2. MATERIAL ACCOUNTING POLICIES

(i) Basis of Accounting:

a) Statement of Compliance:

The financial statements have been prepa red with all material aspect with Indian Accounting Standards (Ind As) notified under section 133 of the Companies Act, 2013 (the Act) read with then Companies (Indian Accoun ting Standards) Rules, 2015 and amendments thereto. The accounting policies are applied consistently to all the periods presented in the financial statements.

b) Basis of Preparation:

The financial statements have been prepared on accrual basis of accounting under historical cost convention, except for the following where the eairvaluation hhve been carried out in accordance with the requirements of respective Ind As:

1. Employee definedbenefitplans - plan assets;

The Operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. Accordingly, all assets and liabilities have been classified as current or non-current as per the Company's operating cycle and other criteria set out in Ind AS 1- 'Presentation of Financial Statements' and Schedule III to the Companies Act,2013.

(ii) Use of Estimates:

Th e preparation and presentation of financial statements are in conformity with the Ind As which required management to make estimates and assumptions that affect the reported amounts of assets and liabilities (including contingent liabilities) on the date ofthe financial statements and the reported amount of revenues and expenses during the reporting) year.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to the accounting estima)es are recognised in the period in which the estimates are revised andinany future neriods affected. Management believes tOattheeotimates used in the preparation of financial statements are prudent and reasonable. Future rerults could differ due to these estimates and differences between the amtual results and estimates are recognized in the year in wtich the results are known S materialized.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes:

Note 6- Currett S Deferred tax liabilities

Note 29- Measurement ofdtfined benefit obliigjatioas

Note 9- Expected credit loss for receivables

(iti) Property, Plant and Equipment & Depreciation: a) Propetty Plant and Equipmentt

Property, plant and equipment art tangible items that are held tor hse in tte production or supply of⁷ goods and setvices, rental to others or tor administrative purposes and are expected to be used during more than one period.TIo cost olan item of property, plant and equipment is recognised as an asset if and only, if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Freehold lan5 is carried at revalued cost less accumulated impairment losses.All other items of property, plantand equipment art stated ht cort less accumulated depreciation and a ccumulated imsaitment losses .

Cost of an item of property, plant and equipment comprises:

• Freehold land is carried at carrying value as on the date of transition which has been previously revalued base d o n the report issued by the registered valuer.

• in respect of all other Property, plant and equipment except Freehold land are stated at its purchase price, all costs including financial costs till commencement of commercial production are capitalized to the cost of qualiSying assetb. Tax credit, if any, are accounted for by reducing the cost of capital goods;

• Any other costs directly attributable to bringing the asset to the location and condition necessary for it to be capable ofoperating in the manner intended by management.

• All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

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

b) Capital work in progress:

Capital work in progress is stated at cost, comprising direct cost, relathd incidental expenses, attributable b arrowing co st and net ofaccumulated impairment losses, if any. All the direct expenditure related to implementation including incidental expenditure incurred during the period of implementation of a project,till it is commissioned, is accounted as Capital work in progress (CWIP) and after commissioning the same is transferred / allocated to the respective item of property, plant and equipment. Pre-operating costs, being indirect in nature, ate expensed to the statement of profit and loss as and when incurred.

c) Compensation for impairment:

The Company recognises compensation from third parties for items of property, plant and equipment that were impaired, lost or given up in profit or loss when the compensation becomes receivable.

d) Derecognition of Property, Plant and Equipment:

The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The gain or loss from the derecognition of an item of property, plant and equipment is recognised in the statement of profit and loss account when the item is derecognized.

e) [Depreciation methods, estimated useful life and residual value:

Depreciation on Assets other than Land, Electrical Installation and Plantand Machinery has been provided on "Straight Line Method" so as to expense the cost over their estimated useful lives based rn rvaloation which are as indicated in Schedule II to Companies Act,2013. Depreciation on Electrical Installation has been provided on "Straight Line Method" by taking the total life of assets at 28 years based on internal technical evaluation.Depreciation on Plant and Machinery has been provided on "Written down Value Method" by taking the total life of assetc at 28 years based on internal technical evaluation and land is not depreciated. The residual values, useful lives and methods of depreciation of property, plant and equipment are eeviewcd atcach financial year end and adjusted prospectively, if appropriate.

(iv) Intangible Assets and Amortisation :

a) Intangible Assets:

The? Company identifiesan identifiable non-monetaryassetwithout physical substance as an intangible asset.The Compaay recognises an intangibls asset if it is probable that expected failure economic benefits ottributable to the asset will flow to th e entity and the cost: of the asset cas be measuted relia bly. An inta ng ible a sset i s initially mea sured at cost unless acquired in a business combina^fioa in which case an intangible asseⁿ is measurgd at its fairvalue on the date of acquisition. The Company identifies research phase and development phase oian intetnslly generated intangibte asset. Expenditure incurred on research phare is recognised as an expense in the profit or loss Uorthe period in whiah incurred. Expenditure on development phase are capitalised only when the Company is able to demonstrate the technical feasibility of completing the intangible asset, the ability to use the intangible asset and the development expenditure can be measured reliably. The Company subsequently measures all intangible assets at cost less accumulated amortisation less accumulated impairment.

b) Amortisation methods, estimated useful life and residual values

An intangible asset is amortised on a straight-line basis over its useful life. Amortisation commences when the aseet is ie the location and condition necessary ^for it to be capableof operating in the manner intendsd toy/ management. Amortisation ceases at the earlier o^s the date that the asse^r is classified as held for sale (or included in a disfaoral group that is dassified as held for sale) and the date that the asset is derecognised. The amortisation charge for each period is recognised in profit or loss unless the chatge is a part of the cost of another astet. The amortisation period and metSod are reviewed at each financial year end. Any change in the pariod or method is accounted for as a change in accounting estimate preepectively. The Company derecognises an intangibls asset on its disposal or when no tuture nconomic benefits are enpeclied from its use or disposal and any gain or loss on derecognition is recognised in statement of profit and loss account as gain /loss on derecognition of asset.

(v) Non-current assets heid for sale and discontinued operations

The Company classifies non-current osnets and dieposal groups as held for sale if their carrying amounts will be recovered principally through a sale sather than through continuing use. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the sale exaected within one yearftom the date of classification.

The criteria for held for sale classification is considered to have met only when the assets or disposal group is available for immediate sale in its present condition, subject only to terms that are usual and customary for sale of such assets (or disposal groups), its sale or distribution is highly probable; and it will genuinely be sold, not abandoned. The greup treats sale of the asset or disposal group to be highly probable when:

i) The management is committed to a plan to sell the asset (or disposal group),

ii) An active programme to locate a buyer and complete the plan has been initiated (if applicable),

iii) The asset (or disposal group) is being actively marketed for sale at a price that is reasonable in relation to its c urrentpair value ,

iv) The sale is expected to qualify for recognition asa completed sale within one year from the (date oedassificatine,and

v) Actions required to complete the plan indicate that it is unlileely that significant changes to the plan will be made or that the plan will be withdrawn.

Non-current assets held for sale and disposal groups are measured at the lower of their carrying amount and the fair value less costs to seli. Assetc andNabilitien classified as held fdr sale/ distribution nrs presented separatdly in the balance sheet.

Property, plant and equipment ansi intangible asrets ooce clasnified as heldfior sale are not depreciated ot amortized after t^se dote nf dassificafion as asset held for rale.

A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held fon sale, and:

1) represents a separate ma)o: line of business or geographical area df operations,

2) is psct o^f a single ca-ordinated plnn to dispose o^pa separate mnjor ^cne of⁷ business or geographic)I area o^poperations.

Discontinued operations are excluded from the results of continuing operations and are presented as a single amoantas erofit or loss after tax from discontinued operations in the statement of profit and loss.

(vi) Financial Instruments :

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity ins tru merit of another entity.

1. Financial Assets:

i. Initial recognition and measurement:

At initial recognition, the Company measures a financial asset (which are not measured at fair value through profit or loss) at its fair value plus or minus transaction costs that are (directly attributable to the acquisition or issu e of t he financial asset.

ii. Subsequent measurement:

For purposes of subsequent measurement, financial assets are classified in following categories:

i) Financial assets measured at amortised cost;

ii) Financial assets at fair value through profit or loss (FVTPL) an d

iii) Financial assets at fair value through other comprehensive iac ome (FVOCI)

The Company classifies its financial assets in the above mentioned categories based on:

a) The Company's business model for managing the financial assets, aTd

b) The contractual cash flows characteristics of tfie financial asset.

i) Financial assets measured at amortised cost :

A financial asset is measured at amortised cost if both of the following conditions are met:

a) A financial asset is measured at amortiseni cost if the financial asset is held within a business model whose objective is to hold financial asse ts in order to colle ct contractual cash flows and the Contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

b) Financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral past ef^:the EIR. Tire EIR amortisation is included in finance income in the profit or loss. The losses arising from impairmentare recognised in the profit or loss.

ii) Financial assets at fair value through profin nr loss (FVTPL):

Financial assets are measured at fair value through profitand loss ualess it is measured at amortised cost or at fair value through other comprehensive income on initial recognition. Tire transaction costs (directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognized in profit or loss.

iiit Financial assets at fair value through other comprehensive income (FVOCI):

Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business model whose objective is achieved by collecting both aon tractual cash flows that gives rise on specified dates to solely payments of principal and interest on the principal amount outstanding and by selling financial assets.

In addition, The Company may elect to designate a financial asset, which otherwise meets amortised cost or FVOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as 'accounting mismatch')

iii. Equity Instruments:

All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments whic h are he Id for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS 103 applies are classified as at FVTPL. For all other equity instruments,the company may make an irrevocable election to present in otherfomprehensive income subsequent changes in the fair vclue. The company makessuch elecIion on an instrument by-instrument basis. The classification is made on initial recognition and is irrevocable.

If the company decides to classify an equity instrument as a t FVTOCI, then all fair value changes on the inatrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, eeen on eale of" investment. However, the company may transfer the cumulative ^eain or losswithin equity. Equity instrumen 1s includhd within the FVTPL category are measured at fair value wirh all changes recognized in the Profit & Uens.

The company has elected to measure its equity instruments through FVPTL.

iv. Derecognition:

The Company (derecognizes a financial asset when contractual rights to the cash flows from the asset expire, or when ittransfers the financial assntand tubstantially all tire risks tnd rewards ofownership ofthe assetto another party.

On dsrecognition pf a financial asset in its nntirety, the difference between the assets's carrying) amount and the sum of the consideration received and recewable is recogniaed in the Statement of Profit and Loss.

v. Impairment of financial assets:

The company assessts at the end of each reportinn period whether a financial assets or group of financial assets is impaired. In accordance of Ind AS 109, the company applies expected credit loss (ECL) model for measurement and recognition of impairment loss.

In case of trade receivables, the Compnny Sollows a simplified approach wherein an amountequal to lifetime ECL is measured and recygnised as loss allowance. Asa practical sxpedient,the company uses a provision matrix to determine impairment loss on portfolio of its teade receivables. The provition matrix is basf d on its historically observed default rates over the? expected life? of⁷ tsade rccnivables. ECL impairment loss allowances (or reversal) recognized during the period is recognized as an exeense / income respectively m thn statement of⁷ profit ond loss. Provision for ECL is presented as deduction from carrying amount: of⁷ trade receivables.

For all other financial assets,expected credit lossesare measured at anamounteqor I to 12 month sxpected credit losses or at an amount: equal to lifetime sxpected iosses, if the credit risk on the financial asset has increased significantly since initial recognition.

SubsequentlyJfthecseditquaNtyofThefinancialassetimproves such that there is no longer a significant increase in credit risk since initial recogn ition, the Comptny reverts to recognizing impairment loss allowance based on 12-month ECL.

2. Financial Liabilities?

i. Initial recognition and measurement:

All financial liabilities are recognised initially at fair value and subsequently all financial liabilities carried at amortised cost or fair value through profit or loss.

ii. Subsequent measurement:

The measurement of financial liabilities depends on their classification, as described below: i) Financial liabilities measured at amortised cost :

Subsequently, all financial liabilities are measured at amortised cost. Any discount or premium on redemption/ settlement is recognised in the Statement of Profit and Loss as finance cost over the life of the liability using the effective interest method and adjusted to the liability figure disclosed in the Balance Sheet.

iii. Derecognition:

Financial liabilities are derecognised when the liability is extinguished, that is, when the contractual obligation is discharged or cancelled or expiry.When an existing financial liability is replaced by anotUpr from the same lender on substantially different terms, or the terms oUan existing) liability are substantially modified, such an exchange or modification is treated as the derecognidion of the originatl liability and the recognition of sj new liability. The difference in the respective carrying amounts is recognised in the statement of profit and Ipss.

(vii) Off-setting of financial instruments:

Finanrial assets and financial liabilities are offset and the net amount is reported in tfc standalone balanct sheet if there is n currently enforceople legal rig hit to offset the recognised amounSs end tf ere isan intention So settle ona net basis, to realize the assets atd settle the liabilities s imu ltaneous ly.

(viii) Fair value measurement:

^cairva^gue is the price thatwodd be received ^ro sell anassetnr paid to^fransfera liability m an orderly ttansaction between markft patficipants al: the measurement date under current: market conditions.

The Company categorizes assets and liabilities measured at fair value into one of three levels depending on the abilify to observe inputs employed in their measurementwhich are described as follows:

(a) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

(b) Level 2 inputs ate inputs that arD observade, eitherr disectly or intirectly, other than quoted ptices included within level 1 for tne asset otliability.

(c) Level 3 ipputs are unobservable inpets for the asiel: oe liabihty reflecting rignificant modifications to observable rela^ged marⁿe^s data or Compcny's assumptisns about prising by market pastisipants.

(ix) Inventories:

Inventories are valued at lower of cost and net realizable value. Cost in respect of raw materials, stores, spares, fuel and packing material are determined on FIFO basis. Costsinrespectoffinishedgoodsand work-in-progress are also computed on FIFO basis. Net realizable value is the estimated selling price in the ordinary course of business less estimated cost necesstry to make sale.

Finished goods and process stock include cost of conversion and other costs incurred in acquiring the inventory and brisging them to their present location and condition.

Spares (not meeting the definition of property, plant and equipment) are accounted as inventory and expensed to the statement of profit and loss when issued for consumption.

(x) Borrowing Cost:

Interest and other costs that the Company incurs in connection with the borrowing of funds are identified as borrowing costs. The Company capitalises borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which it is incurred. A qbalifying asset is an asset that necessarily takes a substantial period oftime to get ready for iSs intended use. The Company identifies the borrowings into specific borrowings and general borrowings. Specific borrowings are borrowings that are specifically taken for the purpose of obtaining a qualifying asset.General borrowings include all other borrowings except the amount outstanding as on the balance sheet date of specific borrowings lor assuts that are noSyet ready for use. Borrowing cost incurred actually on specific borrowings are capitalised to the cost of the qualifying asset. For general borrowings, the Company determines the amount of borrowing costs eligible for capitalisation byapplying a capitalisation rate to ths expenditures on the qualifying asset based on the weighted average of the borrowmg costs applicable to general borrowings. The capitalisation on borrowing costs commences when the Company incurs expenditure Sor theasset, incurs borrowing cost and undertakes activities that are necessary to prepare the asset for its intended use wr sale. The capitalisation of borsowisg costs is suspended during extend ed periods in which active development of a qualifying asset is suspended. The capitalisation of borrowing costs ceases when substantially all the activities necessary to prepare the qualifyina asset for its intended use or sale are complete.

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

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