Bajel Projects Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

Mar 31, 2026

1B MATERIAL ACCOUNTING POLICIES

This Note provides a list of the material accounting
policies adopted in the preparation of these Standalone
Financial Statements.

1 Statement of compliance

Standalone Financial Statements have been
prepared in accordance with the accounting
principles generally accepted in India including
Indian Accounting Standards (Ind AS) prescribed
under the section 133 of the Companies Act, 2013
(‘the Act’) read with rule 3 of the Companies (Indian
Accounting Standards) Rules, 2015 (as amended
from time to time) and presentation and disclosures
requirement of Division II of revised Schedule III
of the Act, (Ind AS Compliant Schedule III), as
applicable to standalone financial statements.

Accordingly, the Company has prepared these
Standalone Financial Statements which comprise
the Standalone Balance Sheet as at March 31,

2026, the Standalone Statement of Profit and Loss,
the Standalone Statement of Cash Flows and the
Standalone Statement of Changes in Equity for
the year ended as on that date, and accounting
policies and other explanatory information (together
hereinafter referred to as "standalone financial
statements”).

These standalone financial statements are
approved for issue by the Board of Directors on
May 27, 2026.

2 Basis of preparation

The standalone financial statements are prepared
under the historical cost convention except for the
following:

• certain financial assets and liabilities that are
measured at fair value;

• defined benefit plans where plan assets are
measured at fair value; and

• share-based payments at fair value as on the
grant date of options given to employees.

Estimates, judgements and assumptions used in the
preparation of the standalone financial statements
and disclosures are based upon management’s
evaluation of the relevant facts and circumstances
as of the date of the standalone financial
statements, which may differ from the actual results
at a subsequent date. The critical estimates,
judgements and assumptions are presented in Note
no. 1D.

The Company presents assets and liabilities in
the balance sheet based on current / non-current
classification. Deferred tax assets and liabilities are
classified as non-current.

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

An asset is treated as current when it is:

• Expected to be realised or intended to be sold or
consumed in normal operating cycle

• 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 normal operating
cycle

• 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

All other liabilities are classified as non-current.

The operating cycle is the time between the
acquisition of assets for processing and their
realisation in cash and cash equivalents. The
Company has identified twelve months as its
operating cycle.

3 Revenue from contract with customers:

Revenue from contracts with customers is
recognized when control of the goods or services
is 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 or services

before transferring them to the customer.

The recognition criteria for sale of products and

construction contracts is described below:

i. Sale of Products (including Scrap Sales)

Revenue from sale of products including scrap
is recognised when control of the goods is
transferred to the customer, which is usually on
dispatch or delivery of goods to the customer
and there are no unfulfilled obligations that
could affect the customer’s acceptance of
the goods, at an amount (transaction price)
that reflects the consideration to which the
Company expects to be entitled in exchange
for those goods.

ii. Revenue from Projects

Performance obligations with reference to
Engineering Procurement and Construction
(EPC) contracts are satisfied over the period
of time, and accordingly, Revenue from such
contracts is recognized based on progress of
performance determined using input method
with reference to the cost incurred on contract
and their estimated total costs. Transaction
price is the amount of consideration to
which the Company expects to be entitled in
exchange for transferring goods or services to
a customer excluding amounts collected on
behalf of a third party.

Revenue, measured at transaction price,
is adjusted towards liquidated damages,
time value of money and price variations,
escalation, change in scope etc. wherever,
applicable. Variation in contract work and
other claims are included to the extent that
the amount can be measured reliably, and it is
agreed with customer.

Estimates of revenue and costs are
reviewed periodically and revised, wherever
circumstances change, resulting increases
or decreases in revenue determination, are
recognized in the statement of profit and loss
period in which estimates are revised.

The Company evaluates whether each
contract consists of a single performance
obligation or multiple performance obligations.
Where the Company enters into multiple
contracts with the same customer, the
Company evaluates whether the contract is
to be combined or not by evaluating various
factors. Due to the nature of the work required
to be performed on many of the performance

obligations, the estimation of total revenue and
cost at completion is subject to many variables
and requires significant judgement. The
Company considers its experience with similar
transactions and expectations regarding the
contract in estimating the amount of variable
consideration to which it will be entitled and
determining whether the estimated variable
consideration should be constrained. The
Company includes estimated amounts in the
transaction price to the extent it is probable
that a significant reversal of cumulative
revenue recognised will not occur when
the uncertainty associated with the variable
consideration is resolved.

Progress billings are generally issued upon
completion of certain phases of the work as
stipulated in the contract. Billing terms of the
over-time contracts vary but are generally
based on achieving specified milestones.

The difference between the timing of revenue
recognised and customer billings result in
changes to contract assets and contract
liabilities. Contractual retention amounts
billed to customers are generally due upon
expiration of the contract period.

The contracts generally result in revenue
recognised in excess of billings which are
presented as contract assets on the statement
of financial position. Amounts billed and due
from customers are classified as receivables
on the statement of financial position. The
portion of the payments retained by the
customer until final contract settlement is not
considered a significant financing component
since it is usually intended to provide
customer with a form of security for Company’s
remaining performance as specified under the
contract, which is consistent with the industry
practice. Contract liabilities represent amounts
billed to customers in excess of revenue
recognised till date. A liability is recognised
for advance payments and it is not considered
as a significant financing component since it
is used to meet working capital requirements
at the time of project mobilization stage. The
same is presented as contract liability in the
balance sheet.

iii. Sale of Services

The Company provides galvanisation services
to customers, wherein customer-supplied
materials are processed. Revenue is earned in
the form of processing fees.

Revenue from providing services is recognised
at a point in time, upon completion of the
galvanisation process in the accounting period
in which the services are rendered.

4 Insurance Claims

Insurance claims are recognized when there is
reasonable certainty of ultimate collection from
the insurer and the amount of the claim can be
measured reliably. Claims receivable in respect
of loss or damage to inventories, property or
other assets are recognized based on the
amount admitted or expected to be admitted
by the insurance company, as assessed by the
management on the basis of available supporting
documents and correspondence with the insurer.

Insurance claim receipts are recognized in the
Statement of Profit and Loss under other operating
income.

5 Contract balances

a) Contract asset

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 or services 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.

Contract assets are subject to impairment
assessment. Refer to accounting policies on
impairment of financial assets.

b) 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).

c) 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
recognized when the payment is made or the
payment is due (whichever is earlier). Contract
liabilities are recognised as revenue on
satisfaction of performance obligations under
the contract.

6 Leases:

Company as a lessee:

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. Unless the Company is reasonably certain
to obtain ownership of the leased asset at the end
of the lease term, the recognised right-of-use assets
are depreciated on a straight-line basis over the
shorter of its estimated useful life and the lease term
as follows:

Right-of-use assets are subject to impairment test.
The Company determines the lease term as the
non-cancellable term of the lease, together with any
periods covered by an option to extend the lease
if it is reasonably certain to be exercised, or any
periods covered by an option to terminate the lease,
if it is reasonably certain not to be exercised.

Leases are capitalised at the commencement of
the lease at the inception date fair value of the
leased property or, if lower, at the present value
of the minimum lease payments. Lease payments
are apportioned between finance charges and
reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance
of the liability. Finance charges are recognised in
finance costs in the statement of profit and loss,
unless they are directly attributable to qualifying
assets, in which case they are capitalized in
accordance with the Company’s general policy on
the borrowing costs.

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

In calculating the present value of lease payments,
the Company uses the incremental borrowing rate
at the lease commencement date if 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)

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 of low value (i.e., below
'' 5,00,000). 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.

7 Other income:

(1) Interest income on financial asset is
recognised using the effective interest rate
method. The effective interest rate is the rate
that exactly discounts estimated future cash
receipts through the expected life of the
financial asset to the gross carrying amount
of the financial asset. When calculating the
effective interest rate, the Company estimates
the expected cash flows by considering all the
contractual terms of the financial instruments.

(2) Others:

The Company recognises other income
(including income from claims received, etc.)
on accrual basis. However, where the ultimate
collection of the same is uncertain, revenue
recognition is postponed to the extent of
uncertainty.

8 Property, plant and equipment:

The cost of property, plant and equipment
comprises its purchase price net of any trade

discounts and rebates, any import duties and other
taxes (other than those subsequently recoverable
from the tax authorities), any directly attributable
expenditure on making the asset ready for its
intended use, including relevant borrowing costs
for qualifying assets and any expected costs of
decommissioning. Expenditure incurred after the
property, plant and equipment have been put into
operation, such as repairs and maintenance, are
charged to the Statement of Profit and Loss in the
year in which the costs are incurred.

An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from
the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item of
property, plant and equipment is determined as
the difference between the sales proceeds and the
carrying amount of the asset and is recognised in
Statement of Profit and Loss.

Assets in the course of construction are capitalised
in the assets under Capital work in progress. At the
point when an asset is operating at management’s
intended use, the cost of construction is transferred
to the appropriate category of property, plant and
equipment and depreciation commences. Costs
associated with the commissioning of an asset
and any obligatory decommissioning costs are
capitalised where the asset is available for use but
incapable of operating at normal levels, revenue
(net of cost) generated from production during the
trial period is capitalised.

Property, plant and equipment held for use in the
production, supply or administrative purposes,
are stated in the balance sheet at cost less
accumulated depreciation and accumulated
impairment losses, if any.

Depreciable amount for assets is the cost of
an asset, or other amount substituted for cost,
less its estimated residual value. 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 prescribed 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.

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.

The Company reviews the residual value, useful
lives and depreciation method annually and, if
expectations differ from previous estimates, the
change is accounted for as a change in accounting
estimate on a prospective basis.

9 Intangible assets

Intangible assets acquired separately are measured
on initial recognition at cost. The cost of intangible
assets acquired in a business combination is their
fair value at the date of acquisition. Following
initial recognition, intangible assets are carried
at cost less any accumulated amortisation and
accumulated impairment losses. Internally
generated intangibles, excluding capitalised
development costs, are not capitalised and the
related expenditure is reflected in profit or loss in
the period in which the expenditure is incurred.

Intangible assets with finite lives are amortised
over the useful economic life and assessed for
impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation
period and the amortisation method for an
intangible asset with a finite useful life are reviewed
at least at the end of each reporting period.
Changes in the expected useful life or the expected
pattern of consumption of future economic benefits
embodied in the asset are considered to modify 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 P&L unless such
expenditure forms part of carrying value of another
asset.

An intangible asset is derecognised upon disposal
(i.e., at the date the recipient obtains control) or
when no future economic benefits are expected
from its use or disposal. Any gain or loss arising
upon derecognition of the asset (calculated as the
difference between the net disposal proceeds and
the carrying amount of the asset) is included in the
P&L when the asset is derecognised.

10 Impairment of non-financial assets:

The carrying amounts of assets are reviewed at
each balance sheet date if there is any indication
of impairment based on internal/external factors.

An asset is impaired when the carrying amount of
the asset exceeds the recoverable amount. The
recoverable amount is the higher of an asset’s fair
value less costs of disposal and value in use. For
the purposes of assessing impairment, assets
are grouped at the lowest levels for which there
are separately identifiable cash inflows which
are largely independent of the cash inflows from
other assets or groups of assets (cash-generating
units). Impairment loss is charged to the Statement
of Profit & Loss Account in the year in which an
asset is identified as impaired. An impairment
loss recognized in the prior accounting periods is
reversed if there has been change in the estimates
used to determine the assets recoverable amount
since the last impairment loss was recognised.

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.

Impairment losses are recognised in the statement
of profit and loss.

For assets, an assessment is made at each
reporting date to determine whether there is an
indication that previously recognised 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
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 or loss unless the asset is carried
at a revalued amount, in which case, the reversal is
treated as a revaluation increase.

11 Financial instruments

Financial assets and financial liabilities are
recognised when an entity becomes a party to the
contractual provisions of the instrument.

Financial assets (except trade receivable,
measured at amortised cost) and financial liabilities
are initially measured at fair value. Transaction
costs that are directly attributable to the acquisition
or issue of financial assets and financial liabilities
(other than financial assets and financial liabilities
at fair value through Statement of Profit and Loss
(FVTPL)) are added to or deducted from the fair
value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of
financial assets or financial liabilities at fair value
through profit and loss are recognised immediately
in Statement of Profit and Loss.

A. Financial assets

a) Recognition and initial measurement

A financial asset is initially recognised at
fair value and, for an item not at FVTPL,
transaction costs that are directly attributable
to its acquisition or issue. Purchases and sales
of financial assets are recognised on the trade
date, which is the date on which the Company
becomes a party to the contractual provisions
of the instrument.

b) Classification of financial assets

Financial assets are classified, at initial
recognition and subsequently measured
at amortised cost, fair value through other
comprehensive income (OCI), and fair value
through profit and loss. A financial asset is
measured at amortised cost if it meets both of
the following conditions and is not designated
at FVTPL:

• The asset is held within a business model
whose objective is to hold assets to collect
contractual cash flows; and

• The contractual terms of the financial
asset give rise on specified dates to cash
flows that are solely payments of principal
and interest on the principal amount
outstanding.

A debt instrument is classified as FVTOCI only
if it meets both of the following conditions and
is not recognised at FVTPL;

• The asset is held within a business model
whose objective is achieved by both
collecting contractual cash flows and
selling financial assets; and

• The contractual terms of the financial
asset give rise on specified dates to cash
flows that are solely payments of principal
and interest on the principal amount
outstanding.

Debt instruments included within the FVTOCI
category are measured initially as well as at
each reporting date at fair value. Fair value
movements are recognised in the Other
Comprehensive Income (OCI). However,
the Company recognises interest income,
impairment losses & reversals and foreign
exchange gain or loss in the Statement of
Profit and Loss. On derecognition of the
asset, cumulative gain or loss previously
recognised in OCI is reclassified from the
equity to Statement of Profit and Loss. Interest
earned whilst holding FVTOCI debt instrument
is reported as interest income using the EIR
method.

All equity investments in scope of Ind AS 109
are measured at fair value. Equity instruments
which are held for trading and contingent
consideration recognised by an acquirer in
a business combination to which Ind AS 103
applies are classified as at FVTPL. For all other
equity instruments, the Company may make
an irrevocable election to present in other
comprehensive income subsequent changes
in the fair value. The Company makes such
election on an instrument-by-instrument basis.
The classification is made on initial recognition
and is irrevocable. The equity instruments
which are strategic investments and held for
long term purposes are classified as FVTOCI.

If the Company decides to classify an
equity instrument as at FVTOCI, then all fair
value changes on the instrument, excluding

dividends, are recognised in the OCI. There
is no recycling of the amounts from OCI to
Statement of Profit and Loss, even on sale
of investment. However, the Company may
transfer the cumulative gain or loss within
equity.

Equity instruments included within the FVTPL
category are measured at fair value with all
changes recognised in the Statement of Profit
and Loss.

All other financial assets are classified as
measured at FVTPL.

In addition, on initial recognition, the Company
may irrevocably designate a financial asset
that otherwise meets the requirements to be
measured at amortised cost or at FVTOCI as
at FVTPL if doing so eliminates or significantly
reduces and an accounting mismatch that
would otherwise arise.

Financial assets at FVTPL are measured
at fair value at the end of each reporting
year, with any gains and losses arising on
remeasurement recognised in statement of
profit and loss. The net gain or loss recognised
in statement of profit and loss incorporates any
dividend or interest earned on the financial
asset and is included in the ‘other income’ line
item. Dividend on financial assets at FVTPL is
recognised when:

• The Company’s right to receive the
dividends is established,

• It is probable that the economic benefits
associated with the dividends 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.

c) Derecognition of financial assets

The Company derecognises a financial asset
when the contractual rights to the cash flows
from the asset expire, or when it transfers the
financial asset and substantially all the risks
and rewards of ownership of the asset to
another party.

d) Impairment

The Company recognizes loss allowances on
a forward-looking basis using the expected
credit loss (ECL) model for all the financial
assets except for trade receivables. Loss
allowance for all financial assets is measured

at an amount equal to lifetime ECL. The
Company recognises impairment loss on
trade receivables using expected credit loss
model which involves use of a provision matrix
constructed on the basis of historical credit
loss experience and adjusted for forward
looking information as permitted under Ind AS
109. The expected credit loss is based on the
ageing of the days, the receivables due and
the expected credit loss rate. In addition, in
case of event driven situations as litigations,
disputes, change in customer’s credit risk
history, specific provisions are made after
evaluating the relevant facts and expected
recovery.

The amount of expected credit losses (or
reversal) that is required to adjust the loss
allowance at the reporting date is recognized
as a gain or loss in the Statement of Profit and
Loss.

e) Effective interest method

The effective interest method is a method
of calculating the amortised cost of a debt
instrument and of allocating interest income
over the relevant year. The effective interest
rate is the rate that exactly discounts
estimated future cash receipts (including all
fees and points paid or received that form
an integral part of the effective interest rate,
transaction costs and other premiums or
discounts) through the expected life of the
debt instrument, or, where appropriate, a
shorter year, to the net carrying amount on
initial recognition.

Income is recognised on an effective interest
basis for debt instruments other than those
financial assets classified as at FVTPL. Interest
income is recognised in statement of profit and
loss and is included in the ‘Other income’ line
item.

B. Financial liabilities and equity instruments

a) Classification as debt or equity

Debt and equity instruments issued by a
company are classified as either financial
liabilities or as equity in accordance with the
substance of the contractual arrangements
and the definitions of a financial liability and an
equity instrument.

b) Equity instruments

An equity instrument is any contract that
evidences a residual interest in the assets of
an entity after deducting all of its liabilities.

Equity instruments issued by the Company are
recognised at the proceeds received, net of
direct issue costs.

Repurchase of the Company’s own equity
instruments is recognised and deducted
directly in equity. No gain or loss is recognised
in Statement of Profit and Loss on the
purchase, sale, issue or cancellation of the
Company’s own equity instruments.

c) Financial liabilities

Financial liabilities are classified as either
financial liabilities ‘at FVTPL’ or ‘other financial
liabilities’.

Financial liabilities at FVTPL:

Financial liabilities are classified as at FVTPL
when the financial liability is either held for
trading or it is designated as at FVTPL.

A financial liability is classified as held for
trading if:

• It has been incurred principally for the
purpose of repurchasing it in the near term;
or

• on initial recognition it is part of a portfolio
of identified financial instruments that the
Company manages together and has a
recent actual pattern of short-term profit¬
taking; or

• it is a derivative that is not designated and
effective as a hedging instrument.

A financial liability other than a financial liability

held for trading may be designated as at
FVTPL upon initial recognition if:

• such designation eliminates or significantly
reduces a measurement or recognition
inconsistency that would otherwise arise;

• the financial liability forms part of a group
of financial assets or financial liabilities
or both, which is managed and its
performance is evaluated on a fair value
basis, in accordance with the Company’s
documented risk management or
investment strategy, and information about
the grouping is provided internally on that
basis; or

• it forms part of a contract containing one
or more embedded derivatives, and Ind AS
109 permits the entire combined contract to
be designated as at FVTPL in accordance
with Ind AS 109.

Financial liabilities at FVTPL are stated at
fair value, with any gains or losses arising
on remeasurement recognised in Statement
of Profit and Loss. The net gain or loss
recognised in Statement of Profit and Loss
incorporates any interest paid on the financial
liability and is included in the Statement of
Profit and Loss. For Liabilities designated as
FVTPL, fair value gains/losses attributable to
changes in own credit risk are recognised in
OCI.

The Company derecognises financial liabilities
when, and only when, the Company’s
obligations are discharged, cancelled or they
expire. The difference between the carrying
amount of the financial liability derecognised
and the consideration paid and payable is
recognised in the Statement of Profit and Loss.

Derecognition of financial liabilities:

The Company derecognises financial liabilities
when, and only when, the Company’s
obligations are discharged, cancelled or have
expired. An exchange with a lender of debt
instruments with substantially different terms
is accounted for as an extinguishment of the
original financial liability and the recognition of
a new financial liability. Similarly, a substantial
modification of the terms of an existing
financial liability (whether or not attributable
to the financial difficulty of the debtor) is
accounted for as an extinguishment of the
original financial liability and the recognition of
a new financial liability. The difference between
the carrying amount of the financial liability
derecognised and the consideration paid and
payable is recognised in the Statement of
Profit and Loss.

12 Fair value measurements

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 or liability

The principal or the most advantageous market
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 is 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 standalone 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 — It includes financial instruments
measured using quoted prices. For the
Company, the fair valuations in this level of
hierarchy include listed equity instruments
and mutual funds. The fair value of all equity
instruments which are traded in the stock
exchanges is valued using the closing price as
at the reporting period and mutual funds are
valued using closing NAV as at the reporting
period.

• Level 2 — The fair value of financial instruments
that are not traded in an active market (for
example derivatives) is determined using
valuation techniques which maximise the use

of observable market data and rely as little
as possible on entity-specific estimates. If
all significant inputs required to fair value an
instrument are observable, the instrument is
included in Level 2. The fair valuations in this
level of hierarchy for the Company mainly
include derivatives.

• Level 3 — The instrument is included in Level
3 if one or more of the significant inputs is not
based on observable market data. Fair value is
determined in whole or in part, using a valuation
model based on assumptions that are neither
supported by prices from observable current
market transactions in the same instrument nor
are they based on available market data. This
includes investment in unquoted preference
shares. Similarly, unquoted equity instruments
where most recent information to measure fair
value is insufficient, or if there is a wide range

of possible fair value measurements, net asset
value has been considered as best estimate of
fair value which is approximate to cost.

For assets and liabilities that are recognised in
the standalone 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. External valuers are involved for
valuation of significant assets, such as properties
and unquoted financial assets.

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.

13 Derivative Instruments and Hedge
Accounting

a. Derivative financial instruments

The Company enters into a variety of derivative
financial instruments to manage its exposure
to commodity price and foreign exchange
rate risks, including foreign exchange
forward contracts and commodity forward
contracts - OTC derivatives. Derivatives are
initially recognized at fair value at the date the
derivative contracts are entered into and are
subsequently remeasured to their fair value at
the end of each reporting year. The resulting
gain or loss is recognized in Statement of Profit
and Loss immediately unless the derivative
is designated and effective as a hedging
instrument, in which event the timing of the
recognition in Statement of Profit and Loss
depends on the nature of the hedge item.

b. Hedge accounting

The Company designates certain hedging
instruments, which include derivatives
in respect of foreign currency risk and
commodity price risk, as cash flow hedges.
Hedges of foreign exchange risk and
commodity price risk for highly probable
forecast transactions are accounted for as
cash flow hedges.

At the inception of the hedge relationship, the
entity documents the relationship between
the hedging instrument and the hedged item,
along with its risk management objectives

and its strategy for undertaking various hedge
transactions. Furthermore, at the inception
of the hedge and on an ongoing basis, the
Company documents whether the hedging
instrument is highly effective in offsetting
changes in fair values or cash flows of the
hedged item attributable to hedged risk.

Cash flow hedges

The effective portion of changes in fair value
of derivatives that are designated and qualify
as cash flow hedges is recognized in other
comprehensive income and accumulated
under the heading of cash flow hedging
reserve. The gain or loss relating to the
ineffective portion is recognized immediately
in Statement of profit and loss. Amounts
previously recognized in other comprehensive
income and accumulated in equity relating
to effective portion as described above are
reclassified to profit and loss in the years
when the hedged item affects profit and loss,
in the same line as the recognized hedged
item. However, when the hedged forecast
transaction results in the recognition of a non¬
financial asset or a non-financial liability, such
gains or losses are transferred from equity
(but not as a reclassification adjustment) and
included in the initial measurement of the cost
of the non-financial asset or non-financial
liability. Hedge accounting is discontinued
when the hedging instrument expires or is
sold, terminated, or exercised, or when it
no longer qualifies for hedge accounting.

Any gain or loss recognized in other
comprehensive income and accumulated in
equity at that time remains in equity and is
recognized when the forecast transaction is
ultimately recognized in profit and loss. When
a forecast transaction is no longer expected to
occur, the gain or loss accumulated in equity
is recognized immediately in profit and loss.

14 Cash and cash equivalents:

Cash and cash equivalents in the balance sheet
and for the purpose of the statement of cash flows,
include cash on hand, other short-term, highly
liquid investments with original maturities of three
months or less that are readily convertible to known
amounts of cash and which are subject to an
insignificant risk of changes in value.

15 Inventories:

Inventories 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 for as follows:

Raw materials and Stores & Spares: cost includes
cost of purchase and other costs incurred in
bringing the inventories to their present location and
condition. Cost is determined on weighted average
basis.

Finished goods and work in progress: cost includes
cost of direct materials, cost of purchase and other
costs incurred in bringing the inventories to their
present location and condition, labour cost and
a proportion of manufacturing overheads based
on the normal operating capacity but excluding
borrowing costs. Cost is determined on weighted
average basis.

By products are valued at net realisable value.

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.

16 Foreign currency transactions:

Items included in the standalone financial
statements are measured using the currency of
the primary economic environment in which the
Company operates (‘the functional currency’). The
standalone financial statements are presented
in Indian Rupee (INR), which is the Company’s
functional and presentation currency.

a) On initial recognition, all foreign currency
transactions are recorded at the functional
currency spot rate at the date the transaction
first qualifies for recognition.

b) Monetary assets and liabilities in foreign
currency outstanding at the close of reporting
date are translated at the functional currency
spot rates of exchange at the reporting date.

c) Exchange differences arising on settlement of
translation of monetary items are recognised in
the 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 recognised in OCI or profit or loss are
also recognised in OCI or profit or loss, respectively.

17 Borrowing costs

Borrowing costs directly attributable to the
acquisition, construction or production of qualifying
assets, which are assets that necessarily take a
substantial period of time to get ready for their
intended use or sale, are added to the cost of
those assets, until such time as the assets are
substantially ready for their intended use or sale.

All other borrowing costs are recognised in the
Statement of Profit and Loss in the year in which
they are incurred.

The Company determines the amount of borrowing
costs eligible for capitalisation as the actual
borrowing costs incurred on that borrowing
during the year less any interest income earned
on temporary investment of specific borrowings
pending their expenditure on qualifying assets, to
the extent that an entity borrows funds specifically
for the purpose of obtaining a qualifying asset. In
case if the Company borrows generally and uses
the funds for obtaining a qualifying asset, borrowing
costs eligible for capitalisation are determined by
applying a capitalisation rate to the expenditures on
that asset.

18 Vendor bill discounting

The Company enters into deferred payment
arrangements whereby lender such as banks and
financial institutions make payments to supplier’s
bank for purchase of raw materials and traded
goods. The bank and financial institutions are
subsequently repaid by the company at a later
date providing working capital benefits. These
arrangements are in the nature of credit extended
beyond normal operating cycle and these
arrangements for raw materials and traded goods
are recognised as borrowings. Interest borne by the
company on such arrangements is accounted as
finance cost.

19 Income tax

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
for the jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to temporary
differences, unused tax losses and unabsorbed
depreciation.

Current and deferred tax is recognized in the
Statement of Profit and Loss except to the extent
it relates to items recognized directly in equity
or other comprehensive income, in which case it
is recognized in equity or other comprehensive
income.

A. Current income tax

The current income tax charge is calculated
on the basis of the tax laws enacted or
substantively enacted at the end of the
reporting period. The Company establishes
provisions, wherever appropriate, on the basis
of amounts expected to be paid to the tax
authorities.

Current tax assets and liabilities are offset
when there is a legally enforceable right to
set off current tax assets against current tax
liabilities.

B. Deferred tax

Deferred tax is provided using the Balance
sheet approach, on temporary differences
arising between the tax bases of assets and
liabilities and their carrying amounts in the
standalone financial statements. Deferred tax
is determined using tax rates (and laws) that
have been enacted or substantially enacted
by the end of the reporting period and are
expected to apply when the related deferred
income tax asset is realised or the deferred
income tax liability is settled.

The carrying amount of deferred tax assets is
reviewed at each reporting date and adjusted
to reflect changes in probability that sufficient
taxable profits will be available to allow all or
part of the asset to be recovered.

Deferred tax assets are recognised for all
deductible temporary differences and unused
tax losses only if it is probable that future
taxable amounts will be available to utilise
those temporary differences and losses.

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.

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 items are
recognised in correlation to the underlying
transaction either in OCI or directly in equity.

20 Investment in joint ventures

A joint venture is a type of joint arrangement
whereby the parties that have joint control of the
arrangement have rights to the net assets of the
joint venture. Joint control is the contractually
agreed sharing of control of an arrangement, which

exists only when decisions about the relevant
activities require unanimous consent of the parties
sharing control. Investment in joint venture is
measured at cost.

---

Mar 31, 2025

IB MATERIAL ACCOUNTING POLICIES

This note provides a list of the material accounting
policies adopted in the preparation of these
Standalone Financial Statements.

1 Statement of compliance

Standalone Financial Statements have been
prepared in accordance with the accounting
principles generally accepted in India including
Indian Accounting Standards (Ind AS) prescribed
under the section 133 of the Companies Act,
2013 read with rule 3 of the Companies (Indian
Accounting Standards) Rules, 2015 (as amended
from time to time) and presentation and
disclosures requirement of Division II of revised
Schedule III of the Companies Act 2013, (Ind
AS Compliant Schedule III), as applicable to
standalone financial statement.

Accordingly, the Company has prepared
these Standalone Financial Statements which
comprise the Standalone Balance Sheet as at 31
March 2025, the Standalone Statement of Profit
and Loss, the Standalone Statement of Cash
Flows and the Standalone Statement of Changes
in Equity for the year ended as on that date,
and accounting policies and other explanatory
information (together hereinafter referred to as
“standalone financial statements”).

These standalone financial statements are
approved for issue by the Board of Directors on
May 22, 2025.

2 Basis of preparation

The standalone financial statements of the
Company have been prepared in accordance
with Indian Accounting Standards (hereinafter
referred to as Ind AS) as notified by Ministry
of Corporate Affairs pursuant to Section 133 of
the Companies Act, 2013 (‘the Act’) read with

the Companies (Indian Accounting Standards)
Rules, as amended from time to time and other
relevant provisions of the Act.

The standalone financial statements are
prepared under the historical cost convention
except for the following:

• certain financial assets and liabilities that
are measured at fair value;

• defined benefit plans where plan assets are
measured at fair value; and

• share-based payments at fair value as on the
grant date of options given to employees.

Estimates, judgements and assumptions used
in the preparation of the standalone financial
statements and disclosures are based upon
management’s evaluation of the relevant
facts and circumstances as of the date of the
standalone financial statements, which may
differ from the actual results at a subsequent
date. The critical estimates, judgements and
assumptions are presented in Note no. 1D.

The Company presents assets and liabilities
in the balance sheet based on current / non¬
current classification. Deferred tax assets and
liabilities are classified as non-current.

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

An asset is treated as current when it is:

• Expected to be realised or intended to be
sold or consumed in normal operating cycle

• 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 normal
operating cycle

• 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

All other liabilities are classified as non-current.

The operating cycle is the time between the
acquisition of assets for processing and their
realisation in cash and cash equivalents. The
Company has identified twelve months as its
operating cycle.

3 Revenue from contract 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 or services before transferring
them to the customer.

The recognition criteria for sale of products and
construction contracts is described below

i. Sale of Products

The Company recognises revenue when
control over the promised goods or services
is 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 as it typically controls the
goods or services before transferring them
to the customer.

Revenue is adjusted for variable
consideration such as discounts, rebates,
refunds, credits, price concessions,
incentives, or other similar items in a
contract when they are highly probable
to be provided. The amount of revenue
excludes any amount collected on behalf of
third parties.

The Company recognises revenue generally
at the point in time when the products are
delivered to customer or when it is delivered
to a carrier for export sale, which is when
the control over product is transferred to
the customer. In contracts where freight is
arranged by the Company and recovered
from the customers, the same is treated
as a separate performance obligation and
revenue is recognised when such freight
services are rendered.

ii. Revenue from Projects

Performance obligations with reference to
Engineering Procurement and Construction
(EPC) contracts are satisfied over the period
of time, and accordingly, Revenue from such
contracts is recognized based on progress
of performance determined using input
method with reference to the cost incurred
on contract and their estimated total
costs. Transaction price is the amount of
consideration to which the Company expects
to be entitled in exchange for transferring
goods or services to a customer excluding
amounts collected on behalf of a third party.

Revenue, measured at transaction price,
is adjusted towards liquidated damages,
time value of money and price variations,
escalation, change in scope etc. wherever,
applicable. Variation in contract work and
other claims are included to the extent that
the amount can be measured reliably, and
it is agreed with customer.

Estimates of revenue and costs are
reviewed periodically and revised, wherever
circumstances change, resulting increases
or decreases in revenue determination, is
recognized in the statement of profit and
loss period in which estimates are revised.

The Company evaluates whether each
contract consists of a single performance
obligation or multiple performance
obligations. Where the Company enters into
multiple contracts with the same customer,
the Company evaluates whether the contract
is to be combined or not by evaluating various
factors. Due to the nature of the work required
to be performed on many of the performance
obligations, the estimation of total revenue
and cost at completion is subject to many
variables and requires significant judgement.
The Company considers its experience
with similar transactions and expectations
regarding the contract in estimating the
amount of variable consideration to which
it will be entitled and determining whether
the estimated variable consideration should
be constrained. The Company includes
estimated amounts in the transaction price
to the extent it is probable that a significant
reversal of cumulative revenue recognised will
not occur when the uncertainty associated
with the variable consideration is resolved.

Progress billings are generally issued upon
completion of certain phases of the work
as stipulated in the contract. Billing terms
of the over-time contracts vary but are
generally based on achieving specified
milestones. The difference between the
timing of revenue recognised and customer
billings result in changes to contract assets
and contract liabilities. Contractual retention
amounts billed to customers are generally
due upon expiration of the contract period.

The contracts generally result in revenue
recognised in excess of billings which
are presented as contract assets on the
statement of financial position. Amounts
billed and due from customers are
classified as receivables on the statement
of financial position. The portion of the
payments retained by the customer until
final contract settlement is not considered a
significant financing component since it is
usually intended to provide customer with
a form of security for Company’s remaining
performance as specified under the contract,
which is consistent with the industry
practice. Contract liabilities represent
amounts billed to customers in excess of
revenue recognised till date. A liability is
recognised for advance payments and it is
not considered as a significant financing
component since it is used to meet working
capital requirements at the time of project
mobilization stage. The same is presented as
contract liability in the balance sheet.

4 Contract balances

a) Contract asset

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 or services
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.

b) 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).

c) 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 recognized
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.

5 Leases:

Company as a lessee:

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. Unless the Company is reasonably
certain to obtain ownership of the leased asset at
the end of the lease term, the recognised right-
of-use assets are depreciated on a straight-line
basis over the shorter of its estimated useful life
and the lease term as follows:

Right-of-use assets are subject to impairment
test. The Company determines the lease term as
the non-cancellable term of the lease, together
with any periods covered by an option to
extend the lease if it is reasonably certain to be
exercised, or any periods covered by an option to
terminate the lease, if it is reasonably certain not
to be exercised.

Leases are capitalised at the commencement of
the lease at the inception date fair value of the
leased property or, if lower, at the present value of
the minimum lease payments. Lease payments
are apportioned between finance charges and
reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance
of the liability. Finance charges are recognised in
finance costs in the statement of profit and loss,
unless they are directly attributable to qualifying
assets, in which case they are capitalized in

accordance with the Company’s general policy
on the borrowing costs. Contingent rentals are
recognised as expenses in the periods in which
they are incurred.

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

In calculating the present value of lease
payments, the Company uses the incremental
borrowing rate at the lease commencement
date if the interest rate implicit in the lease is not
readily determinable.

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 of low
value (i.e., below H 5,00,000). 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.

6 Other income:

(1) Interest income on financial asset is
recognised using the effective interest rate
method. The effective interest rate is the
rate that exactly discounts estimated future
cash receipts through the expected life of
the financial asset to the gross carrying
amount of the financial asset. When
calculating the effective interest rate, the
Company estimates the expected cash
flows by considering all the contractual
terms of the financial instruments.

(2) Others:

The Company recognises other income
(including income from income from scrap
sales, income from claims received, etc.) on
accrual basis. However, where the ultimate

collection of the same is uncertain, revenue
recognition is postponed to the extent of
uncertainty.

7 Property, plant and equipment:

The cost of property, plant and equipment
comprises its purchase price net of any trade
discounts and rebates, any import duties and
other taxes (other than those subsequently
recoverable from the tax authorities), any
directly attributable expenditure on making
the asset ready for its intended use, including
relevant borrowing costs for qualifying assets
and any expected costs of decommissioning.
Expenditure incurred after the property, plant
and equipment have been put into operation,
such as repairs and maintenance, are charged
to the Statement of Profit and Loss in the year in
which the costs are incurred. Major shut-down
and overhaul expenditure is capitalised as the
activities undertaken improves the economic
benefits expected to arise from the asset.

An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from
the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item
of property, plant and equipment is determined
as the difference between the sales proceeds
and the carrying amount of the asset and is
recognised in Statement of Profit and Loss.

Assets in the course of construction are
capitalised in the assets under Capital work
in progress. At the point when an asset is
operating at management’s intended use,
the cost of construction is transferred to the
appropriate category of property, plant and
equipment and depreciation commences. Costs
associated with the commissioning of an asset
and any obligatory decommissioning costs are
capitalised where the asset is available for use
but incapable of operating at normal levels,
revenue (net of cost) generated from production
during the trial period is capitalised.

Property, plant and equipment held for use in the
production, supply or administrative purposes,
are stated in the balance sheet at cost less
accumulated depreciation and accumulated
impairment losses, if any.

Depreciable amount for assets is the cost of
an asset, or other amount substituted for cost,
less its estimated residual value. 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 prescribed 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.

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.

Major overhaul costs are depreciated over the
estimated life of the economic benefit derived
from the overhaul. The carrying amount
of the remaining previous overhaul cost is
charged to the Statement of Profit and Loss if
the next overhaul is undertaken earlier than
the previously estimated life of the economic
benefit.

The Company reviews the residual value, useful
lives and depreciation method annually and, if
expectations differ from previous estimates,
the change is accounted for as a change in
accounting estimate on a prospective basis.

8 Impairment of non-financial assets:

The carrying amounts of assets are reviewed at
each balance sheet date if there is any indication
of impairment based on internal/external
factors. An asset is impaired when the carrying
amount of the asset exceeds the recoverable
amount. The recoverable amount is the higher
of an asset’s fair value less costs of disposal
and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest
levels for which there are separately identifiable
cash inflows which are largely independent of
the cash inflows from other assets or groups
of assets (cash-generating units). Impairment
loss is charged to the Statement of Profit & Loss

Account in the year in which an asset is identified
as impaired. An impairment loss recognized
in the prior accounting periods is reversed if
there has been change in the estimates used to
determine the assets recoverable amount since
the last impairment loss was recognised.

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.

Impairment losses are recognised in the
statement of profit and loss.

For assets, an assessment is made at each
reporting date to determine whether there
is an indication that previously recognised
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 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 or loss unless the asset is
carried at a revalued amount, in which case, the
reversal is treated as a revaluation increase.

9 Financial instruments:

Financial assets and financial liabilities are
recognised when an entity becomes a party to
the contractual provisions of the instrument.

Financial assets (except trade receivable,
measured at amortised cost) and financial
liabilities are initially measured at fair value.
Transaction costs that are directly attributable
to the acquisition or issue of financial assets and
financial liabilities (other than financial assets
and financial liabilities at fair value through
Statement of Profit and Loss (FVTPL)) are added
to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on
initial recognition. Transaction costs directly
attributable to the acquisition of financial
assets or financial liabilities at fair value through
profit and loss are recognised immediately in
Statement of Profit and Loss.

A. Financial assets

a) Recognition and initial measurement

A financial asset is initially recognised
at fair value and, for an item not at
FVTPL, transaction costs that are directly
attributable to its acquisition or issue.
Purchases and sales of financial assets are
recognised on the trade date, which is the
date on which the Company becomes a
party to the contractual provisions of the
instrument.

b) Classification of financial assets

Financial assets are classified, at initial
recognition and subsequently measured
at amortised cost, fair value through other
comprehensive income (OCI), and fair value
through profit and loss. A financial asset
is measured at amortised cost if it meets
both of the following conditions and is not
designated at FVTPL:

• The asset is held within a business
model whose objective is to hold assets
to collect contractual cash flows; and

• The contractual terms of the financial
asset give rise on specified dates to
cash flows that are solely payments of
principal and interest on the principal
amount outstanding.

A debt instrument is classified as FVTOCI
only if it meets both of the following
conditions and is not recognised at FVTPL;

• The asset is held within a business
model whose objective is achieved by
both collecting contractual cash flows
and selling financial assets; and

• The contractual terms of the financial
asset give rise on specified dates to
cash flows that are solely payments of
principal and interest on the principal
amount outstanding.

Debt instruments included within the
FVTOCI category are measured initially as
well as at each reporting date at fair value.
Fair value movements are recognised
in the Other Comprehensive Income
(OCI). However, the Company recognises
interest income, impairment losses &
reversals and foreign exchange gain or
loss in the Statement of Profit and Loss.
On derecognition of the asset, cumulative

gain or loss previously recognised in OCI is
reclassified from the equity to Statement
of Profit and Loss. Interest earned whilst
holding FVTOCI debt instrument is reported
as interest income using the EIR method.

All equity investments in scope of Ind
AS 109 are measured at fair value. Equity
instruments which are held for trading and
contingent consideration recognised by
an acquirer in a business combination to
which Ind AS 103 applies are classified as
at FVTPL. For all other equity instruments,
the Company may make an irrevocable
election to present in other comprehensive
income subsequent changes in the fair
value. The Company makes such election
on an instrument-by-instrument basis. The
classification is made on initial recognition
and is irrevocable.The equity instruments
which are strategic investments and held
for long term purposes are classified as
FVTOCI.

If the Company decides to classify an equity
instrument as at FVTOCI, then all fair value
changes on the instrument, excluding
dividends, are recognised in the OCI. There
is no recycling of the amounts from OCI to
Statement of Profit and Loss, even on sale
of investment. However, the Company may
transfer the cumulative gain or loss within
equity.

Equity instruments included within the
FVTPL category are measured at fair
value with all changes recognised in the
Statement of Profit and Loss.

All other financial assets are classified as
measured at FVTPL.

In addition, on initial recognition, the
Company may irrevocably designate a
financial asset that otherwise meets the
requirements to be measured at amortised
cost or at FVTOCI as at FVTPL if doing so
eliminates or significantly reduces and
accounting mismatch that would otherwise
arise.

Financial assets at FVTPL are measured
at fair value at the end of each reporting
year, with any gains and losses arising on
remeasurement recognised in statement
of profit and loss. The net gain or loss
recognised in statement of profit and loss
incorporates any dividend or interest earned

on the financial asset and is included in
the ‘other income’ line item. Dividend on
financial assets at FVTPL is recognised
when:

The Company’s right to receive the
dividends is established,

It is probable that the economic benefits
associated with the dividends 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.

c) Derecognition of financial assets

The Company derecognises a financial
asset when the contractual rights to
the cash flows from the asset expire, or
when it transfers the financial asset and
substantially all the risks and rewards of
ownership of the asset to another party.

d) Impairment

The Company applies the expected credit
loss model for recognising impairment loss
on financial assets measured at amortised
cost, debt instruments at FVTOCI, lease
receivables, trade receivables, other
contractual rights to receive cash or other
financial asset, and financial guarantees
not designated as at FVTPL.

Expected credit losses are the weighted
average of credit losses with the respective
risks of default occurring as the weights.
Credit loss 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 effective interest
rate (or credit-adjusted effective interest rate
for purchased or originated credit-impaired
financial assets). The Company estimates
cash flows by considering all contractual
terms of the financial instrument (for
example, prepayment, extension, call and
similar options) through the expected life
of that financial instrument.

The Company measures the loss allowance
for a financial instrument at an amount
equal to the lifetime expected credit
losses if the credit risk on that financial
instrument has increased significantly

since initial recognition. If the credit risk on
a financial instrument has not increased
significantly since initial recognition, the
Company measures the loss allowance for
that financial instrument at an amount
equal to 12-month expected credit losses.
12-month expected credit losses are portion
of the life-time expected credit losses and
represent the lifetime cash shortfalls that
will result if default occurs within the 12
months after the reporting date and thus,
are not cash shortfalls that are predicted
over the next 12 months.

If the Company measured loss allowance for
a financial instrument at lifetime expected
credit loss model in the previous year,
but determines at the end of a reporting
year that the credit risk has not increased
significantly since initial recognition due to
improvement in credit quality as compared
to the previous year, the Company again
measures the loss allowance based on
12-month expected credit losses.

When making the assessment of whether
there has been a significant increase in
credit risk since initial recognition, the
Company uses the change in the risk of a
default occurring over the expected life
of the financial instrument instead of the
change in the amount of expected credit
losses. To make that assessment, the
Company compares the risk of a default
occurring on the financial instrument as at
the reporting date with the risk of a default
occurring on the financial instrument as at
the date of initial recognition and considers
reasonable and supportable information,
that is available without undue cost or effort,
that is indicative of significant increases in
credit risk since initial recognition.

For trade receivables or any contractual right
to receive cash or another financial asset
that result from transactions that are within
the scope of Ind AS 115, the Company always
measures the loss allowance at an amount
equal to lifetime expected credit losses.

Further, for the purpose of measuring lifetime
expected credit loss allowance for trade
receivables, the Company has used a practical
expedient as permitted under Ind AS 109. This
expected credit loss allowance is computed
based on a provision matrix which takes into
account historical credit loss experience and
adjusted for forward-looking information.

The impairment requirements for the
recognition and measurement of a loss
allowance are equally applied to debt
instruments at FVTOCI except that the
loss allowance is recognised in other
comprehensive income and is not reduced
from the carrying amount in the balance
sheet.

e) Effective interest method

The effective interest method is a method
of calculating the amortised cost of a
debt instrument and of allocating interest
income over the relevant year. The effective
interest rate is the rate that exactly discounts
estimated future cash receipts (including all
fees and points paid or received that form
an integral part of the effective interest rate,
transaction costs and other premiums or
discounts) through the expected life of the
debt instrument, or, where appropriate, a
shorter year, to the net carrying amount on
initial recognition.

Income is recognised on an effective
interest basis for debt instruments other
than those financial assets classified as at
FVTPL. Interest income is recognised in
statement of profit and loss and is included
in the ‘Other income’ line item.

B. Financial liabilities and equity instruments

a) Classification as debt or equity

Debt and equity instruments issued by a
company are classified as either financial
liabilities or as equity in accordance with the
substance of the contractual arrangements
and the definitions of a financial liability
and an equity instrument.

b) Equity instruments

An equity instrument is any contract that
evidences a residual interest in the assets of
an entity after deducting all of its liabilities.
Equity instruments issued by the Company
are recognised at the proceeds received,
net of direct issue costs.

Repurchase of the Company’s own equity
instruments is recognised and deducted
directly in equity. No gain or loss is
recognised in Statement of Profit and Loss
on the purchase, sale, issue or cancellation
of the Company’s own equity instruments.

c) Financial liabilities

Financial liabilities are classified as either
financial liabilities ‘at FVTPL’ or ‘other
financial liabilities’.

Financial liabilities at FVTPL:

Financial liabilities are classified as at FVTPL
when the financial liability is either held for
trading or it is designated as at FVTPL.

A financial liability is classified as held for
trading if:

• It has been incurred principally for the
purpose of repurchasing it in the near
term; or

• on initial recognition it is part of
a portfolio of identified financial
instruments that the Company
manages together and has a recent
actual pattern of short-term profit¬
taking; or

• it is a derivative that is not designated
and effective as a hedging instrument.

A financial liability other than a financial
liability held for trading may be designated
as at FVTPL upon initial recognition if:

• such designation eliminates or
significantly reduces a measurement
or recognition inconsistency that
would otherwise arise;

• the financial liability forms part of a
group of financial assets or financial
liabilities or both, which is managed
and its performance is evaluated on
a fair value basis, in accordance with
the Company’s documented risk
management or investment strategy,
and information about the grouping is
provided internally on that basis; or

• it forms part of a contract containing
one or more embedded derivatives, and
Ind AS 109 permits the entire combined
contract to be designated as at FVTPL
in accordance with Ind AS 109.

Financial liabilities at FVTPL are stated
at fair value, with any gains or losses
arising on remeasurement recognised in
Statement of Profit and Loss. The net gain

or loss recognised in Statement of Profit
and Loss incorporates any interest paid on
the financial liability and is included in the
Statement of Profit and Loss. For Liabilities
designated as FVTPL, fair value gains/losses
attributable to changes in own credit risk
are recognised in OCI.

The Company derecognises financial
liabilities when, and only when, the
Company’s obligations are discharged,
cancelled or they expire. The difference
between the carrying amount of the
financial liability derecognised and
the consideration paid and payable is
recognised in the Statement of Profit and
Loss.

Derecognition of financial liabilities:

The Company derecognises financial
liabilities when, and only when, the
Company’s obligations are discharged,
cancelled or have expired. An exchange
between with a lender of debt instruments
with substantially different terms is
accounted for as an extinguishment of
the original financial liability and the
recognition of a new financial liability.
Similarly, a substantial modification of
the terms of an existing financial liability
(whether or not attributable to the financial
difficulty of the debtor) is accounted for as
an extinguishment of the original financial
liability and the recognition of a new
financial liability. The difference between
the carrying amount of the financial liability
derecognised and the consideration paid
and payable is recognised in the Statement
of Profit and Loss.

10. Fair value measurements:

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 or
liability

The principal or the most advantageous market
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 standalone
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
standalone 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. External valuers are
involved for valuation of significant assets, such
as properties and unquoted financial assets.

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.

11. Derivative Instruments and Hedge Accounting

a. Derivative financial instruments

The Company enters into a variety of
derivative financial instruments to manage
its exposure to commodity price and
foreign exchange rate risks, including
foreign exchange forward contracts
and commodity forward contracts -
OTC derivatives. Derivatives are initially
recognized at fair value at the date the
derivative contracts are entered into and
are subsequently remeasured to their fair
value at the end of each reporting year.
The resulting gain or loss is recognized in
Statement of Profit and Loss immediately
unless the derivative is designated and
effective as a hedging instrument, in which
event the timing of the recognition in
Statement of Profit and Loss depends on
the nature of the hedge item.

b. Hedge accounting

The Company designates certain hedging
instruments, which include derivatives
in respect of foreign currency risk and
commodity price risk, as cash flow hedges.
Hedges of foreign exchange risk and
commodity price risk for highly probable
forecast transactions are accounted for as
cash flow hedges.

At the inception of the hedge relationship,
the entity documents the relationship
between the hedging instrument and
the hedged item, along with its risk
management objectives and its strategy for
undertaking various hedge transactions.
Furthermore, at the inception of the hedge
and on an ongoing basis, the Company
documents whether the hedging
instrument is highly effective in offsetting
changes in fair values or cash flows of the
hedged item attributable to hedged risk.

Cash flow hedges

The effective portion of changes in fair
value of derivatives that are designated and
qualify as cash flow hedges is recognized
in other comprehensive income and
accumulated under the heading of cash flow
hedging reserve. The gain or loss relating
to the ineffective portion is recognized

immediately in Statement of profit and loss.
Amounts previously recognized in other
comprehensive income and accumulated
in equity relating to effective portion as
described above are reclassified to profit
and loss in the years when the hedged item
affects profit and loss, in the same line as the
recognized hedged item. However, when
the hedged forecast transaction results in
the recognition of a non-financial asset or
a non-financial liability, such gains or losses
are transferred from equity (but not as a
reclassification adjustment) and included
in the initial measurement of the cost of the
non-financial asset or non-financial liability.
Hedge accounting is discontinued when
the hedging instrument expires or is sold,
terminated, or exercised, or when it no longer
qualifies for hedge accounting. Any gain
or loss recognized in other comprehensive
income and accumulated in equity at that
time remains in equity and is recognized
when the forecast transaction is ultimately
recognized in profit and loss. When a
forecast transaction is no longer expected to
occur, the gain or loss accumulated in equity
is recognized immediately in profit and loss.

12. Cash and cash equivalents:

Cash and cash equivalents in the balance
sheet and for the purpose of the statement of
cash flows, include cash on hand, other short¬
term, highly liquid investments with original
maturities of three months or less that are
readily convertible to known amounts of cash
and which are subject to an insignificant risk of
changes in value.

13. Inventories:

Inventories 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 for as follows:

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

Finished goods and work in progress: cost includes
cost of direct materials, cost of purchase and other
costs incurred in bringing the inventories to their
present location and condition, labour cost and
a proportion of manufacturing overheads based
on the normal operating capacity but excluding
borrowing costs. Cost is determined on 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.

14. Foreign currency transactions:

Items included in the standalone financial
statements are measured using the currency
of the primary economic environment in
which the Company operates (‘the functional
currency’). The standalone financial statements
are presented in Indian Rupee (INR), which is
the Company’s functional and presentation
currency.

a) On initial recognition, all foreign currency
transactions are recorded at the functional
currency spot rate at the date the
transaction first qualifies for recognition.

b) Monetary assets and liabilities in foreign
currency outstanding at the close of
reporting date are translated at the
functional currency spot rates of exchange
at the reporting date.

c) Exchange differences arising on settlement
of translation of monetary items are
recognised in the 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 recognised in OCI or profit or loss are also
recognised in OCI or profit or loss, respectively.

15. Borrowing costs

Borrowing costs directly attributable to
the acquisition, construction or production
of qualifying assets, which are assets that
necessarily take a substantial period of time
to get ready for their intended use or sale, are
added to the cost of those assets, until such time
as the assets are substantially ready for their
intended use or sale. All other borrowing costs
are recognised in the Statement of Profit and
Loss in the year in which they are incurred.

The Company determines the amount of
borrowing costs eligible for capitalisation as
the actual borrowing costs incurred on that
borrowing during the year less any interest
income earned on temporary investment of
specific borrowings pending their expenditure
on qualifying assets, to the extent that an entity
borrows funds specifically for the purpose
of obtaining a qualifying asset. In case if the
Company borrows generally and uses the funds
for obtaining a qualifying asset, borrowing costs
eligible for capitalisation are determined by
applying a capitalisation rate to the expenditures
on that asset.

16. Income tax

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 for the jurisdiction adjusted by changes in
deferred tax assets and liabilities attributable to
temporary differences, unused tax losses and
unabsorbed depreciation.

Current and deferred tax is recognized in the
Statement of Profit and Loss except to the extent
it relates to items recognized directly in equity
or other comprehensive income, in which case it
is recognized in equity or other comprehensive
income.

A. Current income tax

The current income tax charge is calculated
on the basis of the tax laws enacted or
substantively enacted at the end of the
reporting period. The Company establishes
provisions, wherever appropriate, on the
basis of amounts expected to be paid to the
tax authorities.

Current tax assets and liabilities are offset
when there is a legally enforceable right to
set off current tax assets against current tax
liabilities.

B. Deferred tax

Deferred tax is provided using the Balance
sheet approach, on temporary differences
arising between the tax bases of assets and
liabilities and their carrying amounts in the
standalone financial statements. Deferred
tax is determined using tax rates (and laws)
that have been enacted or substantially
enacted by the end of the reporting period
and are expected to apply when the related
deferred income tax asset is realised or the
deferred income tax liability is settled.

The carrying amount of deferred tax assets
is reviewed at each reporting date and
adjusted to reflect changes in probability
that sufficient taxable profits will be
available to allow all or part of the asset to
be recovered.

Deferred tax assets are recognised for all
deductible temporary differences and
unused tax losses only if it is probable that
future taxable amounts will be available
to utilise those temporary differences and
losses.

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.

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 items are
recognised in correlation to the underlying
transaction either in OCI or directly in
equity.

17. 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.

When the Company receives grants of non¬
monetary assets, the asset and the grant are
recorded at fair value amounts and released
to profit or loss over the expected useful life in
a pattern of consumption of the benefit of the
underlying asset i.e. by equal annual instalments.
Government grants related to assets, including
non-monetary grants at fair value are presented
in the balance sheet by setting up the grant as
deferred income.

18. Trade Credits

Company enters into deferred payment
arrangements (acceptances) whereby lenders
such as banks and other financial institutions
make payments to supplier’s banks for purchase
of raw materials and traded goods. The banks
and financial institutions are subsequently

repaid by the Company at a later date providing
working capital benefits. These arrangements
are in the nature of credit extended in normal
operating cycle and these arrangements for raw
materials and traded goods are recognised as
Trade Credits. Interest borne by the company
on such arrangements is accounted as finance
cost. Payments made by banks and financial
institutions to the operating vendors are treated
as a non-cash item and settlement of operational
acceptances by the Company is treated as cash
flows from operating activity reflecting the
substance of the payment.

19. Business Combinations under common control

Business combinations involving entities that
are controlled by the group are accounted for
using the pooling of interests method as follows:

1) The assets and liabilities of the combining
entities are reflected at their carrying
amounts.

2) No adjustments are made to reflect fair
values, or recognise any new assets or
liabilities. Adjustments are only made to
harmonise accounting policies.

3) The balance of the retained earnings
appearing in the standalone financial
statements of the transferor is aggregated
with the corresponding balance appearing
in the standalone financial statements of
the transferee or is adjusted against general
reserve.

4) The identity of the reserves are preserved
and the reserves of the transferor become
the reserves of the transferee.

5) The difference, if any, between the amounts
recorded as share capital issued plus any
additional consideration in the form of cash
or other assets and the amount of share
capital of the transferor is transferred to
capital reserve and is presented separately
from other capital reserves.

6) The financial information in the standalone
financial statements in respect of prior
periods is restated as if the business
combination had occurred from the
beginning of the preceding period in
the standalone financial statements,
irrespective of the actual date of
combination. However, where the business
combination had occured after that date,
the prior period information is restated only
from that date.

20. Investment in joint ventures

A joint venture is a type of joint arrangement
whereby the parties that have joint control of the
arrangement have rights to the net assets of the
joint venture. Joint control is the contractually
agreed sharing of control of an arrangement,
which exists only when decisions about the
relevant activities require unanimous consent of
the parties sharing control. Investment in joint
venture is measured at cost.

---

Mar 31, 2024

IB MATERIAL ACCOUNTING POLICIES

This note provides a list of the material accounting policies adopted in the preparation of these Financial Statements.

1 Statement of compliance

Financial Statements have been prepared in accordance with the accounting principles generally accepted in India including Indian Accounting Standards (Ind AS) prescribed under the section 133 of the Companies Act, 2013 read with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation and disclosures requirement of Division II of revised Schedule III of the Companies Act 2013, (Ind AS Compliant Schedule III), as applicable to standalone financial statement.

Accordingly, the Company has prepared these Financial Statements which comprise the Balance Sheet as at 31 March 2024, the Statement of Profit and Loss, the Statement of Cash Flows and the Statement of Changes in Equity for the year ended as on that date, and accounting policies and other explanatory information (together hereinafter referred to as "financial statements”).

These financial statements are approved for issue by the Board of Directors on May 23, 2024.

2 Basis of preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (hereinafter referred to as Ind AS) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (''the Act'') read with the Companies (Indian Accounting

Standards) Rules, as amended from time to time and other relevant provisions of the Act.

The financial statements are prepared under the historical cost convention except for the following:

• certain financial assets and liabilities that are measured at fair value;

• defined benefit plans where plan assets are measured at fair value; and

• share-based payments at fair value as on the grant date of options given to employees.

Estimates, judgements and assumptions used in the preparation of the financial statements and disclosures are based upon management''s evaluation of the relevant facts and circumstances as of the date of the financial statements, which may differ from the actual results at a subsequent date. The critical estimates, judgements and assumptions are presented in Note no. 1D.

The Company presents assets and liabilities in the balance sheet based on current / non-current classification. Deferred tax assets and liabilities are classified as non-current.

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

An asset is treated as current when it is:

• Expected to be realised or intended to be sold or consumed in normal operating cycle

• 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 normal operating cycle

• 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

All other liabilities are classified as non-current.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.

3 Revenue from contract 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 or services before transferring them to the customer.

The recognition criteria for sale of products and construction contracts is described below

a) Sale of Products

The Company recognises revenue when control over the promised goods or services is 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 as it typically controls the goods or services before transferring them to the customer.

Revenue is adjusted for variable consideration such as discounts, rebates, refunds, credits, price concessions, incentives, or other similar items in a contract when they are highly probable to be provided. The amount of revenue excludes any amount collected on behalf of third parties.

The Company recognises revenue generally at the point in time when the products are delivered to customer or when it is delivered to a carrier for export sale, which is when the control over product is transferred to the customer. In contracts where freight is arranged by the Company and recovered from the customers, the same is treated as a separate performance obligation and revenue is recognised when such freight services are rendered.

b) Construction contracts (Contract Revenue)

Performance obligation in case of construction contracts is satisfied over a period of time, as the Company creates an asset that the customer control and the Company has an enforceable right to payment for performance completed to date if it meets the agreed specifications. Revenue from construction contracts is recognised based on the stage of completion determined with reference to the actual costs incurred up to reporting date on the construction contract and the estimated cost to complete the project. Cost estimates involves judgments including those relating to cost escalations; assessment of technical, political, regulatory and other related contract risks and their financial estimation; scope of deliveries and services required for fulfilling the contractually defined obligations and expected delays, if any. Provision for foreseeable losses/ construction contingencies on said contracts is made based on technical assessments of costs to be incurred and revenue to be accounted for.

4 Contract balances

a) Contract asset

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 or services 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.

b) 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).

c) 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

recognized 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.

5 Leases

Company as a lessee:

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. Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term as follows:

Right-of-use assets are subject to impairment test. The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Company has determined leasehold lands also as, right of use assets and hence the same has been classified from property, plant and equipment to right of use assets.

Leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company''s general policy on the borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straightline basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.

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

In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable.

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 of low value (i.e., below Rs. 5,00,000). 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.

> Other income

(1) Interest income on financial asset is recognised using the rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of

the financial asset to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instruments.

(2) Others: The Company recognises other income (including income from income from scrap sales, income from claims received, etc.) on accrual basis. However, where the ultimate collection of the same is uncertain, revenue recognition is postponed to the extent of uncertainty.

7 Property, plant and equipment

The cost of property, plant and equipment comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, including relevant borrowing costs for qualifying assets and any expected costs of decommissioning. Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance, are charged to the Statement of Profit and Loss in the year in which the costs are incurred. Major shut-down and overhaul expenditure is capitalised as the activities undertaken improves the economic benefits expected to arise from the asset.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss

Assets in the course of construction are capitalised in the assets under Capital work in progress. At the point when an asset is operating at management''s intended use, the cost of construction is transferred to the appropriate category of property, plant and equipment and depreciation commences. Costs associated with the commissioning of an asset and any obligatory decommissioning costs are capitalised where the asset is available for use but incapable of operating at normal levels, revenue (net of cost) generated from production during the trial period is capitalised.

Property, plant and equipment held for use in the production, supply or administrative

purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses, if any.

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. 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 prescribed 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.

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.

Freehold land and leasehold land where the lease is convertible to freehold land under lease agreements at future dates at no additional cost, are not depreciated.

Major overhaul costs are depreciated over the estimated life of the economic benefit derived from the overhaul. The carrying amount of the remaining previous overhaul cost is charged to the Statement of Profit and Loss if the next overhaul is undertaken earlier than the previously estimated life of the economic benefit.

The Company reviews the residual value, useful lives and depreciation method annually and, if expectations differ from previous estimates, the change is accounted for as a change in accounting estimate on a prospective basis.

8 Impairment of non-financial assets:

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. The recoverable amount is the higher of an asset''s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Impairment loss is charged to the Statement of Profit & Loss Account in the year in which an asset is identified as impaired. An impairment loss recognized in the prior accounting periods is reversed if there has been change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised.

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.

Impairment losses are recognised in the statement of profit and loss, except for properties previously revalued with the revaluation surplus taken to OCI.

For assets, an assessment is made at each reporting date to determine whether there is an indication that previously recognised 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 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 or loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.

9 Financial instruments

Financial assets and financial liabilities are recognised when an entity becomes a party to the contractual provisions of the instrument.

Financial assets (except trade receivable, measured at transaction cost) and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through Statement of Profit and Loss (FVTPL)) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognised immediately in Statement of Profit and Loss.

A. Financial Assets

a) Recognition and initial measurement

A financial asset is initially recognised at fair value and, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. Purchases and sales of financial assets are recognised on the trade date, which is the date on which the Company becomes a party to the contractual provisions of the instrument.

b) Classification of financial assets

Financial assets are classified, at initial recognition and subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit and loss. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated at FVTPL:

• The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt instrument is classified as FVTOCI only if it meets both of the following conditions and is not recognised at FVTPL;

• The asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the Other Comprehensive Income (OCI). However, the Company recognises interest income, impairment losses & reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.

All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS 103 applies are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.The equity instruments which are strategic investments and held for long term purposes are classified as FVTOCI.

If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to Statement of Profit and Loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.

Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the Statement of Profit and Loss.

All other financial assets are classified as measured at FVTPL.

In addition, on initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVTOCI as at FVTPL if doing so eliminates or significantly reduces and accounting mismatch that would otherwise arise.

Financial assets at FVTPL are measured at fair value at the end of each reporting year, with any gains and losses arising on remeasurement recognised

in statement of profit and loss. The net gain or loss recognised in statement of profit and loss incorporates any dividend or interest earned on the financial asset and is included in the ''other income'' line item. Dividend on financial assets at FVTPL is recognised when:

The Company''s right to receive the dividends is established.

It is probable that the economic benefits associated with the dividends 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.

c) Derecognition of financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

d) Impairment

The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, lease receivables, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.

Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss 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 effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.

The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument

at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.

If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous year, but determines at the end of a reporting year that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous year, the Company again measures the loss allowance based on 12- month expected credit losses

When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses..

Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information. The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt instruments at FVTOCI except that the loss allowance is recognised in other comprehensive income and is not reduced from the carrying amount in the balance sheet.

The Company has performed sensitivity analysis on the assumptions used and based on current indicators of future economic conditions, the Company expects to recover the carrying amount of these assets.

e) Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant year. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter year, to the net carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in statement of profit and loss and is included in the ''Other income'' line item.

B. Financial liabilities and equity instruments

a) Classification as debt or equity

Debt and equity instruments issued by a company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

b) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs. Repurchase of the Company''s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in Statement of Profit and Loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.

c) Financial liabilities

Financial liabilities are classified as either financial liabilities ''at FVTPL'' or ''other financial liabilities''.

Financial liabilities at FVTPL:

Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.

A financial liability is classified as held for trading if:

• It has been incurred principally for the purpose of repurchasing it in the near term; or

• on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;

• the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL in accordance with Ind AS 109.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in Statement of Profit and Loss. The net gain or loss recognised in Statement of Profit and Loss incorporates any interest paid on the financial liability and is included in the Statement of Profit and Loss. For Liabilities designated as FVTPL, fair value gains/losses attributable to changes in own credit risk are recognised in OCI.

The Company derecognises financial liabilities

when, and only when, the Company''s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the

consideration paid and payable is recognised in the Statement of Profit and Loss.

Derecognition of financial liabilities:

The Company derecognises financial liabilities

when, and only when, the Company''s obligations are discharged, cancelled or have expired.

An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial

modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in the Statement of Profit and Loss.

10. Fair value measurements

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 or liability

The principal or the most advantageous market 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. External valuers are involved for valuation of significant assets, such as properties and unquoted financial assets.

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.

H. Cash and cash equivalents

Cash and cash equivalents in the balance sheet and for the purpose of the statement of cash flows, include cash on hand, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

12. Inventories

Inventories 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 for as follows:

Raw materials: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on first in, first out basis.

Finished goods and work in progress: 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 first in, first out 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 weighted average basis.

Initial cost of inventories includes the transfer of gains and losses on qualifying cash flow hedges, recognised in OCI, in respect of the purchases of raw materials. 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.

13. Foreign currency transactions

Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The financial statements are presented in Indian Rupee (INR), which is the Company''s functional and presentation currency.

a) On initial recognition, all foreign currency transactions are recorded at the functional currency spot rate at the date the transaction first qualifies for recognition.

b) Monetary assets and liabilities in foreign currency outstanding at the close of reporting date are translated at the functional currency spot rates of exchange at the reporting date.

c) Exchange differences arising on settlement of translation of monetary items are recognised in the 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 recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively

14. Income tax

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 for the jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and unabsorbed depreciation.

Current and deferred tax is recognized in the Statement of Profit and Loss except to the extent it relates to items recognized directly in equity or other comprehensive income, in which case it is recognized in equity or other comprehensive income.

A. Current income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. The Company establishes provisions, wherever appropriate, on the basis of amounts expected to be paid to the tax authoritiesx. Current tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities.

B. Deferred tax

Deferred tax is provided using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

The carrying amount of deferred tax assets is reviewed at each reporting date and adjusted to reflect changes in probability that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

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.

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 items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

15. 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.

When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset i.e. by equal annual instalments.

16. Trade Credits

Company enters into deferred payment arrangements (acceptances) whereby lenders such as banks and other financial institutions make payments to supplier''s banks for purchase of raw materials and traded goods. The banks and financial institutions are subsequently repaid by the Company at a later date providing working capital benefits. These arrangements are in the nature of credit extended in normal operating cycle and these arrangements for raw materials and traded goods are recognised as Trade Credits. Interest borne by the company on such arrangements is accounted as finance cost. Payments made by banks and financial institutions to the operating vendors are treated as a non-cash item and settlement of operational acceptances by the Company is treated as cash flows from operating activity reflecting the substance of the payment.

17. Business Combinations

The acquisition method of accounting is used to account for all business combinations, regardless

of whether equity instruments or other assets are

acquired. The consideration transferred for the acquisition of a demerged undertaking comprises the:

• fair values of the assets transferred;

• liabilities incurred to the former owners of the acquired business;

• equity interests issued by the Company; and

• fair value of any asset or liability resulting from a contingent consideration arrangement.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Company recognises any non-controlling interest in

the acquired entity on an acquisition-by-acquisition basis at the non-controlling interest''s proportionate share of the acquired entity''s net identifiable assets.

Acquisition-related costs are expensed as incurred. The excess of the

• consideration transferred;

• amount of any non-controlling interest in the acquired entity, and

• acquisition-date fair value of any previous equity interest in the acquired entity

over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised in other comprehensive income and accumulated in equity as capital reserve provided there is clear evidence of the underlying reasons for classifying the business combination as a bargain purchase. In other cases, the bargain purchase gain is recognised directly in equity as capital reserve.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity''s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer''s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss or other comprehensive income, as appropriate.

Common control transactions

Business combinations involving entities that are

controlled by the group are accounted for using the

pooling of interests method as follows:

1) The assets and liabilities of the combining entities are reflected at their carrying amounts. The Company has made accounting policy choice to account investment in associates and joint venture at a carrying cost as appearing in the books of acquiree.

2) No adjustments are made to reflect fair values, or recognise any new assets or liabilities. Adjustments are only made to harmonise accounting policies.

3) The balance of the retained earnings appearing in the financial statements of the transferor is aggregated with the corresponding balance appearing in the financial statements of the transferee or is adjusted against general reserve.

4) The identity of the reserves are preserved and the reserves of the transferor become the reserves of the transferee.

5) The difference, if any, between the amounts recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor is transferred to capital reserve and is presented separately from other capital reserves.

6) The financial information in the financial statements in respect of prior periods is restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of combination. However, where the business combination had occured after that date, the prior period information is restated only from that date