J MATERIAL ACCOUNTING POLICIES

This note provides a list of the material accounting policies
adopted in the preparation of these standalone financial
statements. These policies have been consistently applied
to all the years presented, unless otherwise stated.

1.1 Basis of preparation of standalone financial
statements

a) Compliance with Ind AS

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) [Companies
(Indian Accounting Standards) Rules, 2015 as
amended] and other relevant provisions of the Act.
The Standalone Financial statements presents the
financial position of the Company and it includes
the financial information of one trust viz. Welspun
Corp Employees Welfare Trust which is controlled
by the Company. Treasury shares are held in trust
whose sole beneficiary is Welspun Corp Limited.
Also refer note 16.

b) Historical cost convention

The standalone financial statements have been
prepared on an accrual and going concern basis.
The standalone Financial statements have been
prepared on a historical cost basis, except for the
following items:

c) Current and non-current classification

All assets and liabilities have been classified as
current or non-current as per the Company’s
normal operating cycle (i.e. 12 months) and other
criteria set out in Schedule III (Division II) to the
Act.

d) Recent Pronouncement

Ministry of Corporate Affairs ("MCA") notifies
new standards or amendments to the existing
standards under the Companies (Indian
Accounting Standards) Rules as issued from time
to time. There is no such notification which would
have been applicable from 1 April 2025.

1.2 Revenue recognition

a) Sale of goods

The Company derives revenue principally from
sale of pipes and steel products (including pig iron
and hot metal).

The Company recognises revenue when it
satisfies a performance obligation in accordance
with the provisions of contract with the customer.
This is achieved when control of the product
has been transferred to the customer, which is
generally determined when title, ownership, risk of
obsolescence and loss pass to the customer and
the Company has the present right to payment, all
of which occurs at a point in time upon shipment
or delivery of the product. The Company considers
freight activities as costs to fulfil the promise to
transfer the related products and the payments by
the customers for freight costs are recorded as a
component of revenue.

A receivable is recognised when the goods are
delivered as this is the point in time that the
consideration is unconditional because only the
passage of time is required before the payment is
due.

In certain customer contracts, freight services
are treated as a distinct separate performance
obligation and the Company recognises revenue
for such services when the performance obligation
is completed.

The Company considers the terms of the
contract in determining the transaction price. The
transaction price is based upon the amount the
Company expects to be entitled to in exchange
for transferring of promised goods and services to
the customer after deducting incentive programs,
included but not limited to discounts, volume
rebates, etc.

Revenue is recognized at a determined transaction
price when identified performance obligations are
satisfied. The bill and hold contracts are entered at
the request of the customer.

Revenue from bill and hold contracts is recognised
at the agreed transaction price (determined price).
The price for bill and hold contracts is determined
at the time of entering into the transaction and
the performance obligation is satisfied when
goods have been appropriated towards the sale
transaction (the control of asset is transferred to
the customer and other conditions are satisfied as
per Ind AS 115).

Revenue excludes any taxes and duties collected
on behalf of the government.

The Company’s payment terms range from 0 to
60 days from date of delivery, depending on the
market and product sold.

b) Sale of services

The Company provides freight services to its
customers. Revenue from providing freight
services is recognised in the accounting period
in which the services are rendered. The related
freight costs incurred are included in freight
expenses when the Company is acting as principal
in the freight arrangement.

Freight services may be considered a separate
performance obligation if control of the goods
transfers to the customer before goods reach to
the agreed place of shipment, but the entity has
promised to ship the goods (or arrange for the
goods to be shipped). In contrast, if control of
goods does not transfer to the customer before
goods reach to the agreed place of shipment,
freight service is not a promised service to the
customer. This is because freight service is a
fulfillment activity as the costs are incurred as part
of transferring the goods to the customer.
Revenue towards satisfaction of a performance
obligation is measured at the amount of
transaction price (net of variable consideration)
allocated to that performance obligation.

c) Insurance claims received

Claim from insurance companies are accounted
when it is virtually certain that an inflow of
economic benefit will arise and to the extent
amount received from insurance companies.

1.3 Government grants

Grants from the government are recognised at their fair
value where there is a reasonable assurance that the
grant will be received, and the Company will comply
with all attached conditions.

Export incentives and subsidies are recognized when
there is reasonable assurance that the Company will
comply with the conditions and the incentive will be
received.

Grants related to assets are government grants whose
primary condition is that an entity qualifying for them
should purchase, construct or otherwise acquire long¬
term assets. Grants related to income are government
grants other than those related to assets.

Government grants relating to income are deferred and
recognised in the profit or loss over the period necessary
to match them with the costs that they are intended
to compensate and presented either under "other
operating income" or are deducted in reporting the
related expense. Grants related to income are presented
under Other Operating Revenue or Other Income in the
statement of profit and loss depending upon the nature
of the underlying grant. This presentation approach is
applied consistently to all similar grants.

Government grants relating to the purchase of property,
plant and equipment are included in liabilities as
"Government grants" and are credited to profit or loss
on a straight-line basis over the expected lives of the
related assets and presented within "Other operating
income" (Revenue from operations) in case of VAT
incentive. In case of disposal of such property, plant
and equipment, related Government Grants included
in the liabilities are written back and charged to the
statement of profit and loss.

In case of SGST incentive, the Company is following
the net basis of accounting of government grants.
As per this method, the balance sheet would reflect
the cumulative net amount of grant that has been
amortised to date and the cash that has been received
/ reasonably assured to be received under the terms
of the grant and corresponding government grant is
recognised in the statement of profit and loss.

Export Promotion Capital Goods (EPCG) grant relating
to property, plant and equipment relate to duty saved
on import of capital goods and spares under the EPCG

scheme. Under the scheme, the Company is committed
to export prescribed times of the duty saved on import
of capital goods over a specified period of time. In case
such commitments are not met, the Company would
be required to pay the duty saved along with interest
to the regulatory authorities. Such grants are initially
recognized / added in the cost of underlying property,
plant and equipment and a corresponding liability
which is released to the statement of profit and loss
on straight-line basis over useful life of related property,
plant and equipment.

Export Benefits - In case of sale made by the Company
as Support Manufacturer, export benefits arising from
Duty Entitlement Pass Book (DEPB), Remission of
Duties and Taxes on Export Products ("RoDTEP") and
Duty Drawback scheme are recognised on export of
such goods in accordance with the agreed terms and
conditions with customers. In case of direct exports
made by the Company, export benefits arising from
DEPB, Duty Drawback scheme and RoDTEP are
recognised on shipment of direct exports.

1.4 Income tax and deferred tax

The Income tax expense or credit for the year is the tax
payable on the current year’s taxable income based on
the applicable income tax rate adjusted by changes
in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.

a) Current income tax

Current tax charge is based on taxable profit
for the year. The tax rates and tax laws used to
compute the amount are those that are enacted or
substantively enacted, at the reporting date where
the Company operates and generates taxable
income. Management periodically evaluates
positions taken in tax returns with respect to
situations in which applicable tax regulation is
subject to interpretation and considers whether
it is probable that the taxation authority will
accept an uncertain tax treatment. It establishes
provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.

Current tax assets and tax liabilities are offset
where the Company has a legally enforceable
right to offset and intends either to settle on a net
basis, or to realise the asset and settle the liability
simultaneously.

b) Deferred tax

Deferred tax is, on temporary differences arising
between the tax bases of assets and liabilities and
their carrying amounts in the standalone financial

statements. However, deferred tax liabilities
are not recognized if they arise from the initial
recognition of goodwill.

Deferred tax is determined using tax rates (and
laws) that have been enacted or substantially
enacted by the end of the reporting period and are
expected to apply when the related deferred tax
assets is realized or deferred tax liability is settled.
Deferred tax are recognised for all deductible
temporary difference and unused tax losses only
if it is probable that future taxable amounts will be
available to utilise those temporary differences
and losses.

Deferred income tax is not accounted for if it arises
from initial recognition of an asset or liability in a
transaction other than a business combination
that at the time of the transaction affects neither
accounting profit nor taxable profit (tax loss).

The carrying amount of deferred tax assets is
reviewed at each reporting date and adjusted
to reflect changes in probability that sufficient
taxable profits will be available to allow all or part
of the asset to be recovered.

Deferred tax assets and liabilities are offset if
there is a legally enforceable right to offset current
tax liabilities and assets, and they relate to income
taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they
intend to settle current tax liabilities and assets on
a net basis or their tax assets and liabilities will be
realised simultaneously.

Current and deferred tax is recognised in profit or
loss, except to the extent that it relates to items
recognised in other comprehensive income or
directly in equity. In this case, the tax is also
recognised in other comprehensive income or
directly in equity, respectively

1.5 Property, plant and equipment

The cost of property, plant and equipment comprises its
purchase price net of any trade discounts and rebates,
any import duties and other taxes (other than those
subsequently recoverable from the tax authorities), any
directly attributable expenditure on making the asset
ready for its intended use, including relevant borrowing
costs for qualifying assets and any expected costs of
decommissioning.

Freehold land is carried at historical cost less any
accumulated impairment losses. All other items of
property, plant and equipment are stated at historical
cost less depreciation.

Subsequent costs are included in the asset’s carrying amount or recognised 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. The carrying amount of any component accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are
incurred. Overhaul expenditure is capitalised where the activities undertaken improves the economic benefits expected to
arise from the asset.

Cost of Capital Work in Progress ('CWIP’) comprises amount paid towards acquisition of property, plant and equipment
outstanding as of each balance sheet date and construction expenditures, other expenditures necessary for the purpose
of preparing the CWIP for its intended use and borrowing cost incurred before the qualifying asset is ready for intended
use. CWIP is not depreciated until such time as the relevant asset is completed and ready for its intended use.

The Company has elected to continue with the carrying value for all of its property, plant and equipment as recognised in
the financial statements on transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as
at the date of transition.

Depreciation methods, estimated useful lives and residual value

Freehold land is not depreciated. Depreciation is calculated using the straight-line method to allocate the cost of the
assets, net of their residual values, over their estimated useful lives as follows:

The useful lives have been determined based on
technical evaluation done by management’s expert
which may differ from those specified in Schedule II of
the Companies Act, 2013 (as indicated in table above)
in order to reflect the actual usage of the assets.

The estimated useful lives of plant and machinery,
determined based on internal technical advice,
considers the nature of the asset, the usage of the
asset, expected physical wear and tear, the operating
conditions of the asset, anticipated technological
changes, etc.

The residual values are not more than 5% of the original
cost of the asset.

Major overhaul costs are depreciated over the estimated
life of the economic benefit derived from the overhaul.
The carrying amount of the remaining previous overhaul
cost is charged to the Statement of Profit and Loss.

An asset’s carrying amount is written down immediately
to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount.

Estimated useful lives, residual values and depreciation
methods are reviewed annually, taking into account
commercial and technological obsolescence as well
as normal wear and tear and adjusted prospectively, if
appropriate.

An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These are
included in profit or loss within other expenses or other
income or other expenses, as applicable.

1.6 Impairment of assets

Intangible assets that have an indefinite useful life are
not subject to amortization and are tested annually for
impairment or more frequently if events or changes in
circumstances indicate that they might be impaired.
Other assets are tested for impairment whenever events
or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss

is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair
value less costs of disposal and value in use. For the
purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately
identifiable cash inflows which are largely independent
of the cash inflows from other assets or groups of
assets (cash-generating units). Non-financial assets
that suffered impairment are reviewed for possible
reversal of the impairment at the end of each reporting
period.

Recoverable amount is the higher of fair value less
costs to sell and value in use. In assessing value in use,
the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of
money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash
generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or cash
generating unit) is reduced to its recoverable amount.
An impairment loss is recognised immediately in the
Statement of Profit and Loss.

Where an impairment loss subsequently reverses, the
carrying value of the asset (or cash generating unit)
is increased to the revised estimate of its recoverable
amount so that the increased carrying value does
not exceed the carrying value that would have been
determined had no impairment loss been recognised
for the asset (or cash generating unit) in prior years.
A reversal of an impairment loss is recognised in the
statement of profit and loss immediately.

Impairment of assets excludes investment property,
inventories, contract assets and deferred tax assets

Write-off

The gross carrying amount of a financial asset is written
off when the Company has no reasonable expectations
of recovering a financial asset in its entirety or a portion
thereof. For individual customers, the Company has a
policy of writing off the gross carrying amount when
the financial asset is 180 days past due based on
historical experience of recoveries of similar assets. For
corporate customers, the Company individually makes
an assessment with respect to the timing and amount
of write-off based on whether there is a reasonable
expectation of recovery. The Company expects no
significant recovery from the amount written off.
However, financial assets that are written off could

still be subject to enforcement activities in order to
comply with the Company’s procedures for recovery of
amounts due

1.7 Inventories

Raw materials, stores and spares, work in progress,
traded goods, acquired scrap and finished goods

Raw materials, stores and spares, work in progress,
traded goods, acquired scrap and finished goods are
stated at the lower of cost and net realisable value.
The comparison of cost and net realisable value is
made on an item-by-Item basis. Cost of raw materials,
traded goods and acquired scrap comprises cost of
purchases on moving weighted average basis. Cost of
work-in progress and finished goods comprises direct
materials, direct labour and an appropriate proportion
of variable and fixed overhead expenditure, the latter
being allocated on the basis of normal operating
capacity. Cost of inventories also includes all other
costs incurred in bringing the inventories to their present
location and condition. Costs are assigned to individual
items of inventory on moving weighted average basis.
Costs of purchased inventory are determined after
deducting rebates and discounts. 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.

1.8 Investment in subsidiaries, joint ventures and
associate

The investments in subsidiaries, joint ventures and
associate are carried in the standalone financial
statements at historical cost except when the
investment, or a portion thereof, is classified as held for
sale, in which case it is accounted for as Non-current
assets held for sale and discontinued operations.

When the Company is committed to a sale plan
involving disposal of an investment, or a portion of
an investment, in any subsidiary or joint venture, the
investment or the portion of the investment that will
be disposed of is classified as held for sale when the
criteria described above are met. Any retained portion
of an investment in a subsidiary or a joint venture that
has not been classified as held for sale continues to be
accounted for at historical cost.

Company considers issuance of non-market rate
redeemable preference shares by subsidiary as
compound instrument comprising a loan with market
terms and a capital injection and hence treat the
difference between the cash paid and fair value on
initial recognition as an addition to the investment in

the subsidiary and presented separately as ,Investment
in equity component of preference shares' under ,Equity
investments in subsidiaries and joint ventures’. Equity
Component is not subsequent remeasured.

1.9 Financial Instruments

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

a) Financial assets

(I) Classification

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

• those to be measured subsequently
at fair value (either through other
comprehensive income, or through
profit or loss); and

• those measured at amortised cost.

The classification depends on the entity’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 profit
or loss or other comprehensive income. 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 other
comprehensive income.

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

(II) Measurement

At initial recognition, the Company measures
a financial asset (excluding trade receivables
without a significant financing component)
at its fair value plus, in the case of a financial
asset not at fair value through profit or
loss, transaction costs that are directly
attributable to the acquisition of the financial
asset. However, trade receivables do not
contain significant financing component are
measured at transaction price. After initial
recognition, financial assets not measured at

fair value through profit & Loss are measured
using effective interest method. The effective
interest rate is the rate that exactly discounts
estimated future cash flow through the
expected life of the financial asset, or,
where appropriate, a shorter period, to the
net carrying amount on initial recognition.
Transaction costs of financial assets carried
at fair value through profit or loss are
expensed in profit or loss.

(i) Debt instruments

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
that is subsequently measured at
amortised cost and is not part of a
hedging relationship is recognised
in profit or loss when the asset is
derecognised or impaired. Interest
income from these financial assets
is included in other income using
the effective interest rate method.

• Fair value through other
comprehensive income (FVOCI):
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 fair value
through other comprehensive
income (FVOCI). Movements in
the carrying amount are taken
through OCI, except for the
recognition of impairment gains
or losses, interest income and
foreign exchange gains and losses
which are recognised in profit and
loss. When the financial asset is

derecognised, the cumulative gain
or loss previously recognised in
OCI is reclassified from equity to
profit or loss and recognised in
other income or other expenses
(as applicable). Interest income
from these financial assets is
included in other income using the
effective interest rate method.

• Fair value through profit or loss
(FVTPL): Assets that do not meet
the criteria for amortised cost or
FVOCI are measured at fair value
through profit or loss. A gain or
loss on a debt investment that is
subsequently measured at fair
value through profit or loss and is
not part of a hedging relationship
is recognised in profit or loss and
presented net in the statement
of profit and loss within other
income or other expenses (as
applicable) in the period in which it
arises. Interest income from these
financial assets is included in other
income.

(ii) Equity instruments

The Company subsequently measures
all equity investments at fair value.
Where the Company’s management
has elected to present fair value gains
and losses on equity investments in
other comprehensive income and there
is no subsequent reclassification of
fair value gains and losses to profit or
loss. Dividends from such investments
and gain/loss on restatement of equity
shares held in foreign currency are
recognised in profit or loss as other
income when the Company’s right to
receive payments is established.
Changes in the fair value of financial
assets at fair value through profit or loss
are recognised in other income or other
expenses, as applicable in the statement
of profit and loss. Impairment losses
(and reversal of impairment losses) on
equity investments measured at FVOCI
are not reported separately from other
changes in fair value.

(MI) Impairment of financial assets

The Company assesses on a forward looking
basis the expected credit losses associated
with its assets carried at amortised cost.

For trade receivables and contract assets,
the Company applies the simplified
approach permitted by Ind AS 109 Financial
Instruments, which requires expected
lifetime losses to be recognised from initial
recognition of the receivables.

(IV) Derecognition of financial assets

A financial asset is derecognised only when

• The Company has transferred the rights
to receive cash flows from the financial
asset or

• Retains the contractual rights to receive
the cash flows of the financial asset,
but assumes a contractual obligation
to pay the cash flows to one or more
recipients.

Where the entity has transferred an asset,
the Company evaluates whether it has
transferred substantially all risks and rewards
of ownership of the financial asset. In such
cases, the financial asset is derecognised.
Where the entity has not transferred
substantially all risks and rewards of
ownership of the financial asset, the financial
asset is not derecognised.

Where the entity has neither transferred a
financial asset nor retains substantially all
risks and rewards of ownership of the financial
asset, the financial asset is derecognised if
the Company has not retained control of the
financial asset. Where the Company retains
control of the financial asset, the asset is
continued to be recognised to the extent of
continuing involvement in the financial asset.

(V) Income recognition
(i) Interest income

Interest income from a financial assets
is recognized when it is probable that
the economic benefits will flow to the
Company and the amount of income
can be measured reliably. Interest
income is accrued on time basis by
reference to principal outstanding and
the effective interest rate applicable
which is the rate that exactly discounts

estimated future cash receipts through
the expected life of the financial asset to
the gross carrying amount of a financial
asset. When calculating the effective
interest rate, the Company estimates
the expected cash flows by considering
all the contractual terms of the financial
instrument (for example, prepayment,
extension, call and similar options) but
does not consider the expected credit
losses.

Interest on income tax and indirect tax
are recognised in the year in which it is
received.

(ii) Dividend income

Dividend income are recognised in
profit or loss only when the right to
receive payment is established, it is
probable that the economic benefits
associated with the dividend will flow
to the Company and the amount of the
dividend can be measured reliably.

(iii) Financial guarantee contracts:

These are initially measured at their fair
values and, are subsequently measured
at the higher of the amount of loss
allowance determined or the amount
initially recognized less, the cumulative
amount of income recognized

(VI) Cash and cash equivalents

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

(VII) Trade receivable

Trade receivables are amounts due from
customers for goods sold or services
performed in the ordinary course of business
and reflects Company’s unconditional right to
consideration (that is, payment is due only on
the passage of time). Trade receivables are
recognised initially at the transaction price
as they do not contain significant financing
components. The Company holds the trade
receivables with the objective of collecting
the contractual cash flows and therefore

measures them subsequently at amortised
cost using the effective interest method, less
loss allowance.

b) Financial liabilities

(I) Measurement

Financial liabilities are initially recognised
at fair value, reduced by transaction costs
(in case of financial liability not at fair value
through profit or loss), that are directly
attributable to the issue of financial liability.
After initial recognition, financial liabilities are
measured at amortised cost using effective
interest method. The effective interest rate
is the rate that exactly discounts estimated
future cash outflow (including all fees paid,
transaction cost, and other premiums or
discounts) through the expected life of the
financial liability, or, where appropriate, a
shorter period, to the net carrying amount
on initial recognition. At the time of initial
recognition, there is no financial liability
irrevocably designated as measured at fair
value through profit or loss.

(II) Derecognition

A financial liability is derecognised when the
obligation under the liability is discharged
or cancelled or expires. When an existing
financial liability is replaced by another from
the same lender on substantially different
terms, or the terms of an existing liability are
substantially modified, such an exchange or
modification is treated as the de-recognition
of the original liability and the recognition of a
new liability. The difference in the respective
carrying amounts is recognised in the
statement of profit or loss.

(III) Borrowings

Borrowings are initially recognised at fair
value, net of transaction costs incurred.
Borrowings are subsequently measured at
amortised cost. Any difference between the
proceeds (net of transaction costs) and the
redemption amount is recognised in profit or
loss over the period of the borrowings using
the effective interest method.

Fees paid on the establishment of loan
facilities are recognised as transaction costs
of the loan to the extent that it is probable
that some or all of the facility will be drawn

down. In this case, the fee is deferred until
the draw down occurs. To the extent there is
no evidence that it is probable that some or
all of the facility will be drawn down, the fee
is capitalised as a prepayment for liquidity
services and amortised over the period of the
facility to which it relates.

Borrowings are removed from the balance
sheet when the obligation specified in
the contract is discharged, cancelled or
expired. The difference between the carrying
amount of a financial liability that has been
extinguished or transferred to another party
and the consideration paid, including any
non-cash assets transferred or liabilities
assumed, is recognised in profit and loss
as other income or other expenses, as
applicable.

Where the terms of a financial liability are
renegotiated and the entity issues equity
instruments to a creditor to extinguish all or
part of the liability (debt for equity swap), a
gain or loss is recognised in profit or loss,
which is measured as the difference between
the carrying amount of the financial liability
and the fair value of the equity instruments
issued.

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. Where there is a breach of a material
provision of a long-term loan arrangement
on or before the end of the reporting period
with the effect that the liability becomes
payable on demand on the reporting date, the
entity does not classify the liability as current,
if the lender agreed, after the reporting period
and before the approval of the standalone
financial statements for issue, not to demand
payment as a consequence of the breach.

(IV) Trade and other payables

These amounts represent liabilities for goods
and services provided to the Company prior
to the end of financial year which are unpaid.
Trade and other payables are presented as
current liabilities unless payment is not due
within 12 months after the reporting period.
Trade and other payables are recognised,
initially at fair value, and subsequently

measured at amortised cost using effective
interest rate method.

Trade payables includes acceptances
arrangements where operational suppliers of
goods are paid by banks while the Company
continues to recognise the liability till
settlement with the banks.

c) Derivatives and hedging activities

In order to hedge its exposure to foreign exchange
and interest rate, the Company enters into forward
and interest rate swap contracts and other
derivative financial instruments. The Company
does not hold derivative financial instruments for
speculative purposes.

Derivatives are initially recognized at fair value on
the date a derivative contract is entered into and
are subsequently re-measured 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.

The Company designates their derivatives as
hedges of foreign exchange risk associated
with the cash flows of highly probable forecast
transactions and variable interest rate risk
associated with borrowings (cash flow hedges).
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 of
hedged items. The Company documents its
risk management objective and strategy for
undertaking various hedge transactions at the
inception of each hedge relationship.

The full fair value of a hedging derivative is
classified as a non-current asset or liability when
the remaining maturity of the hedged item is more
than 12 months; it is classified as a current asset
or liability when the remaining maturity of the
hedged item is less than 12 months.

(I) 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
in the other comprehensive income in 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 profit or loss,
within other income or other expenses (as
applicable).

When forward contracts are used to hedge
forecast transactions, the Company generally
designates the full change in fair value of the
forward contract (including forward points)
as the hedging instrument. In such cases,
the gains and losses relating to the effective
portion of the change in fair value of the
entire forward contract are recognised in the
cash flow hedging reserve within equity.
Amounts accumulated in equity are
reclassified to profit or loss in the periods
when the hedged item affects profit or loss.
Where the hedged item subsequently
results in the recognition of a non-financial
asset (such as inventory), both the deferred
hedging gains and losses and the deferred
time value of the deferred forward contracts,
if any are included within the initial cost of the
asset.

When a hedging instrument expires, or is sold
or terminated, or when a hedge no longer
meets the criteria for hedge accounting,
any cumulative deferred gain or loss 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 that was
reported in equity is immediately reclassified
to profit or loss within other income or other
expense (as applicable). If the hedge ratio
for risk management purposes is no longer
optimal but the risk management objective
remains unchanged and the hedge continues
to qualify for hedge accounting, the hedge
relationship will be rebalanced by adjusting
either the volume of the hedging instrument
or the volume of the hedged item so that
the hedge ratio aligns with the ratio used
for risk management purposes. Any hedge
ineffectiveness is calculated and accounted
for in statement of profit or loss at the time of
the hedge relationship rebalancing.

(II) Derivatives that are not designated as
hedges

The Company enters into derivative contracts
to hedge risks which are not designated as
hedges. Such contracts are accounted for
at fair value through profit or loss and are
included in other income or other expenses
(as applicable).

d) Offsetting financial instruments

Financial assets and liabilities are offset and the
net amount is reported in the balance sheet where
there is a legally enforceable right to offset the
recognised amounts and there is an intention to
settle on a net basis or realise the asset and settle
the liability simultaneously. The legally enforceable
right must not be contingent on future events
and must be enforceable in the normal course of
business and in the event of default, insolvency or
bankruptcy of the Company or the counterparty.