II. Summary of material accounting policies

a) Current versus non-current classification

The Company presents assets and liabilities in the
Balance Sheet based on current/ non-current
classification. An asset is treated as current when
it is:

• Expected to be realized or intended to be sold
or consumed in normal operating cycle,

• Held primarily for the purpose of trading,

• Expected to be realised within twelve months
after the reporting period, or

• Cash or cash equivalent unless restricted
from being exchanged or used to settle a
liability for at least twelve months after the
reporting period.

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in normal
operating cycle,

• It is held primarily for the purpose of trading,

• It is due to be settled within twelve months
after the reporting period, or

• There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period.

The Company classifies all other liabilities as non¬
current.

Deferred tax assets and liabilities are classified as
non-current assets and liabilities.

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

Company has identified twelve months as its
operating cycle.

b) Investment in subsidiary

A subsidiary is an entity that is controlled by
another entity.

The Company's investment in its subsidiary is
accounted at cost less impairment, if any.

Impairment of investment

The Company reviews its carrying value of
investment carried at cost annually, or more
frequently when there is indication for impairment.
If the recoverable amount is less than its carrying
amount, the impairment loss is recorded in the
Statement of Profit and Loss.

When an impairment loss subsequently reverses,
the carrying amount of the Investment is increased
to the revised estimate of its recoverable amount,
so that the increased carrying amount does not
exceed the cost of the Investment. A reversal of
an impairment loss is recognised immediately in
Statement of Profit or Loss.

c) Foreign currencies

The Company's Standalone financial statements
are presented in INR, which is also the Company's
functional currency.

Transactions and balances

Transactions in foreign currencies are initially
recorded at its functional currency spot rates at
the date the transaction first qualifies for
recognition. However, for practical reasons, the
Company uses an average rate, if the average
approximates the actual rate at the date of the
transaction.

Monetary assets and liabilities denominated in
foreign currencies are translated at the functional
currency spot rates of exchange at the reporting
date.

Exchange differences arising on settlement or
translation of monetary items are recognised in the
Statement of Profit and Loss.

Non-monetary items that are measured in terms
of historical cost in a foreign currency are

translated using the exchange rates at the dates
of the initial transactions.

In determining the spot exchange rate to use on
initial recognition of the related asset, expense or
income (or part of it) on the derecognition of a non¬
monetary asset or non-monetary liability relating
to advance consideration, the date of the
transaction is the date on which the Company
initially recognises the non-monetary asset or non¬
monetary liability arising from the advance
consideration. If there are multiple payments or
receipts in advance, the Company determines the
transaction date for each payment or receipt of
advance consideration.

d) Fair Value measurement

The Company measures financial instruments,
such as, derivatives at fair value at each balance
sheet date.

Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an
orderly transaction between market participants
at the measurement date. The fair value
measurement is based on the presumption that
the transaction to sell the asset or transfer the
liability takes place either:

• In the principal market for the asset or liability,
or

• In the absence of a principal market, in the
most advantageous market for the asset or
liability

The principal or the most advantageous market
must be accessible by the Company.

The fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability,
assuming that market participants act in their
economic best interest.

A fair value measurement of a non-financial asset
takes into account a market participant's ability to
generate economic benefits by using the asset in
its highest and best use or by selling it to another
market participant that would use the asset in its
highest and best use.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value
maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorised within the fair value hierarchy,
described as follows, based on the lowest level
input that is significant to the fair value
measurement as a whole:

• Level 1 — Quoted (unadjusted) market prices
in active markets for identical assets or
liabilities.

• Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is directly or indirectly
observable.

• Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable.

For assets and liabilities that are recognised in the
standalone financial statements on a recurring
basis, the Company determines whether transfers
have occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest
level input that is significant to the fair value
measurement as a whole) at the end of each
reporting period.

For the purpose of fair value disclosures, the
Company has determined classes of assets and
liabilities on the basis of the nature, characteristics
and risks of the asset or liability and the level of
the fair value hierarchy as explained above.

This note summarises accounting policy for fair
value. Other fair value related disclosures are given
in the relevant notes.

• Disclosures for valuation methods, significant
estimates and assumptions (note 32, 40, 41)

• Financial instruments (including those carried
at amortised cost) (note 5, 8, 9, 10, 15, 40, 41,
42)

• Quantitative disclosures of fair value
measurement hierarchy (note 41)

e) Revenue from contract with customers

Revenue from contracts with customers is
recognised 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.

The disclosures of significant accounting
judgements, estimates and assumptions relating
to revenue from contracts with customers are
provided in note 32.

Sale of products

Revenue from sale of products is recognised at the
point in time when control of the product is
transferred to the customer, generally on delivery
of the product. The normal credit term is 0 to 135
days from delivery.

Revenue towards satisfaction of a performance
obligation is measured at the amount of
transaction price (net of variable consideration)
allocated to that performance obligation. The
transaction price of products sold is net of variable
consideration on account of various discounts,
schemes offered and allowances for product
returns which are based on historical return rates.

i) 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
products 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 products
provide customers with a right of return and
volume rebates. The Company also provides

volume rebates to certain customers once the
quantity of products sold during the period
exceeds the threshold specified in the
contract. The rights of return and volume
rebates give rise to variable consideration.

a) Rights of return

The Company uses the expected value
method to estimate the variable
consideration in respect of right of
return. The Company then applies the
requirements on constraining estimates
of variable consideration in order to
determine the amount of variable
consideration that can be included in the
transaction price. A refund liability is
recognized for the goods that are
expected to be returned (i.e., the amount
not included in the transaction price). A
right of return asset (and corresponding
adjustment to cost of raw material and
components consumed) is also
recognised for the right to recover the
goods from a customer.

b) Volume rebates

The Company applies the most likely
amount method or the expected value
method to estimate the variable
consideration in the contract. The
selected method that best predicts the
amount of variable consideration is
primarily driven by the number of
volume thresholds contained in the
contract. The most likely amount is used
for those contracts with a single volume
threshold, while the expected value
method is used for those with more than
one volume threshold. The Company
then applies the requirements on
constraining estimates in order to
determine the amount of variable
consideration that can be included in the
transaction price and recognised as
revenue. A refund liability is recognised
for the expected future rebates (i.e., the
amount not included in the transaction
price).

The disclosures of significant estimates
and assumptions relating to the
estimation of variable consideration for
returns and volume rebates are
provided in Note 32.

ii) Service-type Warranty

The Company typically provides warranties
for general repairs of defects that existed at
the time of sale. These assurance-type
warranties are accounted for under Ind AS 37
Provisions, Contingent Liabilities and
Contingent Assets. Refer to the accounting
policy on warranty provisions in section (m)
Provisions.

The Company provides a warranty beyond
fixing defects that existed at the time of sale.
These service-type warranties are sold either
separately or bundled together with the sale
of product. Contracts for bundled sales of
product and a service-type warranty comprise
two performance obligations because the
product and service-type warranty are both
sold on a stand-alone basis and are distinct
within the context of contract. Using the
relative stand-alone selling price method, a
portion of the transaction price is allocated
to the service-type warranty and recognised
as a contract liability. Revenue for service-type
warranties is recognised over the period in
which the service is provided based on the
time elapsed.

Sale of Services

i) For extended warranty services

The Company provides extended warranty
services that are sold separately. The
Company recognizes revenue from sales of
extended warranty services over time in
which the service is provided based on the
time elapsed and as per the agreed terms of
the contract.

ii) For product development and
procurement service

The Company provides product development
and procurement services to Whirlpool
Corporation, USA and other group
Companies. The Company recognizes
revenue by adding a mark-up on the relevant
costs as per the terms of the agreement. The
Company recognizes such revenue as and
when such services are rendered.

Other revenue streams

i) Interest Income

Interest income on fixed deposits is
recognised on a time proportion basis taking
into account the amount outstanding and the
applicable interest rate. Interest income is
included under the head "other income" in the
Statement of Profit and Loss.

ii) Export incentives benefit

Export benefit income is recognised in the
Statement of Profit and Loss, when the right
to receive the benefits amount is established
as per the terms of the relevant scheme and
where there is no significant uncertainty exists
regarding the ultimate collection of the
relevant export proceeds.

Contract balances
Contract assets

A contract asset is initially recognised for revenue
earned from sale of products because the receipt
of consideration is conditional on successful
transfer of the completion of performance
obligation. Upon completion of the performance
obligation and acceptance by the customer, the
amount recognised as contract assets is
reclassified to trade receivables.

Contract assets are subject to impairment
assessment.

Trade receivables

A receivable is recognised if 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 section (p) Financial
instruments - initial recognition and subsequent
measurement.

Contract liabilities

A contract liability is recognised if a payment is
received or a payment is due (whichever is earlier)
from a customer before the Company transfers the
related goods or services. Contract liabilities are
recognised as revenue when the Company
performs under the contract (i.e., transfers control
of the related goods or services to the customer).

Assets and liabilities arising from rights of
return

Right of return assets

A right-of-return asset is recognised for the right
to recover the goods expected to be returned by
customers. The asset is measured at the former
carrying amount of the inventory, less any
expected costs to recover the goods and any
potential decreases in value. The Company
updates the measurement of the asset recorded
for any revisions to its expected level of returns,
as well as any additional decreases in the value of
the returned products.

Refund liabilities

A refund liability is recognised for the obligation
to refund some or all of the consideration received
(or receivable) from the customer. The Company's
refund liabilities arise from customers' right of
return and volume rebates. The Company updates
its estimates of refund liabilities (and the
corresponding change in the transaction price) at
the end of each reporting period.

f) Government Grants

Government grants are recognised where there is
reasonable assurance that the grant will be
received and all attached conditions will be
complied with. When the grant relates to an
expense item, it is recognised as income on a
systematic basis over the periods that the related

costs, for which it is intended to compensate, are
expensed. When the grant relates to an asset, it is
recognised as income on a systematic basis over
the period that the depreciation is charged on the
related assets for which it is intended to
compensate. Similar treatment is being adopted
by the Company in respect of the grants related to
capital assets recognised earlier.

g) Taxes

Tax expense comprises current tax expense and
deferred tax.

Current income tax

Current income tax assets and liabilities are
measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax
rates and tax laws used to compute the amount
are those that are enacted or substantively
enacted, at the reporting date in the country where
the Company operates and generate taxable
income.

Current income tax relating to items recognised
outside profit or loss is recognised outside profit
or loss (either in other comprehensive income or
in equity). Current tax items are recognised in
correlation to the underlying transaction either in
OCI or directly in equity. Management periodically
evaluates positions taken in the tax returns with
respect to situations in which applicable tax
regulations are subject to interpretation and
establishes provisions where appropriate.

Deferred Tax

Deferred tax is provided using the liability method
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 is recognised for all taxable temporary
differences except:

• When the deferred tax liability arises from the
initial recognition of an asset or liability in a
transaction that is not a business combination
and, at the time of the transaction, affects

neither the accounting profit nor taxable
profit or loss and does not give rise to equal
taxable and deductible temporary
differences;

Deferred tax assets are recognised for all
deductible temporary differences, the carry
forward of unused tax credits and any unused tax
losses. Deferred tax assets are recognised to the
extent that it is probable that taxable profit will be
available against which the deductible temporary
differences, and the carry forward of unused tax
credits and unused tax losses can be utilised,
except:

• When the deferred tax asset relating to the
deductible temporary difference arises from
the initial recognition of an asset or liability
in a transaction that is not a business
combination and, at the time of the
transaction, affects neither the accounting
profit nor taxable profit or loss and does not
give rise to equal taxable and deductible
temporary differences;

The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced to
the extent that it is no longer probable that
sufficient taxable profit will be available to allow
all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed
at each reporting date and are recognised to the
extent that it has become probable that future
taxable profits will allow the deferred tax asset to
be recovered.

Deferred tax assets and liabilities are measured at
the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled,
based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting
date.

Deferred tax relating to items recognised outside
profit or loss is recognised outside profit or loss
(either in other comprehensive income or in
equity). Deferred tax items are recognised in
correlation to the underlying transaction either in
OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are
offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and
the deferred taxes relate to the same taxable entity
and the same taxation authority.

Goods and Services tax paid on acquisition of
assets or on incurring expenses

Expenses and assets are recognised net of the
amount of Goods and Services tax paid, except:

• When the tax incurred on a purchase of assets
or services is not recoverable from the
taxation authority, in which case, the tax paid
is recognised as part of the cost of acquisition
of the asset or as part of the expense item,
as applicable;

• When receivables and payables are stated
with the amount of tax included

The net amount of tax recoverable from, or
payable to, the taxation authority is included as
part of receivables or payables in the balance
sheet.

h) Property, plant and equipment

Capital work in progress is stated at cost, net of
accumulated impairment loss, if any. Property,
plant and equipment is stated at cost, net of
accumulated depreciation and accumulated
impairment losses, if any. Such cost includes the
cost of replacing part of the property, plant and
equipment. When significant parts of property,
plant and equipment are required to be replaced
at intervals, the Company depreciates them
separately based on their specific useful lives.
Likewise, when a major inspection is performed,
its cost is recognised in the carrying amount of the
property, plant and equipment as a replacement
if the recognition criteria are satisfied. All other
repair and maintenance costs are recognised in the
Statement of Profit and Loss as incurred.

The amount paid for leasehold improvement which
includes temporary structures, is provided over the
unexpired period of lease or estimated useful life
of 3-5 years, whichever is lower.

The Company, based on technical assessment
made by a technical expert and Management
estimate, depreciates certain items of plant and
equipment i.e. Trolleys and other equipment and
Moulds and tools over the period of 2 years and 6
years respectively, which are different from the
useful life prescribed in Schedule II to the
Companies Act, 2013. The Management believes
that estimated useful lives are realistic and reflect
fair approximation of the period over which the
assets are likely to be used.

The Company based on technical assessment and
historical data, considers useful life of Computers
as 4 years which is different from the useful life
prescribed in Schedule II of the Companies Act,
2013. The Management believes that the estimated
useful life reflects a fair approximation of the
period over which these assets are expected to be
used.

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.

Intangible assets

Intangible assets acquired separately are
measured on initial recognition at cost. Following
initial recognition, intangible assets are carried at
cost less accumulated amortisation and
accumulated impairment losses, if any.

Intangible assets with finite lives are amortised
over the useful economic life and assessed for

impairment whenever there is an indication that
the intangible asset may be impaired. The
amortisation period and the amortisation method
for an intangible asset with a finite useful life are
reviewed at least at the end of each reporting
period. Changes in the expected useful life or the
expected pattern of consumption of future
economic benefits embodied in the asset are
considered to modify the amortisation period or
method, as appropriate, and are treated as
changes in accounting estimates. The amortisation
expense on intangible assets with finite lives is
recognised in the Statement of Profit and Loss
unless such expenditure forms part of carrying
value of another asset.

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
Statement of Profit and Loss when the asset is
derecognised.

Software

Cost of software is amortised over its useful life of
60 months starting from the month of project
implementation.

Research and development costs

Research costs are expensed as incurred.
Development expenditures on an individual
project are recognised as an intangible asset when
the Company can demonstrate:

• The technical feasibility of completing the
intangible asset so that the asset will be
available for use or sale

• Its intention to complete and its ability and
intention to use or sell the asset

• How the asset will generate future economic
benefits

• The availability of resources to complete the
asset

• The ability to measure reliably the
expenditure during development

Following initial recognition of the development
expenditure as an asset, the asset is carried at cost
less any accumulated amortisation and
accumulated impairment losses. Amortisation of
the asset begins when development is complete,
and the asset is available for use. It is amortised
over the period of expected future benefit.
Amortisation expense is recognised in the
Statement of Profit and Loss unless such
expenditure forms part of carrying value of
another asset. During the period of development,
the asset is tested for impairment annually.

) 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.

Company as a lessee

The Company applies a single recognition and
measurement approach for all leases, except for
short-term leases (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) 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.

i) 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
accumulated impairment losses (if, any), and
adjusted for any remeasurement of lease
liabilities, (if, any). 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. 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 as follows:

Leasehold land upto 99 years

Building 2 to 9 years

The right-of-use assets are also subject to
impairment. Refer to the accounting policies
in section (I) Impairment of non-financial
assets.

ii) 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).

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 and change in the lease payments.

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

The Company applies the short-term lease
recognition exemption to its short-term leases
of office building and warehouses (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 building and
warehouses 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.

Company 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 from operating lease is
recognised on a straight-line basis over the term
of the relevant lease.

k) Inventories

Inventories are valued at the lower of cost and net
realisable value.

Costs incurred in bringing each product to its
present location and conditions are accounted for
as follows:

• Raw materials: cost includes cost of purchase
and other costs incurred in bringing the
inventories to their present location and
condition. Cost is determined on weighted
average basis.

• Finished goods and work in progress: cost
includes cost of direct materials and labour
and a proportion of manufacturing
overheads based on the normal operating
capacity. Cost is determined on weighted
average basis.

• Traded goods: cost includes cost of purchase
and other costs incurred in bringing the
inventories to their present location and
condition. Cost is determined on weighted
average basis.

• Stores and spares: cost includes cost of
purchase and other costs incurred in bringing
the inventories to their present location and
condition. Cost is determined on weighted
average basis.

Net realisable value is the estimated selling price
in the ordinary course of business, less estimated
costs of completion and the estimated costs
necessary to make the sale.

l) Impairment of non-financial assets

The Company assesses at each reporting date,
whether there is an indication that an asset may
be impaired. If any indication exists, or when

annual impairment testing for an asset is required,
the Company estimates the asset's recoverable
amount. An asset's recoverable amount is the
higher of an asset's or cash-generating unit's (CGU)
fair value less costs of disposal and its value in use.
Recoverable amount is determined for an
individual asset, unless the asset does not generate
cash inflows that are largely independent of those
from other assets or groups of assets. Where the
carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered
impaired and is written down to its recoverable
amount.

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. In determining fair value
less costs of disposal, recent market transactions
are taken into account. If no such transactions can
be identified, an appropriate valuation model is
used. These calculations are corroborated by
valuation multiples, quoted share prices for
publicly traded companies or other available fair
value indicators.

The Company bases its impairment calculation on
detailed budgets and forecast calculations which
are prepared separately for each of the Company's
cash-generating units to which the individual assets
are allocated. These budgets and forecast
calculations generally cover a period of five years.
For longer periods, a long term growth rate is
calculated and applied to project future cash flows
after the fifth year. To estimate cash flow
projections beyond periods covered by the most
recent budgets/forecasts, the Company
extrapolates cash flow projections in the budget
using a steady or declining growth rate for
subsequent years, unless an increasing rate can
be justified. In any case, this growth rate does not
exceed the long-term average growth rate for the
products, industries, or country or countries in
which the entity operates, or for the market in
which the asset is used.

Impairment losses, including impairment on

inventories, are recognised in the Statement of
Profit and Loss.

The impairment assessment for all assets is made
at each reporting date to determine whether there
is an indication that previously recognised
impairment losses no longer exist or have
decreased. If such indication exists, the Company
estimates the asset's or CGU's recoverable amount.
A previously recognised impairment loss is
reversed only if there has been a change in the
assumptions used to determine the asset's
recoverable amount since the last impairment loss
was recognised. The reversal is limited so that the
carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying
amount that would have been determined, net of
depreciation, had no impairment loss been
recognised for the asset in prior years. Such
reversal is recognised in the Statement of Profit
and Loss.