2. 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.

2.1 Basis of preparation of standalone financial
statements

The standalone financial statements of the Company
have been prepared in accordance with Indian
Accounting Standards (Ind AS) notified under Section
133 of the Companies Act, 2013 (the Act) read with
Companies (Indian Accounting Standards) Rules,
2015, as amended from time to time and presentation
requirements of Division II of Schedule III to the
Companies Act, 2013 (Ind AS compliant Schedule III)
as applicable to the standalone financial statements.
The standalone financial statements have been
prepared on accrual and going concern basis. The
standalone financial statements have been prepared
on a historical cost basis, except for certain assets
and liabilities that are measured at fair value as stated
in subsequent policies.

Standalone financial statements also includes
financial statements of the Trust (Welspun Living
Employee Welfare Trust) which is controlled by
the Company.

2.2 Foreign currency translation

a) Functional and presentation currency

The standalone financial statements of the
Company are presented in Indian Rupee (INR)
and all values are rounded to the nearest crore,
which is also its functional currency and all items
included in the standalone financial statements
of the Company are measured using the same
functional currency.

b) Transactions and balances

Foreign currency transactions are translated
and recorded into the functional currency
using the exchange rates prevailing on the date
of the transaction. Foreign exchange gains
and losses resulting from the settlement of
such transactions and from the translation of
monetary assets and liabilities denominated in
foreign currencies at year end exchange rates
are generally recognised in statement of profit
and loss. They are deferred in equity if they relate
to qualifying cash flow hedges.

Foreign exchange differences regarded as an
adjustment to borrowing costs are presented in
the statement of profit and loss, within finance
costs. All other foreign exchange gains and
losses are presented in the statement of profit
and loss on a net basis within other expenses or
other income, as applicable.

Non-monetary items that are measured in
terms of historical cost in a foreign currency are
translated using the exchange rates at the date of
the initial transaction. Non-monetary items that
are measured at fair value in a foreign currency
are translated using the exchange rates at the
date when the fair value is determined. The gain
or loss arising on translation of non-monetary
items measured at fair value is treated in line
with the recognition of the gain or loss on the
change in fair value of the item (i.e., translation
differences on items whose fair value gain or
loss is recognised in OCI or profit or loss are also
recognised in OCI or the statement of profit and
loss, respectively).

2.3 Revenue recognition

Revenue from contracts with customers

Revenue from contracts with customers is recognised
at transaction price (net of variable consideration)
when control of the goods or services are transferred
to the customer at an amount that reflects the
consideration to which the Company expects to be
entitled in exchange for those goods or services.
The Company has generally concluded that it is
the principal in its revenue arrangements because
it typically controls the goods or services before
transferring them to the customer.

Revenue excludes amounts collected on behalf of
third parties.

The disclosures of significant accounting judgments,
estimates and assumptions relating to revenue from
contracts with customers are provided in Note 46.

(a) Sale of goods

For sale of goods, revenue is recognised when
control of the goods is transferred at a point in
time i.e. when the goods have been delivered
to the specific location (delivery). Following
delivery, the customer has full discretion over the
responsibility, manner of distribution, price to sell
the goods and bears the risks of obsolescence
and loss in relation to the goods. A receivable is
recognised by the Company when the goods are
delivered to the customer as this represents the
point in time at which the right to consideration
becomes unconditional, as only the passage of
time is required before payment is due. Payment
is due within 0-180 days. The Company considers
the effects of variable consideration, the
existence of significant financing components,
noncash consideration, and consideration
payable to the customer (if any).

• Variable consideration

If the consideration in a contract includes
a variable amount, the Company estimates
the amount of consideration to which it will
be entitled in exchange for transferring
the goods to the customer. The variable
consideration is estimated at contract
inception and constrained until it is highly
probable that a significant revenue reversal
in the amount of cumulative revenue
recognised will not occur when the
associated uncertainty with the variable
consideration is subsequently resolved.
Some contracts for the sale of goods provide
customers with rebates (including mark-
downs, chargebacks etc.). The rights to
rebates give rise to variable consideration.

The Company provides retrospective
rebates including, markdowns, chargebacks
etc. to certain customers once the conditions
relating to such rebates are satisfied as per
terms of the contract. Rebates are offset
against amounts payable by the customer.
To estimate the variable consideration
for the expected future rebates, the
Company applies the most likely amount
method for contracts. The Company then
applies the requirements on constraining
estimates of variable consideration and
recognises a refund liability for the expected
future rebates.

b) Engineering Procurement and Construction
(EPC) Contracts

Performance obligations with reference to
Engineering Procurement and Construction (EPC)

contracts are satisfied over the period of time,
and accordingly, Revenue from such contracts
is recognized based on progress of performance
determined using input method with reference to
the cost incurred on contract and their estimated
total costs. Transaction price is the amount of
consideration to which the Company expects to
be entitled in exchange for transferring goods
or services to a customer excluding amounts
collected on behalf of a third party.

Revenue, measured at transaction price, is
adjusted towards liquidated damages, time
value of money and price variations, escalation,
change in scope etc. wherever, applicable.

Estimates of revenue and costs are reviewed
periodically and revised, wherever circumstances
change, resulting increases or decreases in
revenue determination, is recognized in the
statement of profit and loss period in which
estimates are revised.

The Company evaluates whether each contract
consists of a single performance obligation or
multiple performance obligations. Due to the
nature of the work required to be performed
on many of the performance obligations,
the estimation of total revenue and cost at
completion is subject to many variables and
requires significant judgement. The Company
considers its experience with similar transactions
and expectations regarding the contract in
estimating the amount of variable consideration
to which it will be entitled and determining
whether the estimated variable consideration
should be constrained. The Company includes
estimated amounts in the transaction price
to the extent it is probable that a significant
reversal of cumulative revenue recognised will
not occur when the uncertainty associated with
the variable consideration is resolved.

Progress billings are generally issued upon
completion of certain phases of the work as
stipulated in the contract. Billing terms of the
over-time contracts vary but are generally
based on achieving specified milestones. The
difference between the timing of revenue
recognised and customer billings result in
changes to contract assets and contract
liabilities. Contractual retention amounts billed
to customers are generally due upon expiration
of the contract period.

The contracts generally result in revenue
recognised in excess of billings which are
presented as contract assets on the statement
of financial position. Amounts billed and due from
customers are classified as receivables on the

statement of financial position. The portion of
the payments retained by the customer until final
contract settlement is not considered a significant
financing component since it is usually intended
to provide customer with a form of security for
Company's remaining performance as specified
under the contract, which is consistent with the
industry practice. Contract liabilities represent
amounts billed to customers in excess of revenue
recognised till date. A liability is recognised for
advance payments and it is not considered as
a significant financing component since it is
used to meet working capital requirements
at the time of project mobilization stage. The
same is presented as contract liability in the
balance sheet.

• Contract balances:

Trade receivables

A receivable represents the Company's
right to an amount of consideration that
is unconditional (i.e., only the passage of
time is required before payment of the
consideration is due). Refer to accounting
policies of financial assets in note no. 2.12
Financial Instruments - Financial Assets.

Contract liabilities

A contract liability is the obligation to transfer
goods or services to a customer for which
the Company has received consideration (or
an amount of consideration is due) from the
customer. If a customer pays consideration
before the Company transfers goods
or services to the customer, a contract
liability is recognised when the payment is
made or the payment is due (whichever is
earlier). Contract liabilities are recognised
as revenue when the Company performs
under the contract.

Refund liabilities

A refund liability is the obligation to refund
some or all of the consideration received
(or receivable) from the customer and is
measured at the amount the Company
ultimately expects it will have to return
to the customer. The Company updates
its estimates of refund liabilities (and the
corresponding change in the transaction
price) at the end of each reporting period.
Refer to above accounting policy on
variable consideration.

Cost to obtain a contract and cost to
fulfill a contract

The Company pays sales commission to its
selling agents for each contract that they
obtain for the Company. The Company
has elected to apply the optional practical
expedient for costs to obtain a contract
which allows the Company to immediately
expense sales commissions (under Other
Expenses) because the amortisation period
of the asset that the Company otherwise
would have used is less than one year.

Costs to fulfill a contract i.e. freight,
insurance and other selling expenses are
recognised as an expense (under Other
Expense) in the period in which related
revenue is recognised.

c) Other Operating Income

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.
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 an expense item
are recognised in the statement of profit and loss
over the period necessary to match them with
the costs that they are intended to compensate
and presented either under "Other Operating
Income” (Revenue from Operations) or are
deducted in reporting the related expense. The
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 deferred income
and are credited to the statement of profit and
loss over the periods and in proportions in
which depreciation expense on those assets
is recognised.

Rebate/Drawback of Taxes and Duties

In case of sale made by the Company as Support
Manufacturer, rebate/drawback of taxes and
duties arising from Remissions of Duties and
Taxes on Exported Products (RoDTEP), Duty
Drawback scheme, Rebate of State and Central
Taxes and Levies (ROSCTL) and other applicable
export incentives are recognised on post export

basis at the rate at which the entitlements accrue
and is included in the 'Other Operating Income'
(Revenue from operation).

Sale of Scrap

Sale of manufacturing scrap is treated as
other operating income and is recognised at
transaction price when the control of goods is
transferred to the customer.

Other Income

Other income is accounted for on accrual basis
except where the receipt of income is uncertain.

2.4 Income 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.

Current and deferred tax is recognised in the
statement of profit and loss except to the extent it
relates to items recognised directly in equity or other
comprehensive income, in which case it is recognised
in equity or other comprehensive income respectively.

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. It
establishes provisions where appropriate on
the basis of amounts expected to be paid to the
tax authorities. Current tax assets and liabilities
are offset when there is a legally enforceable
right to set off current tax assets against current
tax liabilities.

b) Deferred tax

Deferred tax is provided using the balance sheet
approach on temporary differences between
the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes
at the reporting date. Deferred tax assets are
recognised to the extent that it is probable that
future taxable income will be available against
which the deductible temporary differences,
unused tax losses, depreciation carry-forwards
and unused tax credits could be utilised.

Deferred tax liabilities are recognised for all
taxable temporary differences to the extent that
it is probable that they will result in future taxable
amounts when the carrying value of assets or
liabilities is recovered or settled.

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).

Deferred tax assets and liabilities are measured
based on the tax rates that are expected to apply
in the period when the asset is realised or the
liability is settled, based on tax rates and tax laws
that have been enacted or substantively enacted
by the balance sheet date.

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.

In assessing the recoverability of deferred tax
assets, the Company relies on the same forecast
assumptions used elsewhere in the financial
statements and in other management reports,
which, among other things, reflect the potential
impact of climate-related development on the
business, such as increased cost of production as
a result of measures to reduce carbon emission.

Deferred income tax assets and liabilities are
off-set against each other and the resultant
net amount is presented in the balance sheet,
if and only when, (a) the Company has a legally
enforceable right to set-off the current income
tax assets and liabilities, and (b) the Deferred
income tax assets and liabilities relate to income
tax levied by the same taxation authority.

Deferred tax assets are not recognised for
temporary differences between the carrying
amount and tax bases of investments in
subsidiaries where it is not probable that the
differences will reverse in the foreseeable future
and taxable profit will not be available against
which the temporary difference can be utilised.

2.5 Exceptional items

Exceptional items comprise items of income and
expense, including tax items, that are material in
amount and unlikely to recur and which merit separate
disclosure in order to provide an understanding of the
Company's underlying financial performance.

2.6 Leases

The Company assesses at contract inception
whether a contract is, or contains, a lease. That is, if
the contract conveys the right to control the use of
an identified asset for a period of time in exchange
for consideration.

As a lessee

The Company applies a single recognition and
measurement approach for all leases, except for
short-term leases and leases of low-value assets. The
Company recognises lease liabilities to make lease
payments and right-of-use assets representing the
right to use the underlying assets.

a) Right-of-use assets

The Company recognises right-of-use assets at
the commencement date of the lease (i.e., the
date the underlying asset is available for use).
Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment
losses, and adjusted for any remeasurement
of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease
payments made at or before the commencement
date less any lease incentives received. Right-
of-use assets are depreciated on a straight-line
basis over the shorter of the lease term and
the estimated useful lives of the assets. The
estimated useful life of the assets is as follows:

• Commercial Property: 2 to 30 Years

• Other Equipments: 3 to 5 Years

If ownership of the leased asset transfers to
the Company at the end of the lease term or the
cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated
useful life of the asset. The right-of-use assets
are also subject to impairment. Refer to the
accounting policies in Note 2.9 Impairment of
non-financial assets.

b) Lease Liabilities

At the commencement date of the lease, the
Company recognises lease liabilities measured at
the present value of lease payments to be made
over the lease term. The lease payments include
fixed payments (including in substance fixed
payments) less any lease incentives receivable,
variable lease payments that depend on an index
or a rate, and amounts expected to be paid under
residual value guarantees. The lease payments
also include the exercise price of a purchase
option reasonably certain to be exercised by

the Company and payments of penalties for
terminating the lease, if the lease term reflects
the Company exercising the option to terminate.
Variable lease payments that do not depend on
an index or a rate are recognised as expenses
(unless they are incurred to produce inventories)
in the period in which the event or condition that
triggers the payment occurs.

In calculating the present value of lease payments,
the Company uses its incremental borrowing rate
at the lease commencement date because the
interest rate implicit in the lease is not readily
determinable. After the commencement date,
the amount of lease liabilities is increased to
reflect the accretion of interest and reduced
for the lease payments made. In addition, the
carrying amount of lease liabilities is remeasured
if there is a modification, a change in the lease
term, a change in the lease payments or change
in the assessment of an option to purchase the
underlying asset.

c) Short-term leases and leases of low-value
assets

The Company applies the short-term lease
recognition exemption to its short-term leases
of machinery and equipment (i.e., those leases
that have a lease term of 12 months or less from
the commencement date and do not contain a
purchase option). It also applies the lease of low-
value assets recognition exemption to leases of
office equipment that are considered to be low
value. Lease payments on short-term leases
and leases of low value assets are recognised
as expense on a straight-line basis over the
lease term.

As a lessor

Leases in which the Company does not transfer
substantially all the risks and rewards incidental to
ownership of an asset are classified as operating
leases. Rental income arising is accounted for on a
straight-line basis over the lease terms and is included
in revenue in the statement of profit and loss due to its
operating nature.

Leases are classified as finance leases when
substantially all of the risks and rewards of ownership
transfer from the Company to the lessee. Amounts
due from lessees under finance leases are recorded
as receivables at the Company's net investment
in the leases. Finance lease income is allocated to
accounting periods so as to reflect a constant periodic
rate of return on the net investment outstanding in
respect of the lease.

2.7 Property, plant and equipment

Property Plant and equipment except for freehold land
are stated at cost less accumulated depreciation and
accumulated impairment losses, if any. The cost of
property plant and equipment comprises its purchase
price net of any trade discounts and rebates, any
import duties, GST 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 cost of decommissioning. 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
statement of profit and loss during the reporting
period in which they are incurred.

Capital work-in-progress is stated at cost, net of
accumulated impairment loss, if any.

An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss
arising on derecognition of the asset (calculated as
the difference between the net disposal proceeds
and the carrying amount of the asset) is included
in the statement of profit and loss when the asset
is derecognised. The residual values, useful lives
and methods of depreciation of property, plant and
equipment are reviewed at each financial year end
and adjusted prospectively, if appropriate.

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 recognised at fair value and
added to the cost of underlying property, plant and
equipment and a corresponding liability which is
credited to the statement of profit and loss based on
fulfilment of related export obligations.

Depreciation methods, estimated useful lives
and residual value

Freehold land is not depreciated. Leasehold
improvements are amortised over the shorter of
estimated useful life or the related lease term.

For following items of property, plant and equipment,
depreciation is calculated using the straight-line
method to allocate their cost, net of their residual
values, over their estimated useful lives as follows:

Plant and Machinery (other than electrical installations)
of flooring division are depreciated on straight line
method over the useful life ranging between 5 years
to 15 years. Other Plant and Machinery (other than
electrical installations) are depreciated on written
down value method over the useful life ranging
between 7.5 years to 20 years.

The useful lives have been determined based on
technical evaluation done by the management's
expert in order to reflect the actual usage of the assets
and which is equal to or lower than those specified by
Schedule II to the Companies Act 2013. The residual
values are not more than 5% of the original cost of the
asset. The assets' residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of
each reporting period.

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 asset. Gains and losses on disposals
are determined by comparing proceeds with carrying
amount. These are included in the statement of profit
and loss within other expenses or other income,
as applicable.

2.8 Intangible assets

Intangible assets including patents with finite useful
lives acquired by the Company are measured at cost
less accumulated amortisation and accumulated
impairment losses.

Amortisation methods and periods

Amortisation is charged on a straight-line basis over
the estimated useful lives.

The estimated useful life and amortisation method are
reviewed at the end of each annual reporting period,
with the effect of any changes in the estimate being
accounted for on a prospective basis.

Intangible assets that have an indefinite useful life are
not subject to amortisation 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.

An intangible asset is derecognised upon disposal (i.e.,
at the date the recipient obtains control) or when no
future economic benefits are expected from its use or
disposal. Any gain or loss arising upon derecognition
of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount
of the asset) is included in the P&L when the asset
is derecognised.

The recoverable amount is the higher of an asset's fair
value less costs of disposal and value in use.

2.9 Impairment of non-financial assets

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 other than goodwill that suffered an
impairment are reviewed for possible reversal of the
impairment at the end of each reporting period.

2.10 Inventories

Raw materials and stores, work-in-progress, traded
and finished goods

Raw materials and stores, work-in-progress, traded
and finished goods are stated at the lower of cost and
net realisable value. Cost of raw materials and traded
goods comprises cost of purchases on 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 inventories
moving weighted average basis. Costs of purchased
inventories 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.

2.11 Investment in financial instruments issued
by subsidiary

Company considers issuance of non-market rate
Redeemable Preference Shares and Compulsorily
Convertible Debentures 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 equity investment in
the subsidiary. Equity component is not subsequently
re-measured.

The Company has also invested into various financial
instruments of subsidiaries such as Compulsorily
Convertible Debentures which are accounted and
subsequently measured at amortised cost and Non¬
Cumulative Non-Convertible Redeemable Preference
Shares, Optionally Convertible Debentures and
Redeemable Cumulative Preference Shares which are
accounted and subsequently measured at fair value
through Profit and Loss.

2.12 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.

Financial Assets

a) 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 the
statement of profit and 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.

b) Initial Recognition and Measurement

At initial recognition, the Company measures a
financial asset, except trade receivables, 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. Transaction costs of financial
assets carried at fair value through profit or loss
are expensed in the statement of profit and loss.

c) Subsequent Measurement

• 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:

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

ii) F air 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 the statement
of profit and loss. When the financial
asset is derecognised, the cumulative
gain or loss previously recognised
in OCI is reclassified from equity to
the statement of profit and loss and
recognised in other expenses or other
incomes, as applicable. Interest income
from these financial assets is included
in other income using the effective
interest rate method.

iii) Fair value through profit or loss: A
financial asset which is not classified
in any of the above categories are
measured at fair value through profit
or loss.

• Equity Investments

Investment in subsidiaries are carried at cost
in the separate financial statements and
accounted on first-in first-out (FIFO) basis.

The Company subsequently measures all
other 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, there will be no subsequent
reclassification of fair value gains and losses
to the statement of profit and loss. Dividends
from such investments are recognised in
the statement of profit and 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 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.

• Cash and cash equivalents

Cash and cash equivalents includes cash
in hand, deposits held with banks, 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.

• Trade receivable

Trade receivable are recognised initially at
transaction price which approximates the
fair value and subsequently measured at
amortised cost using the effective interest
method, less provision for impairment.

d) Impairment of financial assets

In accordance with Ind AS 109, the Company
applies expected credit loss (ECL) model for
measurement and recognition of impairment
loss on the following financial assets and credit
risk exposure:

i) Financial assets that are debt instruments,
and are measured at amortised cost e.g.,
loans, debt securities, deposits, trade
receivables and bank balance;

ii) Trade receivables or any contractual right to
receive cash or another financial asset that
result from transactions that are within the
scope of Ind AS 115.

ECL impairment loss allowance (or reversal)
recognised during the period is recognised as
income/expense in the statement of profit and
loss. This amount is reflected under the head
'other expenses' in the statement of profit and
loss. The balance sheet presentation for various
financial instruments is described below:

i) Financial assets measured as at amortised
cost, contractual revenue receivables: ECL
is presented as an allowance, i.e., as an
integral part of the measurement of those
assets in the balance sheet. The allowance
reduces the net carrying amount. Until the
asset meets write-off criteria, the Company
does not reduce impairment allowance from
the gross carrying amount;

ii) For trade receivables only, 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.

e) Derecognition of financial assets

A financial asset is derecognised only when

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

ii) 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.

f) Other income

• Interest income

Interest income from debt instruments is
recognised using the effective interest
rate method. The effective interest rate 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.

• Dividends

Dividends are recognised in the statement of
profit and 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.

Financial liabilities

a) Initial Recognition and 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. Liabilities from finance
lease agreements are measured at the lower of
fair value of the leased asset or present value of
minimum lease payments.

b) Subsequent Measurement

• 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 the
statement of profit and 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 statement of
profit and loss.

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 the statement
of profit and loss, which is measured as the
difference between the carrying amount of
the financial liability and the fair value of the
equity instruments issued.

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.

• 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 recognised,
initially at fair value, and subsequently
measured at amortised cost using effective
interest rate method.

• Financial guarantee contracts

Financial guarantee contracts are
recognised as a financial liability at the
time the guarantee is issued. The liability
is initially measured at fair value and
subsequently at the higher of the amount
determined in accordance with Ind AS
37 Provisions, Contingent Liabilities and
Contingent Assets and the amount initially
recognised less cumulative amortisation,
where appropriate.

• Derivatives and hedging activities

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

Derivatives are initially recognised 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.

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.

• Embedded Derivatives

Derivatives embedded in a host contract
that is an asset within the scope of Ind AS
109 are not separated. Financial assets
with embedded derivatives are considered
in their entirety when determining whether
their cash flows are solely payment of
principal and interest. Derivatives embedded
in all other host contract are separated only
if the economic characteristics and risks of
the embedded derivative are not closely
related to the economic characteristics
and risks of the host and are measured at
fair value through profit or loss. Embedded
derivatives closely related to the host
contracts are not separated.

• Embedded foreign currency derivatives:

Embedded foreign currency derivatives
are not separated from the host contract if
they are closely related. Such embedded
derivatives are closely related to the
host contract, if the host contract is not
leveraged, does not contain any option
feature and requires payments in one of the
following currencies:

i) the functional currency of any
substantial party to that contract,

ii) the currency in which the price of the
related good or service that is acquired
or delivered is routinely denominated
in commercial transactions around the
world,

iii) a currency that is commonly used in
contracts to purchase or sell non¬
financial items in the economic
environment in which the transaction
takes place (i.e., relatively liquid, and
stable currency).

Foreign currency embedded derivatives
which do not meet the above criteria are
separated and the derivative is accounted
for at fair value through profit or loss. The
Company currently does not have any such
derivatives which are not closely related.

c) 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 and loss.

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.

2.13 Borrowing costs

General and specific borrowing costs that are
directly attributable to the acquisition, construction
or production of a qualifying asset are capitalised
during the period of time that is required to complete
and prepare the asset for its intended use or sale.
Qualifying assets are assets that necessarily take
a substantial period of time to get ready for their
intended use or sale. Investment income earned on the
temporary investment of specific borrowings pending
their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation.
Other borrowing costs are expensed in the period in
which they are incurred.

2.14 Retirement and other employee benefits

a) Short-term obligations

Liabilities for wages and salaries, including non¬
monetary benefits that are expected to be settled
wholly within 12 months after the end of the
period in which the employees render the related
service are recognised in respect of employees'
services up to the end of the reporting period
and are measured at the amounts expected to be
paid when the liabilities are settled. The liabilities
are presented as current employee benefit
obligations in the balance sheet.

b) Other long-term employee benefit
obligations

The liabilities for earned and sick leave are not
expected to be settled wholly within 12 months
after the end of the period in which the employees
render the related service. They are therefore
measured as the present value of expected future
payments to be made in respect of services
provided by employees up to the end of the
reporting period using the projected unit credit
method. The benefits are discounted using the
market yields at the end of the reporting period
that have terms approximating to the terms of the
related obligation. Remeasurements as a result of
experience adjustments and changes in actuarial
assumptions are recognised in the statement of
profit and loss.

The obligations are presented as current liabilities
in the balance sheet if the entity does not have
an unconditional right to defer settlement for at
least twelve months after the reporting period,
regardless of when the actual settlement is
expected to occur.

c) Post-employment obligations

The Company operates the following post¬
employment schemes:

i) defined benefit plans such as gratuity, and

ii) defined contribution plans such as provident
fund and superannuation

• Defined Benefit Plans

Gratuity obligations

The liability or asset recognised in the
balance sheet in respect of defined benefit
gratuity plans is the present value of the
defined benefit obligation at the end of the
reporting period less the fair value of plan
assets. The defined benefit obligation is
calculated annually by actuaries using the
projected unit credit method.

The present value of the defined benefit
obligation denominated in Indian Rupees
('INR') is determined by discounting the
estimated future cash outflows by reference
to market yields at the end of the reporting
period on government bonds that have
terms approximating to the terms of the
related obligation. The benefits which
are denominated in currency other than
INR, the cash flows are discounted using
market yields determined by reference
to high-quality corporate bonds that are

denominated in the currency in which
the benefits will be paid, and that have
terms approximating to the terms of the
related obligation.

The net interest cost is calculated by
applying the discount rate to the net balance
of the defined benefit obligation and the fair
value of plan assets. This cost is included in
employee benefit expense in the statement
of profit and loss.

Remeasurement gains and losses arising
from experience adjustments and changes
in actuarial assumptions are recognised
in the period in which they occur, directly
in other comprehensive income. They
are included in retained earnings in the
statement of changes in equity and in the
balance sheet.

Remeasurements are not reclassified
to the statement of profit and loss in the
subsequent periods.

Changes in the present value of the defined
benefit obligation resulting from plan
amendments or curtailments are recognised
immediately in the statement of profit and
loss as past service cost.

• Defined contribution plans

i) Provident Fund, Employee State
Insurance Corporation (ESIC),
Pension Fund and other Social
Security Funds

The Contribution towards provident
fund, ESIC, pension fund and Social
Security Funds for certain employees
is made to the regulatory authorities
where the Company has no further
obligations. Such benefits are classified
as Defined Contribution Schemes
as the Company does not carry any
further obligations apart from the
contributions made on a monthly basis.

ii) Superannuation Fund

Contribution towards superannuation
fund for certain employees is made to
SBI Life Insurance Company where the
Company has no further obligations.
Such benefits are classified as Defined
Contribution Schemes as the Company
does not carry any further obligations,
apart from contribution made on
monthly basis.

d) Bonus Plan

The Company recognises a liability and an
expense for bonuses. The Company recognises
a provision where contractually obliged or
where there is a past practice that has created a
constructive obligation.

2.15 Share Based Payments

Senior executives of the company receive
remuneration in the form of share-based payment,
whereby employees render services as consideration
for equity instruments (equity-settled transactions).

Equity-settled transactions

The cost of equity-settled transactions is determined
by the fair value at the date when the grant is made
using an appropriate valuation model. Refer Note 45.

That cost is recognised, together with a corresponding
increase in share-based payment (SBP) reserves in
equity, over the period in which the performance and/
or service conditions are fulfilled in employee benefits
expense. The cumulative expense recognised for
equity-settled transactions at each reporting date
until the vesting date reflects the extent to which the
vesting period has expired and the company's best
estimate of the number of equity instruments that will
ultimately vest. The expense or credit in the statement
of profit and loss for a period represents the movement
in cumulative expense recognised as at the beginning
and end of that period and is recognised in employee
benefits expense.

Service and non-market performance conditions are
not taken into account when determining the grant date
fair value of awards, but the likelihood of the conditions
being met is assessed as part of the Company's best
estimate of the number of equity instruments that
will ultimately vest. Market performance conditions
are reflected within the grant date fair value. Any
other conditions attached to an award, but without
an associated service requirement, are considered
to be non-vesting conditions. Non-vesting conditions
are reflected in the fair value of an award and lead to
an immediate expensing of an award unless there are
also service and/or performance conditions.

No expense is recognised for awards that do not
ultimately vest because non-market performance
and/or service conditions have not been met. Where
awards include a market or non-vesting condition,
the transactions are treated as vested irrespective
of whether the market or non-vesting condition is
satisfied, provided that all other performance and/or
service conditions are satisfied.

When the terms of an equity-settled award are
modified, the minimum expense recognised is
the grant date fair value of the unmodified award,
provided the original vesting terms of the award are
met. An additional expense, measured as at the date
of modification, is recognised for any modification
that increases the total fair value of the share-based
payment transaction, or is otherwise beneficial to
the employee. Where an award is cancelled by the
entity or by the counterparty, any remaining element
of the fair value of the award is expensed immediately
through the statement of profit and loss.

The dilutive effect of outstanding options is reflected
as additional share dilution in the computation of
diluted earnings per share.