1.3 SIGNIFICANT ACCOUNTING POLICIES:

a) Recognition of Income & Expenditure:

Income and Expenditure are recognised on accrual basis.

b) Property, Plant and Equipment:

Property, plant and equipment are stated at acquisition cost, net of accumulated depreciation
and accumulated impairment losses, if any. Subsequent costs are included in the asset's carrying
amount or recognized 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

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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".

Depreciation is provided on a pro-rata basis on the straight line method based on estimated use¬
ful life prescribed under Schedule II to the Companies Act, 2013.

• Assets costing ' 5,000 or less are fully depreciated in the year of purchase.

Freehold land is not depreciated.

Leasehold land: Cost of Leasehold Land and installation and other expenses incurred on Machin¬
eries taken on lease are amortized over the period of the respective lease.

The residual values, useful lives and method of depreciation of property, plant and equipment is
reviewed at each financial year end and adjusted prospectively, if appropriate.

c) Intangible Assets:

Separately purchased intangible assets are initially measured at cost. Intangible assets acquired
in a business combination are recognized at fair value at the acquisition date. Subsequently, in¬
tangible assets are carried at cost less any accumulated amortization and accumulated impair¬
ment losses, if any.

The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible
assets are amortized on a straight-line basis over the period of their expected useful lives. Estimat¬
ed useful lives by major class of finite-life intangible assets are as follows:

Patent - 20 years

Know-how - 5 years

Computer software - 5 years

The amortization period and the amortization method for finite-life intangible assets is reviewed
at each financial year end and adjusted prospectively, if appropriate.

Indefinite life intangibles mainly consist of patents. The assessment of indefinite life is reviewed
annually to determine whether the indefinite life continues, if not, it is impaired or changed pro¬
spectively basis revised estimates

d) Inventories:

Inventories are stated at 'cost or net realizable value, whichever is lower'. Cost comprises all cost
of purchase, cost of conversion and other costs incurred in bringing the inventories to their pres¬
ent location and condition. Cost formulae used are 'Weighted Average Cost'. As per consistent
practice, qualitative deterioration of old stocks are recognised by way of value reduction of such
items.

e) Financial Instruments:

Financial Assets:

Financial assets are recognised when the Company becomes a party to the contractual provisions

of the instrument. On initial recognition, a financial asset is recognised at fair value, in case of
financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction
costs are recognised in the statement of profit and loss. In other cases, the transaction cost is at¬
tributed to the acquisition value of the financial asset.

Financial assets are subsequently classified as measured at

• amortized cost

• fair value through profit and loss (FVTPL)

• fair value through other comprehensive income (FVOCI).

Financial assets are not reclassified subsequent to their recognition, except if and in the period
the Company changes its business model for managing financial assets.

Cash and Cash Equivalents:

Cash and cash equivalents are short-term (twelve months or less from the date of acquisition),
highly liquid investments that are readily convertible into cash and which are subject to an insig¬
nificant risk of changes in value.

Investments:

Long Term Investments are carried at cost and Provision for impairment is made to recognise a
decline, other than temporary, in the value of long term investments, script wise.

Trade Receivables and Loans:

Trade receivables are initially recognised at fair value. Subsequently, these assets are held at am¬
ortized cost, using the effective interest rate (EIR) method net of any expected credit losses. The
EIR is the rate that discounts estimated future cash income through the expected life of financial
instrument.

Debt Instruments:

Debt instruments are initially measured at amortized cost, fair value through other comprehen¬
sive income ('FVOCI') or fair value through profit or loss ('FVTPL') till derecognition on the basis of
(i) the entity's business model for managing the financial assets and (ii) the contractual cash flow
characteristics of the financial asset.

a) Measured at amortized cost:

Financial assets that are held within a business model whose objective is to hold financial
assets in order to collect contractual cash flows that are solely payments of principal and
interest, are subsequently measured at amortized cost using the effective interest rate ('EIR')
method less impairment, if any. The amortization of EIR and loss arising from impairment, if
any is recognised in the Statement of Profit and Loss.

b) Measured at fair value through other comprehensive income:

Financial assets that are held within a business model whose objective is achieved by both,
selling financial assets and collecting contractual cash flows that are solely payments of prin¬
cipal and interest, are subsequently measured at fair value through other comprehensive
income. Fair value movements are recognized in the other comprehensive income (OCI). In¬
terest income measured using the EIR method and impairment losses, if any are recognised
in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously
recognised in OCI is reclassified from the equity to other income' in the Statement of Profit
and Loss.

A financial asset not classified as either amortized cost or FVOCI, is classified as FVTPL. Such
financial assets are measured at fair value with all changes in fair value, including interest
income and dividend income if any, recognised as 'other income' in the Statement of Profit
and Loss.

Equity Instruments:

All investments in equity instruments classified under financial assets are initially measured at
fair value; the Company may, on initial recognition, irrevocably elect to measure the same ei¬
ther at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis.
Fair value changes on an equity instrument are recognised as other income in the Statement of
Profit and Loss unless the Company has elected to measure such instrument at FVOCI. Fair value
changes excluding dividends, on an equity instrument measured at FVOCI are recognized in OCI.
Amounts recognised in OCI are not subsequently reclassified to the Statement of Profit and Loss.
Dividend income on the investments in equity instruments are recognised as 'other income' in
the Statement of Profit and Loss.

Derecognition:

The Company derecognises a financial asset when the contractual rights to the cash flows from
the financial asset expire, or it transfers the contractual rights to receive the cash flows from the
asset.

Impairment of Financial Asset:

Expected credit losses are recognized for all financial assets subsequent to initial recognition
other than financials assets in FVTPL category. For financial assets other than trade receivables,
as per Ind AS 109, the Company recognises 12 month expected credit losses for all originated
or acquired financial assets if at the reporting date the credit risk of the financial asset has not
increased significantly since its initial recognition. The expected credit losses are measured as life¬
time expected credit losses if the credit risk on financial asset increases significantly since its initial
recognition. The Company's trade receivables do not contain significant financing component
and loss allowance on trade receivables is measured at an amount equal to life time expected
losses i.e. expected cash shortfall. The impairment losses and reversals are recognised in State¬
ment of Profit and Loss.

Financial Liabilities:

Initial recognition and measurement

Financial liabilities are recognised when the Company becomes a party to the contractual provi¬
sions of the instrument. Financial liabilities are initially measured at the amortized cost unless at
initial recognition, they are classified as fair value through profit and loss. In case of trade paya¬
bles, they are initially recognised at fair value and subsequently, these liabilities are held at amor¬
tized cost, using the effective interest method.

Subsequent measurement

Financial liabilities are subsequently measured at amortized cost using the EIR method. Financial
liabilities carried at fair value through profit or loss and are measured at fair value with all changes
in fair value recognised in the Statement of Profit and Loss.

Derecognition

A financial liability is derecognised when the obligation specified in the contract is discharged,
cancelled or expires.