalone Statement of Profit and Loss in the period
in which they are incurred.

2.19 Government grants

Government grants and subsidies are recognised when
there is reasonable assurance that the Company will
comply with the conditions attached to them and the
grants and subsidies will be received. Government
grants whose primary condition is that the Company
should purchase, construct or otherwise acquire non-

current assets are recognised as deferred revenue in
the Standalone Balance Sheet and transferred to the
Standalone Statement of Profit and Loss on systematic
and rational basis over the useful lives of the related asset.

2.20 Operating segments

The operating segments are the segments for which
separate financial information is available and for which
operating profit/loss amounts are evaluated regularly by
the Managing Director and Chief Executive Officer (who is
the Company's chief operating decision maker) in deciding
how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting
are in conformity with the accounting policies of
the Company. Segment revenue, segment expenses,
segment assets and segment liabilities have been
identified to segments on the basis of their relationship
to the operating activities of the segment. Inter segment
revenue is accounted on the basis of transactions
which are primarily determined based on market / fair
value factors. Revenue, expenses, assets and liabilities
which relate to the Company as a whole and are not
allocable to segments on a reasonable basis have
been included under 'unallocated revenue / expenses /
assets / liabilities'.

2.21 Income tax

Tax expense for the year comprises current and deferred
tax. The tax currently payable is based on taxable profit for
the year. Taxable profit differs from net profit as reported
in the Standalone Statement of Profit and Loss because
it excludes items of income or expense that are taxable
or deductible in other years and it further excludes items
that are never taxable or deductible. The Company's
liability for current tax is calculated using tax rates and tax
laws that have been enacted or substantively enacted by
the end of the reporting period.

Current tax assets and current tax liabilities are offset
when there is a legally enforceable right to set off the
recognised amounts and there is an intention to realise
the asset or to settle the liability on a net basis.

The Organisation for Economic Co-operation and
Development (OECD) has published the model rules
for global minimum tax (Pillar Two model rules). As per
the provisions of Pillar Two legislation, the Company's
ultimate parent entity (UPE) has consolidated revenues
exceeding the threshold prescribed under the OECD
framework. Pillar Two legislation has been enacted, or
substantively enacted, in certain jurisdictions where the
Company operates. Based on the current assessment,

the Company does not expect a material financial impact
from the application of the Pillar Two rules. The evaluation
of the potential exposure is based on the most recent
country-by-country reporting, and financial statements
for the constituent entities in the Company. In accordance
with Amendments to Ind AS 12, the Company has applied
temporary mandatory relief from accounting for deferred
tax that arises from implementing Pillar Two legislation.

Deferred tax is the tax expected to be payable or
recoverable on differences between the carrying values
of assets and liabilities in the Standalone Financial
Statements and the corresponding tax bases used in the
computation of taxable profit and is accounted for using
the Standalone Balance Sheet liability method. Deferred
tax liabilities are generally recognised for all taxable
temporary differences arising between the tax base of
assets and liabilities and their carrying amount, except
when the deferred income tax arises from the initial
recognition of an asset or liability in a transaction that is
not a business combination and affects neither accounting
nor taxable profit or loss at the time of the transaction. In
contrast, deferred tax assets are only recognised to the
extent that it is probable that future taxable profits will
be available against which the temporary differences
can be utilised.

The carrying value 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 is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the
asset is realised based on the tax rates and tax laws that
have been enacted or substantially 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 cover or
settle the carrying value of its assets and liabilities.

Deferred tax assets and liabilities are offset to the extent
that they relate to taxes levied by the same tax authority
and there are legally enforceable rights to set off current
tax assets and current tax liabilities within that jurisdiction.

Current and deferred tax are recognised as an expense or
income in the Standalone Statement of Profit and Loss,
except when they relate to items credited or debited
either in other comprehensive income or directly in
equity, in which case the tax is also recognised in OCI or
directly in equity.

Management periodically evaluates positions taken
in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation
and establishes provisions where appropriate. The
provision is estimated based on one of two methods,
the expected value method (the sum of the probability
weighted amounts in a range of possible outcomes) or
the single most likely amount method, depending on
which is expected to better predict the resolution of
the uncertainty.