3. Material Accounting Policies

3.1 Property, Plant and Equipment (PPE)

Property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses, if any
Cost includes purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working conditio
for its intended use.

The cost of an item of Property, plant and equipment is recognized as an asset if, and only if, it is probable that the economi
benefits associated with the item will flow to the Company in future periods and the cost of the item can be measure
reliably. Expenditure incurred after the property, plant and equipment have been put into operations, such as repairs an
maintenance expenses are charged to the Statement of Profit and Loss during the period in which they are incurred.

Items such as spare parts, standby equipment and servicing equipment are recognized as Property, plant and equipmer
when it is held for use in the production or supply of goods or services, or for administrative purpose and are expected to b
used for more than one year.

An item of property, plant and equipment is de-recognized upon disposal or when no future economic benefits are expecte
to arise from the continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of propert
plant and equipment, is determined as the difference between the sales proceeds and the carrying amount of the asset an
is recognized in the Statement of Profit and Loss.

3.2 Depreciation and amortization

Depreciation has been provided as per straight-line method on pro rata basis from the date of such additions in the manne
and at the rates specified in Schedule II of the Companies Act, 2013 except that in case of expenditure on software. In th
opinion of management useful life of fixed assets broadly corresponds to life as specified in schedule II of the Companies Ac
2013 and the depreciation provided accordingly. Cost of software is amortized over 6 years considering its useful life.

The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessmen
may result in change in depreciation expense in future periods.

3.3 Impairment of assets

Carrying amounts of fixed assets are reviewed at each Balance sheet date to ascertain whether there is any indication o
impairment in their value caused by any internal / external factors. An impairment loss is recognized wherever the carryin
amount of an asset exceeds its recoverable amount, recoverable amount being the greater of the assets’ net selling pric
and value in use.

3.4 Intangible Assets

Intangible Assets are stated at cost of acquisition less accumulated amortization and accumulated impairment, if any
Amortization is done over their estimated useful life on straight line basis from the date that they are available for intende
use, subjected to impairment test.

3.5 Amortization

Software, which is not an integral part of the related hardware is classified as an intangible asset and is amortized over th
useful life of 6 years.

3.6 Investments and financial assets

a) Investment in Associates

Equity investment in Associate is recognized at cost less impairment loss, if any.

b) Other investments and financial assets

i) Classification

The Company classifies its financial assets in the following measurement categories depending upon th
Company’s business model for managing the financial assets and the contractual terms of the cash flows.

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

• those measured at amortized cost.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive
income, as elected.

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 at its fair value including, 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 or loss.

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 two measurement categories into which the Company classifies its
debt instruments:

Amortized 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 amortized cost e.g. Bonds. A gain or loss on a debt investment that
is subsequently measured at amortized cost is recognized in profit or loss when the asset is derecognized or impaired.
Interest income from these financial assets is included in investment income using the effective interest rate method.

Fair value through profit or loss: Assets that do not meet the criteria for amortized cost, are measured at fair value
through profit or loss e.g. investments in mutual funds.

iii) Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at
amortized cost. The impairment methodology applied depends on whether there has been a significant increase in
credit risk and if so, assess the need to provide for the same in the Statement of Profit and Loss.

iv) Derecognition of financial assets

A financial asset is derecognized only when Company has transferred the rights to receive cash flows from the financial
asset. 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 derecognized.

3.7 Derivative financial instruments

The company holds derivative financial instruments such as foreign exchange forward contracts to mitigate the risk of
changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank.

These derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are included
in other income. Assets/liabilities in this category are presented as current assets/current liabilities if they are either held for
trading or are expected to be realized within 12 months after the Balance Sheet date.

3.8 Inventories

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

Cost is computed on FIFO (First in, First Out) basis.

Cost of finished goods and work-in-progress include all costs of purchases, conversion costs and other costs incurred in
bringing the inventories to their present location and condition.

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

3.9 Revenue Recognition
Revenue from Operations:

The Company derives revenues primarily from sale of Polypropylene Staple Fibre and P.P. Yarn. Ind AS 115 “Revenue
from Contracts with Customers” provides a control-based revenue recognition model and provides a five step application
approach to be followed for revenue recognition.

• Identify the contract(s) with a customer;

• Identify the performance obligations;

• Determine the transaction price;

• Allocate the transaction price to the performance obligations;

• Recognize revenue when or as an entity satisfies performance obligation.

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. Revenue is measured based on the transaction
price, which is the consideration, adjusted for volume discounts, commission, price concessions, incentives and returns, if
any, as specified in the contracts with the customers.

Revenue excludes amounts collected on behalf of third parties.

Sale of Goods

Revenue from the sale of goods is recognized when control of the goods is transferred to the buyer, usually on delivery of the
goods. On delivery of the goods, 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 recognized by the Company when the goods are delivered 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
normally due within 0-45 days. The Company considers the effects of variable consideration, the existence of significant
financing components, non-cash consideration and consideration payable to the customer/discount (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
recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved. The
Company recognizes changes in the estimated amount of variable consideration in the period in which the change occurs.
Some contracts for the sale of goods provide customers with rebates and pricing incentives which give rise to variable
consideration.

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 with a single-volume threshold and the expected
value method for contracts with more than one volume threshold. 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 Company
then applies the requirements on constraining estimates of variable consideration and recognises a refund liability for the
expected future rebates.

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).

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.

Cost to obtain a contract

Costs to obtain a contract are generally expensed as incurred. Costs to fulfil a contract i.e. freight, insurance and other selling
expenses are recognized as an expense in the period in which related revenue is recognised.

Critical judgments

The Company’s contracts with customers include promises to transfer goods to the customers. Judgment is required to
determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration
or variable consideration with elements such as schemes, incentives, cash discounts, etc. The estimated amount of variable
consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the
amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period.

Estimates of rebates and discounts are sensitive to changes in circumstances and the Company’s past experience regarding
returns and rebate entitlements may not be representative of customers’ actual returns and rebate entitlements in the future.

Revenue from sale of goods is net of Goods and Service Tax, returns, discounts, rebates and incentives.

3.10 Other Income
Interest Income

Interest income from a financial asset 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 a time basis, by reference to the principal
outstanding and at the effective interest rate applicable.

Dividend Income

Dividend income from investments is recognized when the Company’s right to receive payment is established.

3.11 Non-current assets held for sale

The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through
a sale rather than through continuing use. This condition is regarded as met only when the asset is available for immediate
sale in its present condition subject only to terms that are usual and customary for sales of such asset and its sale is highly
probable. Also such assets are classified as held for sale only if the management expects to complete the sale within one
year from the date of classification.

3.12 Foreign currency transactions and translation

Transactions in currencies other than Company’s functional currency (foreign currencies) are recorded at the rates of
exchange prevailing on the date of transaction. At the end of the reporting period, monetary items denominated in foreign
currencies are reported using the exchange rate prevailing as at reporting date. Non-monetary items denominated in foreign
currencies which are carried in terms of historical cost are reported using the exchange rate at the date of the transaction.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the exchange rates
different from those at which they were initially recorded during the year, or reported in previous financial statements, are
recognised as income or expenses in the year in which they arise.

3.13 Employee Benefits
Short-Term Employee Benefits

Short-term employee benefits are recognized as an expense on accrual basis. 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 recognized in respect of employee’s 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.

Defined Contribution Plans

Contribution towards provident fund and employee state insurance for 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.

Compensated Absences

Leave benefits being a defined benefit plan is accounted for using the projected unit credit method, on the basis of actuarial
valuations carried out by third party actuaries at each Balance Sheet date. Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income in the year in
which they arise. Other costs are accounted in statement of profit and loss.

Gratuity

The company provides for gratuity, a defined benefit retirement plan (‘the Gratuity Plan’) covering eligible employees. The
Gratuity plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of

employment, as per eligible rules and statutory provisions of an amount based on the respective employee’s salary and the
tenure of employment with the company.

Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an independent actuary, at
each Balance Sheet date using the projected unit credit method. The company contributes liabilities to Gratuity Fund in to
a scheme administered by the Life Insurance Corporation of India. Any deficit in plan assets managed by Life Insurance
Corporation of India as compared to the liability on the basis of an independent actuarial valuation is recognized as a liability.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited
to other comprehensive income in the period in which they arise. Other costs are accounted in statement of profit and loss.

3.14 Borrowing Costs

Borrowing cost directly attributable to acquisition and construction of assets that necessarily takes substantial period of time
are capitalised as part of the cost of such assets up to the date when such assets are ready for intended use or sale.

All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs
that an entity incurs in connection with the borrowing of funds.

3.15 Taxation

Income tax expense comprises current and deferred income 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.

Current income tax relating to items recognised outside Statement of profit or loss is recognized either in other comprehensive
income or in equity. Current tax items are recognised in correlation to the underlying transaction either in other comprehensive
income (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 recognized on temporary differences between the carrying amounts of assets and liabilities in the Financial
Statements and the corresponding tax bases used in the computation of taxable profit under Income tax Act, 1961.

Deferred tax assets and liabilities are generally recognized for all deductible and taxable temporary differences respectively.
However, in case of temporary differences that arise from initial recognition of assets or liabilities in a transaction (other than
business combination) that affect neither the taxable profit nor the accounting profit or does not give rise to equal taxable and
deductible temporary differences, deferred tax assets or liabilities are not recognized. Also, for temporary differences, if any
that may arise from initial recognition of goodwill, deferred tax liabilities are not recognized.

Deferred tax assets are recognized to the extent it is probable that taxable profits will be available against which those
deductible temporary difference can be utilized.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be available to allow the benefits of part or all of such deferred tax assets
to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted by the
Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled.

Uncertain Tax position:

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. The provision is estimated based
on one of two methods, the expected value method (the sum of the probability weighted amounts in a range of possible
outcomes) or the single most likely amount method, depending on which is expected to better predict the resolution of the
uncertainty.

Presentation of current and deferred tax:

Current and deferred tax are recognized as income or an expense in the Statement of Profit and Loss, except when they
relate to items that are recognized in Other Comprehensive Income. The Company offsets tax assets and liabilities, where

it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to
realize the asset and settle the liability simultaneously.

3.16 Earnings per share

Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year.

Diluted earnings per share are computed by dividing the profit after tax as adjusted for dividend, interest and other charges
to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average
number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares
which could have been issued on conversion of all dilutive potential equity shares.

3.17 Cash and cash equivalents

Cash and cash equivalents consist of cash and cheques on hand, cash at banks, demand deposits from banks and short¬
term, highly liquid instruments that are readily convertible into cash and which are subject to an insignificant risk of changes
in value.

Cash Flow Statements

The Statement of Cash Flows has been prepared under the “Indirect Method” as set out in the Indian Accounting Standard
(Ind AS 7) - Statement of Cash Flows.

3.18 Segment Reporting
Identification of segments

An operating segment is a component of the Company that engages in business activities from which it may earn revenues
and incur expenses, whose operating results are regularly reviewed by the Company’s Chief Operating Decision Maker
(“CODM”) to make decisions for which discrete financial information is available.

The Company’s operating businesses are organized and managed separately according to the nature of products and
services provided, with each segment representing a strategic business unit that offers different products and serves different
markets.

Allocation of common costs

Common allocable costs are not significant and hence not allocated to each segment.

Inter-segment transfers

Inter-segment revenue has been accounted for based on the transaction price agreed to between segments which is based
on current market prices.

Unallocated items

Revenue, expenses, assets and liabilities which relate to the Company as a whole and not allocable to segments on
reasonable basis have been included under ‘unallocated revenue / expenses / assets / liabilities’.

Segment Policies

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and
presenting the financial statements of the Company as a whole.

3.19 Leases

The Company’s lease asset classes primarily consist of leases for Land and Buildings. The Company assesses whether a
contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys
the right to control the use of an identified asset, the Company assesses whether:

i) the contract involves the use of an identified asset,

ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and

iii) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognises a right-of-use asset (“ROU”) and a corresponding lease
liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short term

leases) and leases of low value assets. For these short term and leases of low value assets, the Company recognises the
lease payments as an operating expense on a straight line basis over the term of the lease.

The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for
any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease
incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-
of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and
useful life of the underlying asset.

The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted
using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates.

The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability,
reducing the carrying amount to reflect the lease payments made. A lease liability is remeasured upon the occurrence of
certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The
remeasurement normally also adjusts the leased assets.

Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified
as financing cash flows.