Provisions, contingent liabilities and assets

Provisions are recognised when the company has a present
obligation (legal or constructive) as a result of past event, it is
probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of obligation. If the effect of
the time value of money is material, provisions are determined
by discounting the expected future cash flows at a pre-tax rate
that reflects current market assessments of the time value of
money and the risks specific to the liability. Where discounting
is used, the increase in the provision due to the passage of time
is recognised as a finance cost.

Contingent Assets are not recognised in the financial statements.

2.16. Borrowing Cost

Borrowing cost that are directly attributable to the acquisition,
construction, or production of a qualifying asset are capitalized
as a part of the cost of such asset till such time the asset is ready
for its intended use or sale.

Borrowing cost consist of interest and other costs that an entity
incurs in connection with the borrowing of funds. Borrowing
costs also includes exchange differences to the extent regarded
as an adjustment to the borrowing costs. A qualifying asset is an
asset that necessarily requires a substantial period of time to get
ready for its intended use or sale. All other borrowing cost are
recognized as expense in the period in which they are incurred.

2.17. Inventories

• Raw materials, Work in progress, manufactured goods
and Stores & Spares are valued at lower of Cost (FIFO)
or estimated net realisable value after providing for
obsolescence and other losses, where considered
necessary.

• By-products, self-generated scrap and non-reusable waste
are valued at estimated net realisable value.

• Cost includes all charges in bringing the goods to their
present location and condition, including other levies,
transit insurance and receiving charges.

• Work in progress and finished goods include appropriate
proportion of overheads and, where applicable, excise
duty.

• Estimated net realisable value is the estimated selling price
in the ordinary course of business, reduced by estimated
costs of completion and estimated costs necessary to make
the sale.

2.18. Revenue Recognition

Sale of Goods

Revenue from sales are recognized, when risks and rewards of
ownership of products are passed on to the customers, which
is generally on dispatch/delivery of goods and there is no
significant uncertainty regarding amount of consideration that
will be derived. Revenue from sale of goods are recognized at
the fair value of the consideration received or receivable, net
of returns including estimated returns where applicable, and
trade discounts, rebates, sales tax and value added tax/GST.
Revenue is recognized only when risks and rewards incidental
to ownership are transferred to the customer, it can be reliably
measured, and it is reasonable to expect ultimate collection.

The Company has adopted Ind AS 115 Revenue from contracts
with customers, with effect from April 1, 2018. Ind AS 115
establishes principles for reporting information about the
nature, amount, timing and uncertainty of revenues and cash
flows arising from the contracts with its customers and replaces
Ind AS 18 Revenue and Ind AS 11 Construction Contracts.

The Company has adopted Ind AS 115 using the cumulative
effect method whereby the effect of applying this standard is
recognised at the date of initial application (i.e. April 1, 2018).
Accordingly, the comparative information in the statement of
profit and loss is not restated.

Other Income

Interest Income

Interest income is recognized using effective interest rate
method and on time proportion basis taking into account the
amount outstanding and the interest rate applicable.

Dividend

Dividend income is recognised when the Company's right to
receive the payment is established, which is generally when
shareholders approve the dividend.

2.19. Employee Benefits

Defined benefit plans

The liability in respect of defined benefit plans is calculated
using the projected unit credit method with actuarial valuations
being carried out at the end of each annual reporting period. The
present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows by reference to
market yields at the end of the reporting period on government
bonds. The currency and term of the government bonds shall
be consistent with the currency and estimated term of the
post-employment benefit obligations. The current service cost
of the defined benefit plan, recognised in the profit or loss as
employee benefits expense, reflects the increase in the defined
benefit obligation resulting from employee service in the
current year, benefit changes, curtailments and settlements.
Past service costs are recognised in profit or loss in the period
of a plan amendment. The net interest cost is calculated by
applying the discount rate to the net balance of the defined
benefit obligation and the fair value of plan assets. This cost is
included in employee benefit expense in profit or loss. Actuarial
gains and losses arising from experience adjustments and
changes in actuarial assumptions are charged or credited to OCI
in the period in which they arise and is reflected immediately in
retained earnings and is not reclassified to profit or loss.

Short-term and Other long-term employee benefits

A liability is recognised for benefits accruing to employees in
respect of wages and salaries, and casual leave in the period the
related service is rendered at the undiscounted amount of the
benefits expected to be paid in exchange for that service.

The Company's net obligation in respect of other long¬
term employee benefits is the amount of future benefit that
employees have earned in return for their service in the current
and previous periods. That benefit is discounted to determine
its present value.

Defined contribution plans

The Company's contributions to defined contribution plans are
recognised as an expense as and when the services are received
from the employees entitling them to the contributions.

2.20. Income Tax

Current Income Tax

Income tax expense consists of current and deferred tax. Income
tax expense is recognised in profit or loss except to the extent
that it relates to items recognised in OCI or directly in equity, in
which case it is recognised in OCI or directly in equity respectively.
Current tax is the expected tax payable on the taxable profit for
the year, using tax rates enacted or substantively enacted by the
end of the reporting period, and any adjustment to tax payable
in respect of previous years. Current tax assets and tax liabilities
are offset where the Company has a legally enforceable right to
offset and intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.

Deferred Tax

Deferred tax is recognised on temporary differences between
the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the
computation of taxable profit.

Deferred tax is measured at the tax rates that are expected to
be applied to the temporary differences when they reverse,
based on the laws that have been enacted or substantively
enacted by the end of the reporting period. Deferred tax assets
and liabilities are offset if there is a legally enforceable right
to set off corresponding current tax assets against current tax
liabilities and the deferred tax assets and deferred tax liabilities
relate to income taxes levied by the same tax authority on the
Company.

A deferred tax asset is recognised to the extent that it is probable
that future taxable profits will be available against which the
temporary difference can be utilised. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be
realised. Withholding tax arising out of payment of dividends
to shareholders under the Indian Income tax regulations is not
considered as tax expense for the Company and all such taxes
are recognised in the statement of changes in equity as part of
the associated dividend payment.

Minimum Alternate Tax ('MAT') credit is recognised as deferred
tax asset only when and to the extent there is convincing
evidence that the Company will pay normal income tax during
the period for which the MAT credit can be carried forward for
set-off against the normal tax liability. MAT credit recognised
as an asset is reviewed at each Balance Sheet date and written
down to the extent the aforesaid convincing evidence no longer
exists.

2.21. Earnings per share

The Company presents basic and diluted earnings per share
("EPS") data for its equity shares. Basic EPS is calculated by
dividing the profit or loss attributable to equity shareholders of
the Company by the weighted average number of equity shares
outstanding during the period. Diluted EPS is determined by
adjusting the profit or loss attributable to equity shareholders
and the weighted average number of equity shares outstanding
for the effects of all dilutive potential ordinary shares, which
includes all stock options granted to employees.

2.22. Foreign Currency

Foreign currency transactions

Transactions in foreign currencies are translated to the
respective functional currencies of entities within the Company
at exchange rates at the dates of the transactions. Monetary
assets and liabilities denominated in foreign currencies at the
reporting date are translated into the functional currency at the
exchange rate at that date. Exchange differences arising on the
settlement of monetary items or on translating monetary items
at rates different from those at which they were translated on
initial recognition during the period or in previous financial
statements are recognized in the income statement in the period
in which they arise. When several exchange rates are available,
the rate used is that at which the future cash flows represented
by the transaction or balance could have been settled if those
cash flows had occurred at the measurement date.

2.23. Research and development

Expenditures on research activities undertaken with the
prospect of gaining new scientific or technical knowledge and
understanding are recognized in the income statement when
incurred. Development activities involve a plan or design for
the production of new or substantially improved products and
processes. Development expenditures are capitalized only if:

• development costs can be measured reliably;

• the product or process is technically and commercially
feasible;

• future economic benefits are probable; and

• the Company intends to and has sufficient resources to
complete development and to use or sell the asset.

The expenditures to be capitalized include the cost of materials
and other costs directly attributable to preparing the asset for its
intended use. Other development expenditures are recognized
in the income statement as incurred.

3. RECENT ACCOUNTING PRONOUNCEMENTS

The Ministry of Corporate Affairs (MCA) on 23rd March, 2022
through companies (Indian Accounting Standards) Amendment
Rules, 2022 has notified the following amendments to IND AS
which are applicable on 1st April 2022:

3.1. Ind AS 16 - Property, Plant and equipment -

The amendment clarifies that excess of net sale proceeds of
items produced over the cost of testing, if any, shall not be
recognised in the profit or loss but deducted from the directly
attributable costs considered as part of cost of an item of
property, plant and equipment. The amendment prohibits an
entity from deducting from the cost of property, plant and
equipment amounts received from selling items produced
while the company is preparing the asset for its intended
use. Instead, an entity will recognise such sales proceeds and
related cost in the profit or loss The Company does not expect
the amendments to have any impact in its recognition of its
property, plant and equipment in its financial statements.

3.2. Ind AS 37 - Provisions, Contingent Liabilities and Contingent
Assets

The amendment specifies that the cost of fulfilling a contract
comprises the costs that relate directly to the contract. Costs
that relate directly to a contract can either be incremental costs
of fulfilling that contract (examples would be direct labour,
materials) or an allocation of other costs that relate directly
to fulfilling contracts (examples depreciation charge). The
amendment is essentially a clarification, and the Company does
not expect the amendment to have any significant impact in its
financial statements.

3.3. Ind AS 103 - Reference to Conceptual Framework

The amendments specify that to qualify for recognition as part
of applying the acquisition method, the identifiable assets
acquired and liabilities assumed must meet the definitions of
assets and liabilities in the Conceptual Framework for Financial
Reporting under Indian Accounting Standards (Conceptual
Framework) issued by the Institute of Chartered Accountants of
India at the acquisition date. These changes do not significantly
change the requirements of Ind AS 103.

3.4. Ind AS 106 - Annual Improvements to Ind AS (2021)

The amendments remove the illustration of the reimbursement
of leasehold improvements by the lessor in order to resolve any
potential confusion regarding the treatment of lease incentives
that might arise because of how lease incentives were described
in that illustration. The Company is in the process of assessing
the impact of the amendment in its financial statements.

3.5. Ind AS 109 - Annual Improvements to Ind AS (2021)

The amendment clarifies which fees an entity includes when it
applies the '10 %' test of Ind AS 109 in assessing whether to
derecognise a financial liability. The Company is in the process
of assessing the impact of the amendment in its financial
statements.