2. Material accounting policies
2.1 Basis of Preparation

The standalone financial statements of the Company have
been prepared in accordance with Indian Accounting
Standards (Ind AS) notified under the Companies (Indian
Accounting Standards) Rules, 2015 (as amended from
time to time) and presentation requirements of Division
II of Schedule III to the Companies Act, 2013, (Ind AS
compliant Schedule III), as applicable to the standalone
financial statement.

The standalone financial statements have been prepared
on a historical cost basis, except for the certain financial
assets and liabilities which have been measured at
fair value or revalued amount (refer accounting policy
regarding financial instruments).

• Certain financial assets and liabilities measured
at fair value (refer accounting policy regarding
financial instruments), and

• Defined benefit plans whereby the plan assets are
measured at fair value.

The Company has prepared the standalone financial
statements on the basis that it will continue to operate as
a going concern.

The Standalone Financial Statements are presented
in Indian Rupees (?) and all values are rounded to the
nearest lakhs (' 00,000), except wherever otherwise
stated.

2.2 Summary of material accounting policies

A. Investment in subsidiary and associate

A subsidiary is an entity that is controlled by another
entity.

An associate is an entity over which the Company
has significant influence. Significant influence is the
power to participate in the financial and operating
policy decisions of the investee but is not control or
joint control over those policies.

Impairment of investments

The Company reviews its carrying value of
investments carried at cost annually, or more
frequently when there is indication for impairment.
If the recoverable amount is less than its carrying
amount, the impairment loss is recorded in the
Statement of Profit and Loss.

When an impairment loss subsequently reverses,
the carrying amount of the Investment is increased
to the revised estimate of its recoverable amount,
so that the increased carrying amount does not
exceed the cost of the Investment. A reversal of
an impairment loss is recognized immediately in
Statement of Profit or Loss

B. Current versus non-current classification

The Company segregates assets and liabilities into
current and non-current categories for presentation
in the balance sh eet after con siderin g its normal
operating cycle and other criteria set out in Ind AS
1, “Presentation of Financial Statements”. For this
purpose, current assets and liabilities include the
current portion of non-current assets and liabilities
respectively. Deferred tax assets and liabilities are
always classified as non-current.

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 period up to twelve months
as its operating cycle.

C. Foreign currencies

Functional and presentational currency

The Company’s standalone financial statements
are presented in Indian Rupees (?) which is also the
Company’s functional currency. Functional currency

is the currency of the primary economic environment
in which a company operates and is normally the
currency in which the Company primarily generates
and expends cash.

Transactions and balances

Tran sactions in foreign currencies are initially
recorded by the Company at the functional currency
spot rates at the date the transaction first qualifies
for recognition. However, for practical reasons,
the Company uses average rate if the average
approximates the actual rate at the date of the
transaction.

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 recognized in
statement of profit and loss.

Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial
transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value is
determined. The gain or loss arising on translation
of non-monetary items measured at fair value is
treated in line with the recognition of the gain or
loss on the change in fair value of the item (i.e.,
translation differences on items whose fair value
gain or loss is recognized in OCI or profit or loss are
also recognized in OCI or profit or loss, respectively).

I n determining the spot exchange rate to use on
initial recognition of the related asset, expense or
income (or part of it) on the derecognition of a non¬
monetary asset or non-monetary liability relating to
advance consideration, the date of the transaction is
the date on which the Company initially recognizes
the non-monetary asset or non-monetary liability
arising from the advance consideration. If there
are multiple payments or receipts in advance, the
Company determines the transaction date for each
payment or receipt of advance consideration.

D. Property, plant and equipment

I tems of property, plant and equipment are stated
at cost, net of accumulated depreciation and
accumulated impairment losses, if any. Such cost
includes the cost of replacing part of the plant
and equipment and borrowing costs for long-term

construction projects if the recognition criteria are
met. Likewise, when a major inspection is performed,
its cost is recognized 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 recognized in profit or
loss as incurred. When significant parts of plant and
equipment are required to be replaced at intervals,
the Company depreciates them separately based
on their specific useful lives.

Capital work in progress is stated at cost, net of
accumulated impairment loss, if any.

Items of stores and spares that meet the definition
of plant, property and equipment are capitalized
at cost and depreciated over their useful life.
Otherwise, such items are classified as inventories.

An item of property, plant and equipment and any
significant part initially recognized is derecognized
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain
or loss arising on derecognition 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 derecognized.

Depreciation on property, plant and equipment

Depreciation is calculated on a straight-line basis
over the estimated useful lives as estimated by the
management which is in line with the Schedule II to
the Companies Act, 2013. The Company has used
the following useful lives to provide depreciation
on its property, plant and equipment which is in line
with schedule II:

The management has estimated, supported by
independent assessment by professionals, the
useful life of the following class of asset, which are
higher/different than that indicated in Schedule II.

The residual value of property, plant and equipment
is considered at 2%.

The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at the end of each financial year and
adjusted prospectively, if appropriate. In particular,
the Company considers the impact of health, safety
and environment legislation in its assessment of
expected useful lives and estimated residual values.

Leasehold improvements are depreciated over the
lease term or useful life whichever is lower.

E. Intangible assets

Recognition and measurement

Intangible assets acquired separately are measured
on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost
less accumulated amortization and impairment
loss, if any. I ntern ally generated in tangible assets,
excluding capitalized development costs, are not
capitalized and expenditure is reflected in the
statement of profit and loss in the year in which the
expenditure is incurred.

The useful life of intangible assets are assessed as
finite.

Intangible assets with finite lives are amortized over
the useful economic life and assessed for impairment
whenever there is an indication that the intangible
assets may be impaired. The amortization period
and amortization method of the intangible asset with
a useful finite 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 amortization period or
method, as appropriate, and are treated as changes
in accounting estimates. The amortization expense
on intangible assets with finite lives is recognized

An intangible asset is derecognized upon disposal
(i.e., at the date the recipient obtains control) or
when no future economic benefits are expected
from its use or disposal. Gain or loss 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
recognized in the statement of profit and loss when
the asset is derecognized.

Research and development costs

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

• The technical feasibility of completing the
intangible asset so that the asset will be
available for use or sale

• I ts 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 amortization and accumulated
impairment losses. Amortization of the asset begins
when development is complete, and the asset is
available for use. It is amortized over the period of
expected future benefit. Amortization expense is
recognized 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.

F. Investment Properties

Property that is held for long term rental yields or
for capital appreciation or for both, and that is not

occupied by the Company, is classified as investment
property. Investment property is measured initially at
its cost, including related transaction cost and where
applicable borrowing costs. Subsequent to initial
recognition, investment property are stated at cost
less accumulated depreciation and accumulated
impairment loss, if any. Subsequent expenditure is
capitalized to assets carrying amount only when it is
probable that future economic benefits associated
with the expenditure will flow to the Company and
the cost of the item can be measured reliably.

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 external
independent valuer applying a valuation model as
per Ind AS 113 “Fair value measurement”.

Investment property are derecognized either
when they have been disposed of or when they
are permanently withdrawn from use and no future
economic benefit is expected from their disposal.
The difference between the net disposal proceeds
and the carrying amount of the asset is recognized
in profit or loss in the period of recognition.

Transfer of property from investment property to
the property, plant and equipment is made when
the property is no longer held for long term rental
yields or for capital appreciation or both at carrying
amount of the property transferred.

G. Borrowing costs

Borrowing costs directly attributable to the
acquisition, construction or production of an asset
that necessarily takes a substantial period of time to
get ready for its intended use or sale are capitalized
as part of the cost of the asset. All other borrowing
costs are expensed in the period in which they
occur. Borrowing costs consist of interest and other
costs that an entity incurs in connection with the
borrowing of funds. Borrowing cost also includes
exchange differences to the extent regarded as an
adjustment to the borrowing costs.

H. 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 recognizes lease liabilities
to make lease payments and right-to-use assets
representing the right to use the underlying assets.

i. Right-to-use assets

The Company recognizes right-to-use assets
at the commencement date of the lease (i.e.,
the date the underlying asset is available
for use). Right-to-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-to-use assets includes the amount
of lease liabilities recognized, initial direct
costs incurred, and lease payments made at
or before the commencement date less any
lease incentives received. Right-to-use assets
are depreciated on a straight-line basis over
the lease term.

Leasehold Land-99 years

Solar Panel-15 years

Vehicle-5 years

Building-10-15 years

I f 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-to-use assets are also subject to
impairment. Refer to the accounting policies
section Impairment of non-financial assets.

ii. Lease Liabilities

At the commencement date of the lease,
the Company recognizes lease liabilities
measured at the present value of lease
payments to be made over the lease term.
The lease payments include fixed payments
(including in substance 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
recognized as expenses (unless they are
incurred to produce inventories) 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 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. 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
(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 that are
considered to be low value. Lease payments
on short-term leases and leases of low-value
assets are recognized 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, i.e., asset given on
lease, and recognized over the lease term on

the same basis as rental income. Contingent
rents are recognized as revenue in the period
in which they are earned.

Leases are classified as finance leases when
substantially all of the risks and rewards of
ownership transfer from the Company to the
lessee. Amounts due from lessees under
finance leases are recorded as receivables
at the Company’s net investment in the
leases. Finance lease income is allocated to
accounting periods so as to reflect a constant
period ic rate of return on the net investment
outstanding in respect of the lease.

I. Inventories

Inventories which comprise raw materials,
components, work in progress, finished goods,
traded goods, moulds and stores and spares are
valued at the lower of cost and net realisable value.

Costs incurred in bringing each product to its present
location and condition are accounted as follows:

• Raw materials, components, stores and

spares: Cost includes cost of purchase and
other costs incurred in bringing the inventories
to their present location and condition. Cost is
determined on moving weighted average basis.

• Work-in-progress and finished goods: Cost
includes cost of direct materials and labour
and a proportion of manufacturing overheads
based on the normal operating capacity but
excluding borrowing costs. Cost is determined
on weighted moving weighted average basis.

• Traded goods: Cost includes cost of purchase
and other costs incurred in bringing the
inventories to their present location and
condition. Cost is determined on moving
weighted average basis.

• Moulds: Cost includes cost of purchase and
other costs incurred in bringing the inventories
to their present location and condition.

• Stores and spares: Stores and spares which
do not meet the definition of Property, plant
and equipment are accounted as inventories.

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.

Scraps are valued at net realisable value.

J. 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 units’ (CGU)
fair value less costs of disposal and its value in
use. The 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 or groups of assets. Where
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.

The Company bases its impairment calculation on
detailed budgets and forecast calculations, which
are prepared separately for each of the Company
CGUs to which the individual assets are allocated.
These budgets and forecast calculations generally
cover 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. To
estimate cash flow projections beyond periods
covered by the most recent budgets/forecasts,
the Company extrapolates cash flow projections
in the budget using a steady or declining growth
rate for subsequent years, unless an increasing rate
can be justified. In any case, this growth rate does
not exceed the long-term average growth rate for
the products, industries, or country or countries in
which the Company operates, or for the market in
which the asset is used.

Impairment losses of non-financial assets, including
impairment on inventories, are recognized in the
statement of profit and loss, except for properties

previously revalued with the revaluation surplus
taken to OCI. For such properties, the impairment is
recognized in OCI up to the amount of any previous
revaluation surplus.

For assets excluding goodwill, an assessment is
made at each reporting date to determine whether
there is an indication that previously recognized
impairment losses no longer exist or have
decreased. If such indication exists, the Company
estimates the asset’s or CGU’s recoverable amount.
A previously recognized 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 recognized. 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 recognized for the asset in prior years.
Such reversal is recognized in the statement of profit
and loss unless the asset is carried at a revalued
amount, in which case, the reversal is treated as a
revaluation increase.

Goodwill is tested for impairment annually at each
year end and when circumstances indicate that
the carrying value may be impaired. Impairment
is determined for goodwill by assessing the
recoverable amount of each CGU (or group of
CGUs) to which the goodwill relates. When the
recoverable amount of the CGU is less than it’s
carrying amount, an impairment loss is recognized.
Impairment losses relating to goodwill cannot be
reversed in future periods. Intangible assets with
indefinite useful lives are tested for impairment
annually at the CGU level, as appropriate, and when
circumstances indicate that the carrying value may
be impaired.

K. Revenue from contracts with customers

Revenue from contracts with customers is
recognized when control of the goods or services
are transferred to the customer at an amount that
reflects the consideration to which the Company
expects to be entitled in exchange for those goods
or services. The Company has generally concluded
that it is the principal in its revenue arrangements,
because it typically controls the goods before
transferring them to the customer.

However, Goods and services tax (GST), is not
received by the Company on its own account.

Rather, it is tax collected on value added to the
commodity by the seller on behalf of the government.
Accordingly, it is excluded from revenue.

a) Sale of products including moulds

Revenue from sale of products is recognized
at the point in time when control of the goods
is transferred to the customer, generally
on delivery of the goods and there are no
unfulfilled obligations.

The Company considers, whether there are
other promises in the contract in which their are
separate performance obligations, to which a
portion of the transaction price needs to be
allocated. In determining the transaction price
for the sale of product, the Company considers
the effects of variable consideration, the
existence of significant financing components,
noncash consideration, and consideration
payable to the customer, if any.

Revenue arising from the sale of goods
(including moulds) is recognized when the
customer obtains control of the promised
asset, i.e. either at the delivery or dispatch of
goods (based on the agreed terms of sale with
the respective customers), which is the point in
time when the customer has the ability to direct
the use of the goods and obtain substantially
all of the remaining benefits of the goods.

Warranty obligation

The Company generally provides for warranties
for general repair of defects that existed at the
time of sale. These warranties are assurance-
type warranties under Ind AS 115, which are
accounted for under Ind AS 37 (Provisions,
Contingent Liabilities and Contingent Assets).

b) Sale of services

Revenue from sale of services is recognized
in accordance with the terms of contract when
the services are rendered and the related
costs are incurred.

c) Contract balances

i) Contract assets

Contract assets is right to consideration
in exchange for goods or services
transferred to the customer and
performance obligation satisfied. If the
Company performs by transferring goods

or services to a customer before the
customer pays consideration or before
payment is due, a contract asset is
recognized for the earned consideration
that is conditional. Upon completion of
the attached condition and acceptance
by the customer, the amounts recognized
as contract assets is reclassified to
trade receivables upon invoicing. A
receivables represents the Company’s
right to an amount of consideration that
is unconditional. Contract assets are
subject to impairment assessment. Refer
to accounting policies on impairment
of financial assets in section (Financial
instruments - initial recognition and
subsequent measurement)

ii) Trade receivables

A receivable is recognized if 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 “financial
instruments - initial recognition and
subsequent measurement”.

iii) 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
or has raised the invoice in advance. If a
customer pays consideration before the
Company transfers goods or services
to the customer, a contract liability is
recognized when the payment is made or
the payment is due (whichever is earlier).
Contract liabilities are recognized as
revenue when the Company performs
under the contract (i.e., transfers control
of the related goods or services to the
customer).

d) Interest Income

I nterest income is accrued on a time basis,
by reference to the principal outstanding and
recorded using the Effective Interest Rate
(EIR). EIR is the rate that exactly discounts
the estimated future cash receipts over the

expected life of the financial instrument or a
shorter period, where appropriate, to the gross
carrying amount of the financial asset. When
calculating the EIR, the Company estimates
the estimated cash flows by considering all the
contractual terms of the financial instrument
but does not consider the expected credit
losses.

Interest income on bank deposits and
advances to vendors 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.

e) Dividend Income

Dividend on financial assets is recognized
when the Company’s right to receive the
dividends is established, it is probable that
the economic benefits associated with the
dividend will flow to the entity, the dividend
does not represent a recovery of part of cost
of the investment and the amount of dividend
can be measured reliably.

L. Government grants

Government grants are recognized where there is
reasonable assurance that the grant will be received
and all the attached conditions will be complied
with. When the grant relates to an expense item,
it is recognized 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, the government grant
related to asset is presented by deducting the grant
in arriving at the carrying amount of the asset.

M. Retirement and other employee benefits

Retirement benefit in the form of provident fund is
a defined contribution scheme. The Company has
no obligation, other than the contribution payable
to the provident fund. The Company recognizes
contribution payable to the provident fund scheme
as an expense, when an employee renders the
related service. If the contribution payable to the
scheme for service received before the balance
sheet date exceeds the contribution already paid,
the deficit payable to the scheme is 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 Company operates defined benefit plans for its
employees, viz., gratuity, which requires contributions
to be made to a separately administered fund. The
Company provides for its gratuity liability based on
actuarial valuation of the gratuity liability as at the
Balance Sheet date, based on Projected Unit Credit
Method, carried out by an independent actuary. The
contributions made are recognized as plan assets.
The defined benefit obligation as reduced by fair
value of plan assets is recognized in the Balance
Sheet. Re-measurements are recognized in the
Other Comprehensive Income, net of tax in the year
in which they arise.

Short-term employee benefits are expensed as the
related service is provided. A liability is recognized
for the amount expected to be paid if the Company
has a present legal or constructive obligation to pay
this amount as a result of past service provided by
the employee and the obligation can be estimated
reliably.

Accumulated compensated absences which are
expected to be settled wholly within twelve months
after the end of the period in which the employees
render the related service are treated as short-term
benefits. The Company measures the expected cost
of such absences as the additional amount that it
expects to pay as a result of the unused entitlement
that has accumulated at the reporting date.

The Company treats accumulated leave expected to
be carried forward beyond twelve months, as long¬
term employee benefit for measurement purposes.
Such long-term compensated absences are
provided for based on the actuarial valuation using
the projected unit credit method at the reporting
date. Remeasurement gains/losses are immediately
taken to the statement of profit and loss and are not
deferred. The obligations are presented as current
liabilities in the balance sheet if the entity does not
have an unconditional right to defer the settlement
for at least twelve months after the reporting date.

Remeasurements, 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
recognized 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 profit or loss
in subsequent periods.

Past service costs are recognized in profit or loss on
the earlier of:

a) The date of the plan amendment or curtailment,
and

b) The date that the Company recognizes related
restructuring costs

Net interest is calculated by applying the discount
rate to the net defined benefit liability or asset. The
Company recognizes the following changes in the
net defined benefit obligation as an expense in the
statement of profit and loss:

a) Service costs comprising current service
costs, past-service costs, gains and losses on
curtailments and non-routine settlements; and

b) Net interest expense or income.