3 MATERIAL ACCOUNTING POLICIES1. Classification of Current versus Non-Current:

All assets and liabilities in the financial statements
have been classified as current or non-current as
per the Company’s normal operating cycle of up to
twelve months.

For the purpose of Balance Sheet, an asset is
classified as current if:

• It is expected to be realised, or is intended to
be sold or consumed, in the normal operating
cycle; or

• It is held primarily for the purpose of trading;
or

• It is expected to realise the asset within
twelve months after the reporting period; or

• The asset is a cash or cash equivalent unless
it is 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.

Similarly, a liability is classified as current if:

• I t is expected to be settled in the normal
operating cycle; or

• It is held primarily for the purpose of trading;
or

• I t is due to be settled within twelve months
after the reporting period; or

• The Company does not have an unconditional
right to defer the settlement of the liability for
at least twelve months after the reporting
period. Terms of a liability that could result
in its settlement by the issue of equity
instruments at the option of the counterparty
does not affect this classification

All other liabilities are classified as non¬
current.

2. Property, Plant and Equipment (PPE)

PPE is recognised 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 initial cost of PPE
comprises its purchase price, including import
duties and non-refundable purchase taxes, and
any directly attributable costs of bringing an
asset to working condition and location for its
intended use less accumulated depreciation
and accumulated impairment losses, if any Cost
includes professional fees related to the period
acquisition of PPE and for qualifying assets,
borrowing costs is capitalised in accordance with
the Company’s accounting policy.

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. All other repairs and
maintenance cost are charged to the Statement
of Profit and Loss during the period in which they
were incurred.

Long term lease arrangements of land are treated
as PPE, in case such arrangements result in
transfer of control and the present value of the
lease payments is likely to represent substantially
all of the fair value of the land.

An item of PPE and any significant part initially
recognised is derecognised upon disposal or when
no future economic benefits are expected with the
carrying amount of any component accounted for
as a separate asset is derecognised when replaced.
Gains or losses arising from de-recognition of a
PPE are measured as the difference between the
net disposal proceeds and the carrying amount of

4. CAPITAL WORK-IN-PROGRESS

Capital Work-in-Progress represents expenditure
incurred on capital assets that are under construction
or are pending capitalisation and includes project
expenses pending allocation. The same is carried at
cost, comprising of direct costs, related incidental
expenses and attributable borrowing costs. Project
expenses pending allocation are apportioned to the
PPE of the project proportionately on capitalisation.

5. INTANGIBLE ASSETS

I ntangible 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 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.

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.

Amortisation:

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 assets are considered to modify
the amortisation period or method, as appropriate,
and are treated as change in accounting estimates.
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 assets.

Intangible Assets without finite life are tested for
impairment at each Balance sheet date and impairment
provision, if any are debited to profit and loss.

The estimated useful lives of the amortisable intangible
assets are as follows:

6. IMPAIRMENT OF NON-FINANCIAL ASSETS:

The Company assesses at each reporting date, whether
there is an indication that a non-financial asset may
be impaired. If any indication exists, or when annual
impairment testing for such asset is required, the
Company estimates the asset’s recoverable amount in
order to determine the extent of the impairment loss (if
any). When it is not possible to estimate the recoverable
amount of an individual asset, the Company estimates
the recoverable amount of the cash-generating unit to
which the asset belongs. Goodwill and the intangible
assets with indefinite life are tested for impairment
each year.

Impairment loss is recognised when the carrying
amount of an asset (or cash generating unit) exceeds
its recoverable amount which is higher of asset’s (or
cash generating unit’s) net selling price or the value in
use. The amount of value in use is determined as the
present value of estimated future cash flows from the
continuing use of an asset (or cash generating unit) and
from its disposal at the end of its useful life. For this
purpose, the discount rate (pre-tax) is determined based

on the weighted average cost of capital of the Company
suitably adjusted for risks specified to the estimated
cash flows of the asset (or cash generating units).

If recoverable amount of an asset (or cash generating
unit) is estimated to be less than its carrying amount,
such deficit is recognised immediately in the Statement
of Profit and Loss as impairment loss and the carrying
amount of the asset (or cash generating unit) is reduced
to its recoverable amount.

When an impairment loss subsequently reverses, the
carrying amount of the asset (or cash generating unit)
is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount
does not exceed the carrying amount that would have
been determined had no impairment loss is recognised
for the asset (or cash generating unit). A reversal of
an impairment loss is recognised immediately in the
Statement of Profit and Loss.

7. INVENTORIES:

Inventories are valued, after providing for obsolescence
as given below:

Raw Materials, Packing Materials and Stores and
Spares:

i) Raw Materials, Packing Materials and Stores
and Spares:

Raw materials, packing materials and stores and
spares are valued at lower of Cost or net realisable
value. However, materials and other items held for
use in the production of inventories are not written
down below cost if the finished products in which
they will be incorporated are expected to be sold at
or above cost. Costs are determined on Weighted
Average Basis.

ii) Work-in-process:

Work-in-process is valued at the lower of cost
and net realisable value. The cost is computed on
Weighted Average Basis.

iii) Finished Goods, Semi-Finished Goods and
Traded Goods:

Finished goods, Semi-finished goods and traded
goods are valued at lower of cost and net realisable
value. The cost is computed on Weighted Average
Basis.

Cost is determined on Weighted Average Cost
basis for the reporting period basis which includes
expenditure incurred for acquiring inventories

like purchase price, import duties, taxes (net of
tax credit), cost of conversion and other costs
incurred in acquiring the inventories to their
present location and condition.

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.

8. CASH AND CASH EQUIVALENTS

Cash and cash equivalents in the balance sheet
comprise cash at banks and on hand and highly liquid
financial instruments, which are readily convertible
into known amounts of cash, that are subject to an
insignificant risk of change in value with an original
maturity of three months or less.

9. EMPLOYEE BENEFITS:1. Short-term employee benefits:

All employee benefits payable wholly within twelve
months of rendering the services are classified
as short-term employee benefits. Benefits such
as salaries, wages short-term compensated
absences, expected cost of bonus, etc. are
recognised in the period in which the employee
renders the related services.

2. Post-employment benefits:2.1. Defined Contribution Plan:

The Company makes defined contribution
to Employee Provident Fund, Employee
Pension Fund, Employee Deposit Linked
Insurance, and Superannuation Schemes.
The contribution paid/payable under these
schemes is recognised during the period
in which the employee renders the related
service which are recognised in the Statement
of Profit and Loss on accrual basis during
the period in which the employee renders the
services.

2.2. Defined Benefit Plan

The gratuity liability of the Company is
funded through a Group Gratuity Scheme
with Life Insurance Corporation of India
(LIC) under which the annual contribution
is paid to LIC. The Company’s liability under
Payment of Gratuity Act is determined on the
basis of actuarial valuation made at the end
of each financial year using the projected unit

credit method. The obligation is measured
at the present value of the estimated future
cash flows using a discount rate based on
the market yield on government securities
where the terms of government securities
are consistent with the estimated terms of
the defined benefit obligations at the Balance
Sheet date. The Company recognises the
net obligation of a defined benefit plan in its
Balance Sheet as an asset or liability. Gains
and losses through re-measurements of
the net defined benefit liability / (asset) are
recognised in other comprehensive income
and are not reclassified to profit or loss in
subsequent periods.

3. Long term employee benefits:

Compensated absences which are not expected
to occur within twelve months after the end of the
period in which the employee renders the related
services are recognised as a liability. The cost
of providing benefits is actuarially determined
using the projected unit credit method, actuarial
valuations being carried out at each Balance Sheet
date.

Remeasurements of the liability in respect of other
long-term employee benefits are recognised in
the Statement of Profit and Loss in the period in
which they arise and are not recognised in other
comprehensive

4. Employee Stock Option Plan:

The Company recognises compensation expense
relating to share-based payments based on
estimated fair-values of the awards on the
grant date. The estimated fair value of awards
is recognised as an expense in the Statement
of Profit and Loss on a straight-line basis over
the requisite service period for each separately
vesting portion of the award as if the award was in¬
substance, multiple awards with a corresponding
increase to share options outstanding accounts.

The fair value at the grant date is determined
using the Black-Scholes option pricing model,
having regard to the terms and conditions upon
which the options were granted. The cumulative
expense recognised at each reporting date reflects
the extent to which the vesting period has expired
and the Company’s best estimate of the number
of options that will ultimately vest; no expense is
recognised for options that do not ultimately vest

because a service condition has not been met.
The corresponding credit is taken to the Employee
Stock Option Plan reserve within other equity.
The plan is equity-settled and there are no cash-
settled share-based payment arrangements.