• In addition, the carrying values of recognised assets
and liabilities, designated as hedged items in fair
value hedges that would otherwise be carried at
cost, are adjusted to record changes in the fair values
attributable to the risks that are being hedged in
effective hedge relationships.

(C) Significant Accounting Estimates,

Judgements Assumptions:

The preparation of the financial statements in conformity
with Ind AS requires the management to make estimates,
judgments and assumptions. These estimates,
judgments and assumptions affect the application of
accounting policies and the reported amounts of assets
and liabilities, the disclosures of contingent assets and
liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the
period. Actual results could differ from those estimates
according to the nature of the assumption and other
circumstances. This note provides an overview of the
areas where there is a higher degree of judgment or
complexity. Detailed information about each of these
estimates and judgments is included in relevant notes
together with information about the basis of calculation.

The following are areas involving critical estimates
and judgments:

Judgements:

• Leases

• Evaluation of recoverability of deferred tax assets,
and estimation of income tax payable and income
tax expense in relation to an uncertain tax position

• Provisions and Contingencies

Estimates:

• Impairment

• Accounting for Defined benefit plans

• Useful lives of property, plant and equipment and
intangible assets

• Fair Valuation of Financial instruments

• Valuation of inventories

(D) Current and 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:

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

ii) Held primarily for the purpose of trading, or

iii) Expected to be realized within twelve months after
the reporting period, or

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

A liability is treated as current when it is:

(i) Expected to be settled in normal operating cycle, or

(ii) Held primarily for the purpose of trading, or

(iii) Due to be settled within twelve months after the
reporting period, or

(iv) There is no unconditional right to defer the
settlement of the liability for at least twelve months
after the reporting period

All other assets and liabilities are classified as non¬
current assets and liabilities. 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
realization in cash and cash equivalents. The
Company has identified twelve months as its
operating cycle.

E) Property, Plant and Equipment, Intangible
Assets and Depreciation/Amortization:

1. Property, Plant and Equipment (PPE)

PPEs held for use in the production, supply or
administrative purposes, are stated in the balance
sheet at cost less applicable accumulated
depreciation/amortisation and accumulated
impairment losses (if any).

The cost of PPE comprises its purchase price
(including the costs of materials / components)
net of any trade discounts and rebates, any
import duties and other taxes (other than those
subsequently recoverable from the tax authorities),
any directly attributable expenditure on making the
asset ready for its intended use, including relevant
borrowing costs for qualifying assets including
exchange differences arising from foreign
currency borrowings to the extent that they are
regarded as an adjustment to interest costs and
such other incidental costs that may be associated
with acquisition or creation of the asset ready for
its intended use.

An item or part of PPE is derecognized upon
disposal or when no future economic benefits are
expected from its use. Any gain or loss arising
on de-recognition 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 & Loss as and when the asset
is derecognized.

PPE which are not ready for intended use as on
the date of Balance Sheet are disclosed as "Capital
work-in-progress”. Capital Work-in-Progress
represents expenditure incurred on capital assets
that are under construction/erection or are pending
to be commercialized and put to use. The same is
carried at cost which is determined in the same
manner as for any PPE.

2. Intangible Assets

Intangible assets are recognised when it is
probable that the future economic benefits that are
attributable to the asset will flow to the Company
and the cost of the asset can be measured reliably.
Intangible assets are stated at original cost net of
tax/duty credits availed, if any, less accumulated
amortisation and cumulative impairment.
Administrative and other general overhead
expenses that are specifically attributable to
acquisition of intangible assets are allocated and
capitalised as a part of the cost of the intangible
assets. Intangible development costs are
capitalised as and when technical and commercial
feasibility of the asset is demonstrated and future
economic benefits are probable.

The useful lives of intangible assets are assessed
as either finite or indefinite. Intangible assets with
finite lives are amortized over the useful economic
life and assessed for impairment whenever there
is an indication that the intangible asset may
be impaired. The amortization period and the
amortization method for an intangible asset with
a finite useful life are reviewed at least at the end
of each reporting period.

Gains or losses arising from de-recognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the
carrying amount of the asset and are recognised
in the Statement of Profit and Loss when the asset
is derecognised.

3. Depreciation/Amortization

Pursuant to the notification of Schedule II of the
Companies Act, 2013, the management has reassessed
and changed based on technical estimates, wherever
necessary, the useful lives to compute depreciation, to
confirm to the requirements of the Companies Act, 2013.
The useful life for various class of assets is as follows:

4. Impairment

The Company assesses at each reporting that the
carrying amounts of its property, plant and equipment,
intangible assets to determine whether there is any
indication that those assets have suffered an impairment
loss. If any indication exists, or when annual impairment
testing for an asset is required, the Company estimates
the asset's recoverable amount.

Impairment loss, if any, is provided to the extent, the
carrying amount of assets exceeds their recoverable
amount. Recoverable amount is higher of net selling
price of an asset or its value in use. Value in use is the
present value of estimated future cash flows expected
to arise from the continuing use of an asset and from its
disposal at the end of its useful life.

(F) Research and Development:

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

• development costs can be measured reliably;

• the product or process is technically and
commercially feasible;

I nd AS 115 requires entities to exercise judgment,
taking into consideration all of the relevant facts and
circumstances when applying each step of the model
to contracts with their customers. It also specifies
the accounting for the incremental costs of obtaining
a contract and the costs directly related to fulfilling
a contract.

(i) Sale of Goods:

Revenue from sale of goods is recognised when
control of the products being sold is transferred
to our customer and when there are no longer
any unfulfilled obligations. Income from services
rendered is recognised based on agreements/
arrangements with the customers as the service is
performed and there are no unfulfilled obligations.

The Company recognizes net revenue from
goods sold and services rendered at Transaction
Price which is the amount of consideration the
Company expects to be entitled to in exchange
for transferring promised goods or services to
a customer, excluding the amounts collected on
behalf of a third party. The Transaction price is net
of discounts, sales incentives, rebates granted,
returns, sales taxes, GST and duties and any other
recoverable taxes.

Generally, In case of domestic sales, performance
obligations are satisfied when the goods are
dispatched or delivery is handed over to transporter,
revenue from export of goods is recognized at the
time of Bill of lading or airway bill or any other
similar document evidencing delivery thereof.

(ii) 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
principle outstanding and at the effective interest
rate applicable, which is the rate that exactly
discounts estimated future cash receipts through
the expected life of the financial asset to that
asset's net carrying amount on initial recognition.

(iii) Dividend Income:

Revenue is recognized when the Company's right
to receive the dividend is established, which is
generally when shareholders approve the dividend.

(iv) Export Benefits:

Export incentives are recognized as income when
the right to receive credit as per the terms of the
scheme is established in respect of the exports
made and where there is no significant uncertainty
regarding the ultimate collection of the relevant
export proceeds.

(v) Subsidy Received:

Subsidy from the Department of Fertilizers is
recognised, based on the eligible quantities
supplied by the Company, at the rates as notified/
announced by the Government of India.

(J) Financial Instruments:

Recognition and initial measurement

Financial assets and financial liabilities are recognised
when an entity becomes a party to the contractual
provisions of the instrument. Financial assets and
financial liabilities are initially measured at fair value.
However, Trade receivables that do not contain a
significant financing component are measured at
transaction price. Transaction costs directly attributable
to the acquisition of financial assets or financial
liabilities at fair value through profit and loss are
recognised immediately in the Statement of Profit and
Loss. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial
liabilities at fair value through Statement of Profit and
Loss (FVTPL)) are added to or deducted from the fair
value of the financial assets or financial liabilities, as
appropriate, on initial recognition.

Classification and Subsequent Measurement of
Financial Assets:

The Company classifies financial assets, subsequently at
amortised cost, Fair Value through Other Comprehensive
Income ("FVTOCI”) or Fair Value through Profit or Loss
("FVTPL”) on the basis of following:

• the entity's business model for managing the financial
assets and

• the contractual cash flow characteristics of the
financial asset.

(a) Financial Assets measured at Amortised Cost:

A Financial Asset is measured at amortised Cost if
it is held within a business model whose objective
is to hold the asset in order to collect contractual
cash flows and the contractual terms of the
Financial Asset give rise on specified dates to cash

flows that represent solely payments of principal
and interest on the principal amount outstanding.

(b) Financial Assets measured at Fair Value Through Other
Comprehensive Income (FVTOCI):

A Financial Asset is measured at FVTOCI if it is
held within a business model whose objective is
achieved by both collecting contractual cash flows
and selling Financial Assets and the contractual
terms of the Financial Asset give rise on specified
dates to cash flows that represent solely
payments of principal and interest on the principal
amount outstanding.

(c) Financial Assets measured at Fair Value Through Profit
or Loss (FVTPL):

FVTPL is a residual category for financial assets.
Any financial asset, which does not meet the
criteria for categorization as at amortised cost or
as FVTOCI, is classified as at FVTPL.

Classification and Subsequent Measurement of Financial
Liabilities:

(a) Financial liabilities measured at Fair Value Through Profit
or Loss (FVTPL):

Financial liabilities are classified as FVTPL
when the financial liability is held for trading or
is a derivative (except for effective hedge) or are
designated upon initial recognition as FVTPL.
Gains or Losses, including any interest expense
on liabilities held for trading are recognised in the
Statement of Profit and Loss.

(b) Other Financial Liabilities:

Other financial liabilities (including loans and
borrowings, bank overdrafts and trade and other
payables) are subsequently measured at amortised
cost using the effective interest method.

The effective interest rate is the rate that exactly
discounts estimated future cash payments
(including all fees and amounts paid or received
that form an integral part of the effective interest
rate, transaction costs and other premiums or
discounts) through the expected life of the financial
liability, or (where appropriate) a shorter period, to
the amortised cost on initial recognition.

Interest expense (based on the effective interest
method), foreign exchange gains and losses, and
any gain or loss on derecognition is recognised in
the Statement of Profit and Loss.

For trade and other payables maturing within one
year from the Balance Sheet date, the carrying
amounts approximate fair value due to the short
maturity of these instruments.

Debt and Equity Instruments:

Debt and equity instruments issued by the Company
are classified as either financial liabilities or as equity
in accordance with the substance of the contractual
arrangements and the definitions of a financial liability
and an equity instrument. An equity instrument is any
contract that evidences a residual interest in the assets
of an entity after deducting all of its liabilities. Equity
instruments issued by a Company are recognised at the
proceeds received, net of direct issue costs.

Equity Investments

All equity investments (excluding the investments in
Subsidiaries) in the scope of Ind AS 109 are measured
at fair value. Equity instruments which are held for
trading are classified as at FVTPL. For all other equity
instruments, the company may make an irrevocable
election to present in other comprehensive income
subsequent changes in the fair value. The company
makes such election on an instrument-by-instrument
basis. The classification is made on initial recognition
and is irrevocable. If the company decides to classify
an equity instrument as at FVTOCI, then all fair value
changes on the instrument, excluding dividends, are
recognized in the OCI. There is no recycling of the
amounts from OCI to the statement of profit and loss,
even on sale of investment. However, the company may
transfer the cumulative gain or loss within equity. Equity
instruments included within the FVTPL category are
measured at fair value with all changes recognized in
the statement of profit and loss.

Investments in Subsidiaries:

I nvestments in subsidiaries are carried at cost less
accumulated impairment losses, if any. Where an
indication of impairment exists, the carrying amount
of the investment is assessed and written down
immediately to its recoverable amount. On disposal
of investments in subsidiaries, the difference between
net disposal proceeds and the carrying amounts are
recognised in the statement of profit and loss.

Investments in Joint Ventures & Associates:

The Company has interests in the joint venture/associate
entities, which is accounted for using the equity method
in these financial statements. Under the equity method,
the investments are initially recognized at cost, and
the carrying amount would be increased or decreased

to recognize the Company's share of the profit or loss
and other comprehensive income of said joint venture/
associate entities after the date of acquisition. In case
of any distributions received, from such joint venture/
associate entities, the same shall be reduced from the
carrying amount of the such investments.

De-recognition of Financial Instruments:

The Company derecognises a Financial Asset when the
contractual rights to the cash flows from the Financial
Asset expire or it transfers the Financial Asset and the
transfer qualifies for de-recognition under Ind AS 109.
In cases where Company has neither transferred nor
retained substantially all of the risks and rewards of the
financial asset, but retains control of the financial asset,
the Company continues to recognize such financial
asset to the extent of its continuing involvement in
the financial asset. In that case, the Company also
recognizes an associated liability. The financial asset
and the associated liability are measured on a basis that
reflects the rights and obligations that the Company
has retained.

A Financial liability (or a part of a financial liability) is
derecognised from the Company's Balance Sheet when
the obligation specified in the contract 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 derecognition of the
original liability and the recognition of a new liability.

The difference between the carrying amount of the
financial liability de-recognised and the consideration
paid and payable is recognised in the Statement of
Profit and Loss.

Impairment of Financial Assets:

I n accordance with Ind AS 109, the Company uses
'Expected Credit Loss' (ECL) model, for evaluating
impairment of all Financial Assets subsequent to
initial recognition other than financial assets measured
at fair value through profit and loss (FVTPL). The
Company uses historical default rates to determine
impairment loss on the portfolio of trade receivables.
At every reporting date these historical default rates are
reviewed and changes in the forward-looking estimates
are analysed. For other financial assets, the Company
uses 12 month ECL to provide for impairment loss where
there is no significant increase in credit risk since its
initial recognition. If there is significant increase in credit
risk since its initial recognition full lifetime ECL is used.

The impairment losses and reversals are recognised in
Statement of Profit and Loss.

ECL is the difference between all contractual cash flows
that are due to the Company in accordance with the
contract and all the cash flows that the entity expects
to receive (i.e., all cash shortfalls), discounted at the
original EIR.

Offsetting of Financial Instruments:

Financial assets and financial liabilities are offset
and presented on net basis in the balance sheet
when there is a legally enforceable right to set-off the
recognised amounts and it is intended to either settle
them on net basis or to realise the asset and settle the
liability simultaneously.

Fair Value of Financial Instruments

In determining the fair value of its financial instruments,
the Company uses a variety of methods and assumptions
that are based on market conditions and risks existing
at each reporting date. The methods used to determine
fair value include discounted cash flow analysis and
available quoted market prices, where applicable.
All methods of assessing fair value result in general
approximation of value, and such value may never
actually be realized.

Financial instruments by category are separately
disclosed indicating carrying value and fair value of
financial assets and liabilities. For financial assets and
liabilities maturing within one year from the Balance
Sheet date and which are not carried at fair value, the
carrying amounts approximate fair value due to the
short maturity of these instruments.

Derivative Financial Instruments:

Derivative financial instruments such as forward
contracts, option contracts and cross currency swaps,
to hedge its foreign currency risks are initially recognised
at fair value on the date a derivative contract is entered
into and are subsequently re-measured at their fair value
with changes in fair value recognised in the Statement
of Profit and Loss in the period when they arise.

Cash Flow Hedge

At inception of designated hedging relationships, the
Company documents the risk management objective
and strategy for undertaking the hedge. The Company
also documents the economic relationship between
the hedged item and the hedging instrument, including
whether the changes in cash flows of the hedged

item and hedging instrument are expected to offset
each other.

The company is exposed to foreign exchange risk
arising from foreign currency transactions, primarily
with respect to USD. Foreign exchange risk arises from
future commercial transactions and recognised assets
and liabilities denominated in a currency that is not the
company's functional currency (INR).

The risk is measured through a forecast of highly
probable foreign currency cash flows. The objective
of the hedges is to minimise the volatility of the INR
cash flows of highly probable forecast transactions.
The company risk management policy is to hedge
forecasted foreign currency sales for the subsequent
12 to 36 months. As per the risk management policy,
appropriate foreign currency hedges are executed or
undertaken to hedge forecasted sales.

The spot component of forward contracts is determined
with reference to relevant spot market exchange rates.
The differential between the contracted forward rate
and the spot market exchange rate is defined as the
forward points.

When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the
fair value of the derivative is recognised in OCI and
accumulated in other equity under 'effective portion
of cash flow hedges'. The effective portion of changes
in the fair value of the derivative that is recognised in
OCI is limited to the cumulative change in fair value of
the hedged item, determined on a present value basis,
from inception of the hedge. Any ineffective portion of
changes in the fair value of the derivative is recognised
immediately in statement of profit and loss.

I f a hedge no longer meets the criteria for hedge
accounting or the hedging instrument is sold, expires,
is terminated or is exercised, then hedge accounting is
discontinued prospectively. When hedge accounting for
cash flow hedges is discontinued, the amount that has
been accumulated in other equity remains there until,
for a hedge of a transaction resulting in recognition of
a non-financial item, it is included in the non-financial
item's cost on its initial recognition or, for other cash
flow hedges, it is reclassified to profit or loss in the same
period or periods as the hedged expected future cash
flows affect profit or loss.

If the hedged future cash flows are no longer expected
to occur, then the amounts that have been accumulated

in other equity are immediately classified to statement
of profit and loss.

(K) Cash and Cash Equivalents:

For the purpose of presentation in the Balance sheet,
Cash and Cash equivalents comprises cash at bank and
on hand and other short-term, highly liquid investments
with an original maturity (or with an option to or can
be readily converted or liquidated into cash) of three
months or less, which are subject to an insignificant
risk of changes in value. Cash and Cash Equivalents
consist of balances with banks which are unrestricted
for withdrawals and usages.

For the purpose of presentation in the statement of
cash flows, cash and cash equivalents includes cash
at bank and on hand and other short-term highly
liquid investments that are readily convertible to
known amounts of cash and which are subject to an
insignificant risk of changes in value.