3. Summary of material accounting policies

A. Current/ non-current classification

Schedule III to the Act requires assets and liabilities to
be classified as either current or non-current.

The Company presents assets and liabilities in
the balance sheet based on current/ non-current
classification.

Assets

An asset is classified as current when it satisfies any of
the following criteria:

(i) it is expected to be realised in, or is intended for
sale or consumption in, the Company's normal
operating cycle;

(ii) it is expected to be realised within twelve months
from the reporting date;

(iii) it is held primarily for the purposes of
being traded; or

(iv) it is cash or cash equivalent unless it is restricted
from being exchanged or used to settle a liability
for at least twelve months after the reporting date.

All other assets are classified as non-current.

Liabilities

A liability is classified as current when it satisfies any of
the following criteria:

(i) it is expected to be realised in, or is intended for
sale or consumption in, the Company's normal
operating cycle;

(ii) it is due to be settled within twelve months from
the reporting date;

(iii) it is held primarily for the purposes of being traded;

(iv) the Company does not have an unconditional right
to defer settlement of liability for at least twelve
months from the reporting date.

All other liabilities are classified as non-current.

Operating Cycle

The operating cycle is the time between the acquisition
of assets for processing and their realisation in cash or
cash equivalents.

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

B. Financial instruments

(i) Recognition and initial measurement

Trade receivables 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.

A financial asset or financial liability is initially
measured at fair value plus except for receivables
/ contract assets under Ind AS 115 which are
measured at transaction price, for an item not
at fair value through profit and loss (FVTPL),
transaction costs that are directly attributable to
its acquisition or issue.

(ii) Classification and subsequent measurement
Financial Assets

On initial recognition, a financial asset is
classified as measured at

- Amortised cost;

- Fair value through other comprehensive
income (FVTOCI); or

- Fair value through profit and loss (FVTPL)

Financial assets are not reclassified subsequent
to their initial recognition, except if and in the
period the Company changes its business model
for managing financial assets.

A financial asset is measured at amortised cost if
it meets both of the following conditions and is not
designated as at FVTPL:

- the asset is held within a business model
whose objective is to hold assets to collect
contractual cash flows; and

- the contractual terms of the financial asset
give rise on specified dates to cash flows
that are solely payments of principal and
interest on the principal amount outstanding.

(iii) Derecognition
Financial assets

The Company derecognises a financial asset when
the contractual rights to the cash flows from the
financial asset expire, or it transfers the rights to
receive the contractual cash flows in a transaction
in which substantially all of the risks and rewards
of ownership of the financial asset are transferred
or in which the Company neither transfers nor
retains substantially all of the risks and rewards
of ownership and does not retain control of the
financial asset.

If the Company enters into transactions whereby
it transfers assets recognised on its balance sheet
but retains either all or substantially all of the
risks and rewards of the transferred assets, the
transferred assets are not derecognised.

Financial liabilities

The Company derecognises financial liability
when its contractual obligations are discharged or
cancelled, or expire.

The Company also derecognises financial liability
when its terms are modified and the cash flows
under the modified terms are substantially
different. In this case, a new financial liability
based on the modified terms is recognised at
fair value. The difference between the carrying
amount of the financial liability extinguished and
the new financial liability with modified terms is
recognised in profit or loss.

(iv) Offsetting

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 either to settle them on a net basis
or to realise the asset and settle the liability
simultaneously.

(v) Impairment of Financial Asset

In accordance with Ind AS 109, Financial
Instruments, the Company applies expected
credit loss (ECL) model for measurement and
recognition of impairment loss on financial assets
that are measured at amortized cost and FVOCI.

The Company uses simplified approach and
determines for its receivables expected credit
loss. The ECL model is based on its historically
observed default rates over the expected life of

the trade receivable and is adjusted for forward¬
looking estimates. The impairment methodology
applied depends on whether there has been a
significant increase in credit risk.

For financial assets carried at amortised cost, the
carrying amount is reduced and the amount of the
loss is recognised in the Standalone Statement of
Profit and Loss. Interest income on such financial
assets continues to be accrued on the reduced
carrying amount and is accrued using the rate of
interest used to discount the future cash flows
for the purpose of measuring the impairment
loss. The interest income is recorded as part of
finance income. Financial asset together with
the associated allowance are written off when
there is no realistic prospect of future recovery
and all collateral has been realised or has been
transferred to the Company. If, in a subsequent
year, the amount of the estimated impairment
loss increases or decreases because of an event
occurring after the impairment was recognised,
the previously recognised impairment loss is
increased or decreased.

C. Property, plant and equipment

(i) Recognition and measurement

Items of Property, Plant and Equipment are
measured at cost, less accumulated depreciation
and accumulated impairment losses, if any.

Cost of an 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 to
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.

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

Any gain or loss from the disposal of an item of
property, plant and equipment is recognised in
profit or loss.

(ii) Subsequent expenditure

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

(iii) Depreciation

Depreciation is calculated on cost of items
of property, plant and equipment less their
estimated residual values over their estimated
useful lives using the written down value method
and is generally recognised in the Statement of
Profit and Loss.

The estimated useful lives of items of property,
plant and equipment prescribed as per Schedule II
are as follows:

Freehold land is not depreciated.

If the assets are deployed at the premises
acquired on lease, and the useful life as per
Schedule II, is more than the lock-in-period of the
lease arrangement, the useful life of respective
assets that are non-moveable are limited to the
lock-in-period of the lease arrangement.

Depreciation method, useful lives and residual
values are reviewed at each financial year-
end and adjusted if appropriate. Based on
technical evaluation and consequent advice, the
management believes that its estimates of useful
lives as given above best represent the period over
which management expects to use these assets.

Depreciation on additions (disposals) is provided
on a pro-rata basis i.e. from (upto) the date on
which the asset is ready for use (disposed of).

(iv) Investment properties

Investment properties are measured initially at
cost, including transaction costs. Subsequent
to initial recognition, investment properties are
stated at cost less accumulated depreciation and
accumulated impairment loss, if any.

When significant parts of the investment
properties are required to be replaced at intervals,
the Company depreciates them separately based

on their specific useful lives. All other repair
and maintenance costs are recognised in the
Statement of Profit and Loss as incurred.

Though the Company measures investment
properties using cost based measurements,
the fair value of investment property is
disclosed in the notes.

Investment properties are derecognized either
when they have been disposed off or when they
are permanently withdrawn from use and no
future economic benefit is expected from their
disposal. The difference between the net disposal
proceeds and the carrying amount of the asset
is recognized in Statement of Profit and Loss in
the period of derecognition. In determining the
amount of consideration from the derecognition
of investment properties the Company considers
the effects of variable consideration, existence
of a significant financing component, non-cash
consideration, and consideration payable to the
buyer (if any).

Rent receivable is recognised on a straight-line
basis over the period of the lease. Where an
incentive (such as a rent-free period) is given to
a tenant, the carrying value of the investment
property excludes any amount reported as a
separate asset as a result of recognising rental
income on this basis.

>. Capital Work-in-Progress:

Property, Plant and Equipment which are not ready
for intended use as on the date of Balance Sheet are
disclosed as Capital Work-in-Progress.

Advances paid towards the acquisition of property,
plant and equipment outstanding at each reporting
date is classified as capital advances under 'other
non-current assets' and the cost of assets not put
to use before such date are disclosed under 'Capital
Work-in-Progress'.

i. Intangible assets:

(i) Recognition and measurement

Intangible assets acquired separately are
measured on initial recognition at cost. Following
initial recognition, intangible assets are carried at
cost less accumulated amortization.

Cost of an item of Intangible assets comprises its
purchase price, including import duties and non¬
refundable purchase taxes, after deducting trade
discounts and rebates.

Any gain or loss from the disposal of an item of in
the Statement of Profit and Loss.

(ii) Subsequent expenditure

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

(iii) Depreciation

Depreciation is calculated on cost of intangible
assets less their estimated residual values over
their estimated useful lives using the written down
value method and is generally recognised in the
Statement of Profit and Loss.

The estimated useful lives of items of intangible
assets prescribed as per Schedule II are as follows:

Depreciation method, useful lives and residual
values are reviewed at each financial year-
end and adjusted if appropriate. Based on
technical evaluation and consequent advice, the
management believes that its estimates of useful
lives as given above best represent the period over
which management expects to use these assets.

Depreciation on additions (disposals) is provided
on a pro-rata basis i.e. from (upto) the date on
which the asset is ready for use (disposed of).

F. Inventories

Inventories are measured at the lower of cost and net
realisable value. The cost of inventories is based on the
weighted average formula, and includes expenditure
incurred in acquiring the inventories, and other costs
incurred in bringing them to their present location
and condition.

Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs
of completion and selling expenses.

The comparison of cost and net realisable value is
made on an item-by-item basis.

G. Impairment of non-financial assets (excluding
inventories, investment properties and deferred
tax assets):

Impairment tests on non- financial assets are undertaken
annually at the financial year end. Non-financial assets
are subject to impairment tests whenever events or
changes in circumstances indicate that their carrying
amount may not be recoverable. Where the carrying
value of an asset exceeds its recoverable amount (i.e.
the higher of value in use and fair value less costs to
sell), the asset is written down accordingly.

Where it is not possible to estimate the recoverable
amount of an individual asset, the impairment test is
carried out on the smallest group of assets to which
it belongs for which there are separately identifiable
cash flows; its cash generating units ('CGUs').

An impairment loss is calculated as the difference
between an asset's carrying amount and recoverable
amount. Losses are recognized in Statement of profit
and loss and reflected in an allowance account. When
the Company considers that there are no realistic
prospects of recovery of the asset, the relevant
amounts are written off. If the amount of impairment
loss subsequently decreases and the decrease can
be related objectively to an event occurring after
the impairment was recognised, then the previously
recognised impairment loss is reversed through
Statement of Profit and Loss.

H. Cash and cash equivalents

Cash and cash equivalents include cash-in-hand,
cash at banks and other short-term, highly liquid
investments with original maturities of three months or
less that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of
changes in value.

Cash and cash equivalents consist of balances with
banks which are unrestricted for withdrawal and
usage. For the purposes of the cash flow statement,
cash and cash equivalents include cash on hand and
cash with banks.

I. Share Capital

Financial instruments issued by the Company are
classified as equity only to the extent that they do not
meet the definition of a financial liability or financial
asset. The Company ordinary shares are classified as
equity instruments.

J. Borrowings and Loans

Borrowings and loans are initially recognised at
fair value, net of transaction costs incurred. It is
subsequently measured at amortised cost using
the EIR method.

Amortised cost is calculated by taking into account
any discount or premium on acquisition and fees
or transaction costs that are an integral part of the
effective interest rate.

Any difference between the proceeds (net of
transaction costs) and the redemption amount is
recognised in the Statement of Profit and Loss over the
period of borrowing using the EIR.

K. Dividends

The Company recognizes a liability for any dividend
declared but not distributed at the end of the reporting
period, when the distribution is authorized and the
distribution is no longer at the discretion of the
Company on or before the end of the reporting period.

L. Employee benefits

(i) Short-term employee benefits

Other employee benefits that are expected to be
settled wholly within 12 months after the end of
the reporting period are treated as short-term
employee benefits and presented as current
liabilities. The Company recognises expected cost
of short-term employee benefit as an expense,
when an employee renders the related service.
Other employee benefits that are not expected
to be settled wholly within 12 months after the
end of the reporting period are presented as non¬
current liabilities.

(ii) Share-based payment transactions

The grant date fair value of equity settled share-
based payment awards granted to employees
is recognised as an employee expense, with a
corresponding increase in equity, over the period
that the employees unconditionally become
entitled to the awards. The amount recognised as
expense is based on the estimate of the number
of awards for which the related service and non¬
market vesting conditions are expected to be
met, such that the amount ultimately recognised
as an expense is based on the number of awards
that do meet the related service and non-market
vesting conditions at the vesting date.

(iii) Defined contribution plans

A defined contribution plan is a post-employment
benefit plan under which an entity pays fixed
contributions and will have no legal or constructive
obligation to pay further amounts. The Company
makes specified monthly contributions towards
the Government administered provident fund, LWF
and ESIC schemes. Obligations for contributions
to defined contribution plans are recognised as an
employee benefit expense in Statement of Profit
and Loss in the periods during which the related
services are rendered by employees.

(iv) Defined benefit plans

A defined benefit plan is a post-employment
benefit plan other than a defined contribution
plan. The Company's net obligation in respect
of defined benefit plans is calculated separately
for each plan by estimating the amount of future
benefit that employees have earned in the current
and prior periods, discounting that amount and
deducting the fair value of any plan assets.

The calculation of defined benefit obligation is
performed periodically by a qualified actuary
using the Projected Unit Credit method. When
the calculation results in a potential asset for the
Company, the recognised asset is limited to the
present value of economic benefits available in
the form of any future refunds from the plan or
reductions in future contributions to the plan ('the
asset ceiling'). In order to calculate the present
value of economic benefits, consideration is given
to any minimum funding requirements.

Remeasurements of the net defined benefit
liability, which comprise actuarial gains and
losses and the effect of the asset ceiling (if any,
excluding interest), are recognised in OCI. The
Company determines the net interest expense/
(income) on the net defined benefit liability (asset)
for the period by applying the discount rate used
to measure the defined benefit obligation at
the beginning of the annual period to the then-
net defined benefit liability/(asset), taking into
account any changes in the net defined benefit
liability/(asset) during the period as a result of
contributions and benefit payments. Net interest
expenses and other expenses related to defined
benefit plans are recognised in Statement of
Profit and Loss.

When the benefits of a plan are changed or when
a plan is curtailed, the resulting change in benefit
that relates to past service ('past service cost' or
'past service gain') or the gain or loss on curtailment
is recognised immediately in Statement of Profit
and Loss. The Company recognises gains and
losses on the settlement of a defined benefit plan
when the settlement occurs.

(v) Other long-term employee benefits

The Company's net obligation in respect of
long-term employee benefits other than post¬
employment benefits is the amount of future
benefit that employees have earned in return for
their service in the current and prior periods; that
benefit is discounted to determine its present
value, and the fair value of any related assets is
deducted. The obligation is measured on the basis
of an annual independent actuarial valuation using
the Projected Unit Credit method. Remeasurements
gains or losses are recognised in Statement of
Profit and Loss in the period in which they arise.

(vi) Termination benefits

Termination benefits are expensed at the earlier
of when the Company can no longer withdraw the
offer of those benefits and when the Company
recognises costs for a restructuring. If benefits are
not expected to be settled wholly within 12 months
of the reporting date, then they are discounted.