2 Material accounting policies
2.1 Basis of preparation
The financial statements have been prepared in accordance with Indian Accounting Standards ("Ind AS") as issued under the Companies
(Indian Accounting Standards) Rules, 2015 (as amended from time to time).
The financial statements have been prepared on a historical cost basis.
The financial statements are presented in INR and all values are rounded off to the nearest crores (INR 00,00,000) except when otherwise
indicated."
2.2 Summary of material accounting policies
The following are the significant accounting policies applied by the Company in preparing its financial statements:
i. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current / non-current classification.
An asset is current when it is:
• Expected to be realised or intended to be sold or consumed in the 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 the 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.
Operating cycle
Operating cycle of the Company is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents.
The Company has identified twelve months as its operating cycle.
ii. Foreign currencies
The Company's financial statements are presented in INR, which is also the Company's functional currency.
a) Transactions and balances
Transactions in foreign currencies are initially recorded by the Company at their respective functional currency spot rates at the date
the transaction first qualifies for recognition.
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 statement of profit or loss.
iii. Fair value measurement
The Company measures financial instruments 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 and liability.
The principal or the most advantageous market, referred above, 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 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.
The Company's finance team determines the policies and procedures for recurring fair value measurement for items, such as derivative
instruments.
External valuers are involved for valuation of significant assets such as investment properties. Involvement of external valuation experts
is decided upon annually by the finance team after discussion with and approval by the Company's Audit Committee. Selection criteria
include market knowledge, reputation, independence and whether professional standards are maintained. The finance team decides,
after discussions with the Company's external valuers, which valuation techniques and inputs to use for each case.
At each reporting date, the finance team analyses the movements in the values of assets and liabilities which are required to be re¬
measured or re-assessed as per the Company's accounting policies. For this analysis, the finance team verifies the major inputs applied
in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The Finance team, in conjunction with the Company's external valuers, also compares the change in the fair value of each asset and
liability with relevant external sources to determine whether the change is reasonable.
On an interim basis, the finance team and the Company's external valuers present the valuation results to the Audit Committee and the
Company's independent auditors. This includes a discussion of the major assumptions used in the valuations.
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.
a) Disclosures for valuation methods, significant estimates and assumptions (note 2.3 and 38)
b) Investment properties (note 4)
c) Financial instruments (including those carried at amortised cost) (note 6, 7, 11, 12, 17, 18, 38, 40)
iv. Property, plant and equipment
Capital work in progress is stated at cost, net of accumulated impairment loss, if any. Plant and equipment is stated at cost, net of
accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing parts of the property,
plant and equipment. When significant parts of property, plant and equipment are required to be replaced at intervals, the Company
recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major inspection
is performed, its cost is recognised in the carrying amount of the 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.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its
use or disposal. 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 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.
Property Plant & Equipment are carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent
accumulated depreciation and subsequent accumulated impairment losses. Valuations are performed with sufficient frequency to
ensure that the carrying amount of a revalued asset does not differ materially from its fair value.
A revaluation surplus is recorded in OCI and credited to the asset revaluation surplus in equity. However, to the extent that it reverses
a revaluation deficit of the same asset previously recognised in profit or loss, the increase is recognised in profit and loss. A revaluation
deficit is recognised in the statement of profit or loss, except to the extent that it offsets an existing surplus on the same asset recognised
in the asset revaluation surplus. Upon disposal, any revaluation surplus relating to the particular asset being sold is transferred to
retained earnings.
v. Investment properties
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties
are stated at cost less accumulated depreciation and accumulated impairment losses, if any.
The cost includes the cost of replacing parts. When significant parts of the investment property are required to be replaced at intervals,
the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in
the statement of profit or loss as incurred.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed
in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer.
An investment property is derecognised on disposal or on permanent withdrawal from use and no future economic benefits are
expected from its disposal. 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 and loss when the asset is derecognised.
vi. 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. Internally generated intangible assets,
excluding capitalised development costs, are not capitalised and the expenditure is recognised in the statement of profit and loss in the
period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as finite.
Intangible assets with finite lives are amortised over their useful economic lives 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 is accounted for by changing 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.
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 or loss when the asset is derecognised.
- 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.
Depreciation is provided on a pro rata basis on the straight line method over the estimated useful lives of the assets
Intangible Assets are carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated
depreciation and subsequent accumulated impairment losses. Valuations are performed with sufficient frequency to ensure that the
carrying amount of a revalued asset does not differ materially from its fair value.
A revaluation surplus is recorded in OCI and credited to the asset revaluation surplus in equity. However, to the extent that it reverses
a revaluation deficit of the same asset previously recognised in profit or loss, the increase is recognised in profit and loss. A revaluation
deficit is recognised in the statement of profit or loss, except to the extent that it offsets an existing surplus on the same asset recognised
in the asset revaluation surplus. Upon disposal, any revaluation surplus relating to the particular asset being sold is transferred to
retained earnings.
vii. Non- current assets held for sale
The Company has disclosed non-current assets as held for sale if their carrying amounts will be recovered principally through a sale
rather than through continuing use. Actions required to complete the sale should indicate that it is unlikely that significant changes to
the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the sale expected within one
year from the date of classification.
The criteria for held for sale classification is regarded as met only when the assets is available for immediate sale in its present condition,
subject only to terms that are usual and customary for sales of such assets, its sale is highly probable; and it will genuinely be sold, not
abandoned. The Company treats sale of the asset to be highly probable when:
• The appropriate level of management is committed to a plan to sell the asset,
• An active programme to locate a buyer and complete the plan has been initiated (if applicable),
• The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
• The sale is expected to qualify for recognition as a completed sale within one year from the date of classification, and
• Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan
will be withdrawn.
Non-current assets held for sale are measured at the lower of their carrying amount and the fair value less costs to sell.
Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.
viii. 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 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 impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct
costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use
assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase
option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section (x) 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.
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.
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 spaces (i.e., those leases that
have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the
lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments
on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
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 arising is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in
negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term
on the same basis as rental income.
ix. Inventories
a) Raw materials, components, including in transit, stores and spares are valued at lower of cost and net realizable 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. Cost of raw materials, components and stores and spares
includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost of raw
materials, components and stores and spares is determined on a weighted average basis.
b) Work-in-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour
and a proportion of manufacturing overheads based on normal operating capacity. Cost is determined on a 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.
x. 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 of the Company. When 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 available. 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.
Whenever an impairment indicator exists or an annual impairment testing is required, the Company bases its impairment calculation
on detailed budgets and forecasts which are prepared separately for each of the Company's CGU to which the individual assets are
allocated. These budgets and forecast calculations are generally covering 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.
Impairment losses including impairment on inventories, are recognised in the statement of profit and loss in those expense categories
consistent with the function of the impaired asset.
For assets, an assessment is made at each reporting date to determine whether there is an indication that previously recognised
impairment losses may 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.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the CGU level, as appropriate and
when circumstances indicate that the carrying value may be impaired.
xi. Revenue from contract with customer
Revenue from contract with customers is recognised when the Company satisfies performance obligation by transferring promised
goods and services to the customer. Performance obligations may be satisfied at a point of time or over a period of time. Performance
obligations satisfied over a period of time are recognised as per the terms of relevant contractual agreements/ arrangements. Performance
obligations are said to be satisfied at a point of time when the customer obtains controls of the asset or when services are rendered.
Revenue is measured based on transaction price (net of variable consideration) allocated to that performance obligation. The transaction
price of the goods and services to a customer is based on the price specified in the contract and is net of variable consideration on
account of estimated sales incentives / discounts offered by the Company. Accumulated experience is used to estimate and provide for
the discounts/ right of return, using the expected value method.
A refund liability is recognised for expected sale returns and corresponding assets are recognised for the products expected to be
returned.
The following specific recognition criteria must also be met before revenue is recognised:
Rights of return - Certain contracts provide a customer with a right to return the goods within a specified period. The Company
uses the expected value method to estimate the goods that will not be returned because this method best predicts the amount of
variable consideration to which the Company will be entitled. The requirements in Ind AS 115 on constraining estimates of variable
consideration are also applied in order to determine the amount of variable consideration that can be included in the transaction price.
For goods that are expected to be returned, instead of revenue, the Company recognises a refund liability. A right of return asset and
corresponding adjustment to change in inventory is also recognised for the right to recover products from a customer.
Volume rebates - The Company provides retrospective volume rebates to certain customers once the quantity of products purchased
during the period exceeds a threshold specified in the contract. Rebates are offset against amounts payable by the customer. To estimate
the variable consideration for the expected future rebates, the Company applies the most likely amount method for contracts 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
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by
transferring goods to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for
the earned consideration that is conditional.
Trade receivables
A receivable represents the Company's right to an amount of consideration that is unconditional (i.e., only the passage of time is
required before payment of the consideration is due). Refer to accounting policies of financial assets in section (xii) Financial instruments
- initial recognition and subsequent measurement.
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.
Interest income
Interest income is recognized 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.
Rental income
Rental income arising from operating leases on investment properties is accounted for on an actual basis and is included under the head
"other income" in the statement of profit and loss.
xii. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of
another entity.
(a) Financial assets
(i) Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other
comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics
and the Company's business model for managing them. With the exception of trade receivables that do not contain a significant
financing component or for which the Company has applied the practical expedient, the Company initially measures a financial
asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables
that do not contain a significant financing component or for which the Company has applied the practical expedient are measured
at the transaction price determined under Ind AS 115. Refer to the accounting policies in section (xi) Revenue from contracts with
customers.
The Company's business model for managing financial assets refers to how it manages its financial assets in order to generate cash
flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets,
or both.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the
market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the
asset.
The financial assets are subsequently measured at amortised cost.
(ii) De-recognition of financial assets
A financial asset is derecognised when:
- the rights to receive cash flows from the asset have expired, or
- the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party and either (a) the Company has transferred substantially all the risks
and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset it evaluates if and to what extent it has retained
the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the
asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company's
continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated
liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original
carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
(iii) Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of
impairment loss on the following financial assets and credit risk exposure:
Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, deposits, trade receivables and bank
balance.
The Company follows 'simplified approach' for recognition of impairment loss allowance on trade receivables or contract revenue
receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment
loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has
been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is
used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period,
credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition,
then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The
12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting
date.
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 Company expects to receive (i.e., all cash shortfalls), discounted at the original EIR. When estimating the cash
flows, an entity is required to consider:
• All contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected
life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated
reliably, then the Company is required to use the remaining contractual term of the financial instrument
• Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income / expense in the statement of
profit and loss (P&L). This amount is reflected under the head 'other expenses' in the P&L. The balance sheet presentation for
various financial instruments is described below:
• Financial assets measured as at amortised cost and revenue receivables: ECL is presented as an allowance, i.e. as an integral
part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset
meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
• Loan commitments: ECL is presented as a provision in the balance sheet, i.e. as a liability.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit
risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be
identified on a timely basis.
The Company does not have any purchased or originated credit-impaired (POCI) financial assets, i.e., financial assets which are
credit impaired on purchase / origination.
(b) Financial liabilities
(i) Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and in the case of financial liabilities not recorded at fair value through
profit or loss, transaction costs that are attributable to the issue of the financial liabilities.
The Company's financial liabilities include trade and other payables.
(ii) Subsequent measurement of financial liabilities
For purposes of subsequent measurement, financial liabilities are classified and measured as follows:
• Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities designated upon initial recognition as at fair
value through profit or loss. This category also includes derivative financial instruments entered into by the Company that are not
designated as hedging instruments in hedge relationships as defined by Ind AS 109.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of
recognition, and only if the criteria in Ind-AS 109 are satisfied. For liabilities designated as fair value through profit or loss ('FVTPL'),
fair value gains/ losses attributable to changes in own credit risks are recognized in OCI. These gains/ loss are not subsequently
transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value
of such liability are recognised in the statement of profit and loss. The Company has designated derivative instruments as financial
liability as at fair value through profit and loss.
(iii) De-recognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition
of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
xiii. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with a maturity of three
months or less, which are subject to an insignificant risk of changes in value.
xiv. 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 in
equal amounts over the expected useful life of the related asset.
Export incentives
Export incentives under various schemes notified by government are accounted for in the year of exports as grant related to income
and is recognized as other operating income in the profit or loss if the entitlements can be estimated with reasonable accuracy and
conditions precedent to claim are fulfilled. During the current financial year the same is recognised under other operative income.
xv. Taxes
Current income tax
Current income tax assets and liabilities are measured at the amounts expected to be recovered from or paid to the taxation authorities;
on the basis of the taxable profits computed for the current accounting period in accordance with Income Tax Act, 1961. 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 in other comprehensive income or directly in equity is recognised in other comprehensive
income or in equity, respectively, and not in the statement of profit or loss. The 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 balance sheet approach on temporary differences between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets are recognised to the extent that it is
probable that 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.
The tax rates and tax laws used to compute the tax are those that are enacted or substantively enacted at the reporting date.
Current income tax and deferred tax relating to items recognised directly in equity is recognised in equity and not in the statement of
profit and loss.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax
liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either
the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
xvi. Retirement and other employee benefits
Retirement benefits in the form of provident fund, superannuation scheme and employee state insurance scheme are defined
contribution schemes. The Company has no obligation, other than the contribution payable to the schemes. The Company recognizes
contribution payable to the schemes as an expense, when an employee renders the related service. If the contribution payable to the
schemes for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the schemes are
recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for
services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to,
for example, a reduction in future payment or a cash refund.
The employee's gratuity fund scheme is Company's defined benefit plan. The present value of the obligation under such defined benefit
plan is determined based on the actuarial valuation using the projected unit credit method as at the date of the balance sheet. In case
of funded plans, the fair value of plan asset is reduced from the gross obligation under the defined benefit plans, to recognise the
obligation on a net basis.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest
on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit
liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the
period in which they occur. Re-measurements are not reclassified to the profit or loss in subsequent periods.
Past service costs are recognised in profit or loss on the earlier of:
• The date of the plan amendment or curtailment, and
• The date that the Company recognises related restructuring costs
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following
changes in the net defined benefit obligation as an expense in the profit and loss:
• Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
• Net interest expense or income.
Other long term employment benefits:
The employee's long term compensated absences are Company's defined benefit plans. The present value of the obligation is determined
based on the actuarial valuation using the projected unit credit method as at the date of the balance sheet.
In regard to other long term employment benefits, the Company recognises the net total of service costs; net interest on the net defined
benefit liability; and re-measurements of the net defined benefit liability in the profit or loss.
xvii. Earnings per share ('EPS')
Basic EPS is calculated by dividing the Company's earnings for the year attributable to ordinary equity shareholders of the Company by
the weighted average number of ordinary shares outstanding during the year. The earnings considered in ascertaining the Company's
Earnings per Share ('EPS') comprise the net profit after tax attributable to equity shareholders. The weighted average number of equity
shares outstanding during the year is adjusted for events of bonus issue, bonus element in a rights issue to existing shareholders,
share split, and reverse share split (consolidation of shares) other than the conversion of potential equity shares that have changed the
number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders of the
parent company and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive
potential equity shares.
xviii. Cash dividend
The Company recognises a liability to make cash distributions to the equity holders of the Company when the distribution is authorised
and the distribution is no longer at the discretion of the Company. As per the provisions of Companies Act, 2013, a distribution is
authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
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