5 Material accouting policies informaton

5.1 Investment in subsidiaries, joint ventures, and
associates

Investments in subsidiaries, joint ventures, and associates
are recognised at cost less any impairment loss and are not
adjusted to fair value. The cost of investment represents the
amount paid for the acquisition of the said investment. The
Company assesses carrying value of investments annually,
or more frequently if there are any indications of impairment

on such investments. If the carrying amount of an investment
exceeds its estimated recoverable amount, the impairment
loss is recognized in the Statement of Profit and Loss..

5.2 Property, plant and equipment

Property, plant and equipment is stated at acquisition cost net of
accumulated depreciation and accumulated impairment losses,
if any. Cost of acquisition or construction of property, plant and
equipment comprises its purchase price including import
duties and non-refundable purchase taxes after deducting
trade discounts, rebates and any directly attributable cost of
bringing the item to its working condition for its intended use

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 are incurred.

Gains or losses arising on retirement or disposal of property,
plant and equipment are recognised in the statement of
profit and loss.

Property, plant and equipment which are not ready for
intended use as on the date of Balance Sheet are disclosed
as “Capital work-in-progress”. Advances paid towards the
acquisition of property, plant and equipment outstanding at
each balance sheet date is classified as capital advances
under “Other Non-Current Assets”.

Depreciation and useful life

Depreciation is recognised so as to write off the cost of assets
(other than freehold land and properties under construction)
less their residual values over their useful lives, using straight¬
line method as per the useful life as mentioned in Schedule
II to the Companies Act, 2013 except in respect of following
categories of assets, in whose case the life of the assets has
been assessed as under based on technical advice, taking
into account the nature of the asset, the estimated usage
of the asset, the operating conditions of the asset, past
history of replacement, anticipated technological changes,
manufacturers warranties and maintenance support, etc

Freehold land is not depreciated

The Company conducts an annual review of the residual
value, useful lives, and depreciation method of its assets.
If there are differences between the current expectations
and previous estimates, the change is accounted for as a
prospective change in accounting estimate.

Major overhaul costs are depreciated over the estimated
life of the economic benefit derived from the overhaul.
If the next overhaul is undertaken earlier than the
previously estimated life of the economic benefit, the
carrying amount of the remaining previous overhaul
cost is charged to the Statement of Profit and Loss.
If an asset’s carrying amount exceeds its estimated
recoverable amount, the carrying amount is immediately
written down to its recoverable amount.

Derecognition

The Company derecognized property, plant and equipment
when it is disposed of or when there are no future economic
benefits expected from its continued use. The gain or loss
resulting from the disposal or retirement of a property, plant,
and equipment item is calculated as the difference between
the sales proceeds and the carrying amount of the asset. This
gain or loss is recognized in the Statement of Profit and Loss.

Capital Work in Progress:

Capital work-in-progress is recorded at its cost, which
encompasses expenses incurred during the construction
period. This cost also includes interest on the amount
borrowed for the acquisition of qualifying assets and other
expenses related to project implementation, to the extent
that these expenses pertain to the period before the
commencement of commercial production.

5.3 Other intangible assets

Other intangible assets with finite useful lives that are
acquired separately are carried at cost less accumulated
amortization and accumulated impairment losses.
Amortization is recognized on a straight-line basis over
their estimated useful lives. The estimated useful life
and amortization method are reviewed annually, and any
changes in estimates are applied prospectively. Intangible
assets with indefinite useful lives that are acquired separately
are carried at cost less accumulated impairment losses.

The useful lives of other intangible assets are assessed as
either finite or indefinite.

Useful life and amortisation

Amortization is recognized in a straight-line manner
over the useful lives of the assets, starting from the
date of capitalization. The useful lives of the assets is
determined as follows:

The estimated useful life of other intangible assets is
reviewed at the end of each reporting period, and any
changes in estimate are accounted for prospectively.

Derecognition

Other intangible assets are derecognised on disposal, or
when no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of an
intangible asset are determined as the difference between
the net disposal proceeds and the carrying amount.

5.4 Impairment of property, plant and equipment and
other intangible assets

At the end of each reporting year, the Company assesses
whether there are any indications of impairment for its
property, plant and equipment and other intangible assets.
If there is any indication, the Company estimates the
recoverable amount of the asset to determine the extent of
impairment loss, if any. If it’s 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. Corporate assets are
allocated to individual cash-generating units if a reasonable
and consistent allocation basis can be identified.

Other intangible assets with indefinite useful lives and
other intangible assets not yet available for use are tested
for impairment at least annually, as well as when there is
an indication of impairment. The recoverable amount is
determined based on the higher of fair value less costs to
sell and value in use. Value in use is assessed by discounting
the estimated future cash flows to their present value using
a pre-tax discount rate that reflects market assessments of
the time value of money and asset-specific risks.

If the recoverable amount of an asset or cash-generating
unit is lower than its carrying amount, the carrying amount
is reduced to the recoverable amount, and an impairment
loss is recognized immediately in the Statement of
Profit and Loss.

5.5 Inventories

Inventories are valued at the lower of the cost (net of eligible
input tax credits) and net realisable value (except waste and
scrap which are valued at estimated net realisable value).

Raw materials, stores and spare parts, and packing
materials are considered to be realisable at cost, if the
finished products, in which they will be used, are expected
to be sold at or above cost. The cost is computed on
using ‘First in First Out’ method (‘FIFO’). Cost includes
expenditure incurred for acquiring inventories like purchase
price, import duties, taxes (net of tax credit) and other
costs incurred in bringing the inventories to their present
location and condition.

Cost of finished goods and work in progress includes
cost of direct materials and labour and a proportion of
manufacturing overheads based on the normal operating
capacity but excluding borrowing costs incurred in bringing
the inventories to their present location and condition.
The cost of finished goods and work-in-progress is
computed on FIFO basis.

Net realizable 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.

5.6 Government grants

Government Grants are recognised when there is a
reasonable assurance that the same will be received
and all attached conditions will be complied with. When
the grant relates to an expense item, it is recognised in
the Statement of Profit and Loss by way of a deduction
to the related expense on a systematic basis over the
periods that the related costs, for which it is intended to
compensate, are expensed.

Government grants whose primary condition is that the
group should purchase, construct or otherwise acquire non¬
current assets (including property, plant and equipment)
are recognised as deferred income in the standalone
statement of financial position and transferred to profit or
loss on a systematic and rational basis over the useful lives
of the related assets.

5.7 Revenue recognition

Revenue from contracts with customers is recognised
at an amount that reflects the consideration to which the
Company expects to be entitled in exchange for those
goods or services.

Revenue towards satisfaction of a performance obligation
is measured at the amount of transaction price (net of
variable consideration) allocated to that performance
obligation. The transaction price of goods sold and services
rendered is net of variable consideration on account of
discounts or incentives offered by the Company as part

of the contract. This variable consideration is estimated
based on the expected value of outflow. Revenue (net of
variable consideration) is recognised only to the extent
that it is highly probable that the amount will not be subject
to significant reversal when uncertainty relating to its
recognition is resolved.

Sale of products:

Revenue from the sale of products is recognised when the
control of the goods has been transferred to the customer.
The performance obligation in case of sale of product is
satisfied at a point in time i.e., when the material is shipped
to the customer or on delivery to the customer, as may be
specified in the contract.

Sale of service

Revenue from rendering services is recognised over
time in the accounting period in which the services are
rendered and the Company has an enforceable right to
payment for services.

5.8 Leases

The Company assesses whether a contract contains a lease,
at the inception of the 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:

- the contract involves the use of identified asset;

- the Company has substantially all of the economic
benefits from the use of the asset through the
period of lease and;

- the Company has the right to direct the use of the asset.

As a lessee

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.

The right-of-use assets are also subject to impairment.

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 less any
lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by
the Company and payments of penalties for terminating
the lease, if the lease term reflects the Company
exercising the option to terminate.

Variable lease payments that do not depend on an
index or a rate are recognised as expenses in the
period in which the event or condition that triggers the
payment occurs.

In calculating the present value of lease payments, the
Company uses its incremental borrowing rate at the
lease commencement date. After the commencement
date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of
lease liabilities is remeasured if there is a modification,
a change in the lease term, a change in the lease
payments (e.g., changes to future payments resulting
from a change in an index or rate used to determine
such lease payments) or a change in the assessment
of an option to purchase the underlying asset.

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 building and
machinery and equipment (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 building and
machinery and 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.

5.9 Income taxes

The income tax expense or credit for the period is the tax

payable on the current period’s taxable income based on

the applicable income tax rate adjusted by changes in

deferred tax assets and liabilities attributable to temporary
differences and to unused tax losses.

Current tax

Current tax is based on taxable profit for the year. The
Company’s current tax is calculated using tax rates and
laws that have been enacted or substantively enacted by
the end of the reporting period.

Deferred tax

Deferred tax is recognised 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. Deferred tax
liabilities are generally recognised for all taxable temporary
differences. Deferred tax assets are generally recognised
for all deductible temporary differences to the extent that it is
probable that taxable profits will be available against which
those deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at
each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available
to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that it has
become probable that future taxable profits will allow the
deferred tax asset to be recovered. Deferred tax assets and
liabilities are measured at the tax rates that are expected to
apply in the year when the asset is realised or the liability
is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit
or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Deferred tax assets
and liabilities are offset when there is a legally enforceable
right to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority.
Current tax assets and tax liabilities are offset where the
entity has a legally enforceable right to offset and intends
either to settle on a net basis, or to realise the asset and
settle the liability simultaneously.

5.10 Borrowing costs

Borrowing cost includes interest expense, amortisation
of discounts, hedge related cost incurred in connection
with foreign currency borrowings, ancillary costs incurred
in connection with borrowing of funds and exchange
difference, arising from foreign currency borrowings
to the extent they are regarded as an adjustment to
the interest cost.

Borrowing costs, that are attributable to the acquisition
or construction or production of a qualifying asset, are
capitalised as part of the cost of such asset till such time
the asset is ready for its intended use. A qualifying asset is
an asset that necessarily takes a substantial period of time
to get ready for its intended use.

All other borrowing costs are recognised as an expense in
the period in which they are incurred.

Investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for
capitalisation.