1.3 SIGNIFICANT ACCOUNTING POLICIES:

a) Recognition of Income &Expenditure:

Income and Expenditure are recognised on accrual basis.

b) Property, Plant and Equipment:

Property, plant and equipment are stated at acquisition cost net of accumulated depreciation and
accumulated impairment losses, if any. 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 associated with the item will flow to the Company and the cost of the item
can be measured reliably. All other repairs and maintenance are charged to the Statement of
Profit and Loss during the period in which they are incurred.

Gains or losses arising on retirement or disposal of property, plant and equipment are recognised
in the Statement of Profit and Loss.

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”.

Depreciation is provided on a pro-rata basis on the straight line method based on estimated
useful life prescribed under Schedule II to the Companies Act, 2013.

• Assets costing ' 5,000 or less are fully depreciated in the year of purchase.

Freehold land is not depreciated.

Leasehold land: Cost of Leasehold Land and installation and other expenses incurred on
Machineries taken on lease are amortized over the period of the respective lease.

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

c) Intangible Assets:

Separately purchased intangible assets are initially measured at cost. Intangible assets acquired
in a business combination are recognized at fair value at the acquisition date. Subsequently,
intangible assets are carried at cost less any accumulated amortization and accumulated
impairment losses, if any.

The useful lives of intangible assets are assessed as either finite orindefinite. Finite-life
intangible assets are amortized on a straight-linebasis over the period of their expected useful
lives. Estimated useful livesby major class of finite-life intangible assets are as follows:

Computer software - 3 years

The amortization period and the amortization method for finite-lifeintangible assets is reviewed at each
financial year end and adjustedprospectively, if appropriate.

Indefinite life intangibles mainly consist of patents. Theassessment of indefinite life is reviewed annually
to determine whetherthe indefinite life continues, if not, it is impaired or changed prospectivelybasis
revised estimates

d) Inventories:

Inventories are stated at 'cost or net realisable value, whichever is lower'. Cost comprises all
cost of purchase, cost of conversion and other costs incurred in bringing the inventories to
their present location and condition. Cost formulae used are 'Weighted Average Cost'.

e) Financial Instruments:

Financial Assets:

Financial assets are recognised when the Company becomes a party to thecontractual
provisions of the instrument. On initial recognition, a financial asset is recognised at fair value,
in case offinancial assets which are recognised at fair value through profit and loss(FVTPL), its
transaction costs are recognised in the statement of profit andloss. In other cases, the
transaction cost is attributed to the acquisitionvalue of the financial asset.

Financial assets are subsequently classified as measured at

• amortized cost

• fair value through profit and loss (FVTPL)

• fair value through other comprehensive income (FVOCI).

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

Cash and Cash Equivalents:

Cash and cash equivalents are short-term (twelve months or less from thedate of acquisition),
highly liquid investments that are readily convertibleinto cash and which are subject to an
insignificant risk of changes in value.

Investments:

Long Term Investments are carried at cost and Provision for impairment is made to recognise a
decline, other than temporary, in the value oflong term investments, script wise.

Trade Receivables and Loans:

Trade receivables are initially recognised at fair value. Subsequently, these assets are held at
amortized cost, using the effective interest rate(EIR) method net of any expected credit losses.
The EIR is the rate thatdiscounts estimated future cash income through the expected life
offinancial instrument.

Debt Instruments:

Debt instruments are initially measured at amortized cost, fair valuethrough other
comprehensive income (‘FVOCI’) or fair value through profitor loss (‘FVTPL’) till
derecognition on the basis of (i) the entity’s businessmodel for managing the financial assets
and (ii) the contractual cash flowcharacteristics of the financial asset.

a) Measured at amortized cost:

Financial assets that are held within a business model whose objective is to hold financial
assets in order to collect contractual cash flows that are solely payments of principal and

interest, are subsequently measured at amortized cost using the effective interest rate
(‘EIR’) method less impairment, if any. The amortization of EIR and loss arising from
impairment, if any is recognised in the Statement of Profit and Loss.

b) Measured at fair value through other comprehensive income:

Financial assets that are held within a business model whoseobjective is achieved by both,
selling financial assets and collectingcontractual cash flows that are solely payments of
principal andinterest, are subsequently measured at fair value through othercomprehensive
income. Fair value movements are recognized in theother comprehensive income (OCI).
Interest income measured usingthe EIR method and impairment losses, if any are
recognised in theStatement of Profit and Loss. On derecognition, cumulative gain orloss
previously recognised in OCI is reclassified from the equity toother income’ in the
Statement of Profit and Loss.

c) Measured at fair value through profit or loss:

A financial asset notclassified as either amortized cost or FVOCI, is classified as
FVTPL.Such financial assets are measured at fair value with all changesin fair value,
including interest income and dividend income if any, recognized as ‘other income’ in the
Statement of Profit and Loss.

Equity Instruments:

All investments in equity instruments classified under financial assets areinitially measured at
fair value; the Company may, on initial recognition, irrevocably elect to measure the same
either at FVOCI or FVTPL.The Company makes such election on an instrument-by¬
instrument basis. Fair value changes on an equity instrument are recognised as other incomein
the Statement of Profit and Loss unless the Company has electedto measure such instrument at
FVOCI. Fair value changes excludingdividends, on an equity instrument measured at FVOCI
are recognized in OCI. Amounts recognised in OCI are not subsequently reclassified tothe
Statement of Profit and Loss. Dividend income on the investments inequity instruments are
recognised as ‘other income’ in the Statement of Profit and Loss.

Derecognition:

The Company derecognises a financial asset when the contractual rightsto the cash flows from
the financial asset expire, or it transfers the contractual rights to receive the cash flows from the
asset.

Impairment of Financial Asset:

Expected credit losses are recognized for all financial assets subsequentto initial recognition
other than financials assets in FVTPL category.For financial assets other than trade
receivables, as per Ind AS 109, theCompany recognises 12 month expected credit losses for all
originatedor acquired financial assets if at the reporting date the credit risk of thefinancial asset
has not increased significantly since its initial recognition.The expected credit losses are
measured as lifetime expected credit lossesif the credit risk on financial asset increases
significantly since its initialrecognition. The Company’s trade receivables do not contain
significantfinancing component and loss allowance on trade receivables is measuredat an
amount equal to life time expected losses i.e. expected cash shortfall. The impairment losses
and reversals are recognised in Statement of Profitand Loss.

Financial Liabilities:

Initial recognition and measurement

Financial liabilities are recognised when the Company becomes a partyto the contractual
provisions of the instrument. Financial liabilities areinitially measured at the amortized cost
unless at initial recognition, they are classified as fair value through profit and loss. In case of
tradepayables, they are initially recognised at fair value and subsequently, theseliabilities are
held at amortized cost, using the effective interest method.

Subsequent measurement

Financial liabilities are subsequently measured at amortized cost usingthe EIR method.
Financial liabilities carried at fair value through profit orloss and are measured at fair value
with all changes in fair value recognised inthe Statement of Profit and L

Derecognition

A financial liability is derecognised when the obligation specified in thecontract is discharged,
cancelled or expires.