Accounting Policies of Allied Blenders & Distillers Ltd. Company

Mar 31, 2025

2. Material accounting policy information

a. Basis of Preparation

The financial statements comply in all material aspects
with Indian Accounting Standards (Ind AS) notified under
Section 133 of the Companies Act, 2013 (the ‘Act’) and
Companies (Indian Accounting Standards) Rules, 2015,
as amended and other relevant provisions of the Act.

The accounting policies are applied consistently to all the
periods presented in the financial statements, except for
amendments applicable from a specified date.

The financial statements have been prepared on a
historical cost convention and accrual basis, except
for the certain financial assets and liabilities that are
measured at fair value.

All assets and liabilities have been classified as
current or non-current as per the Company’s normal
operating cycle (which is a period not exceeding twelve
months) and other criteria set out in Schedule III to
Companies Act, 2013.

b. Investment in subsidiaries

Investments in subsidiaries are accounted at cost less
impairment in accordance with Ind AS 27 - Separate
financial statements.

Where an indication of impairment exists, the carrying
amount of the investment is assessed and written
down immediately to its recoverable amount. The
recoverable amount is the higher of an asset’s fair value
less costs of disposal and value in use. On disposal
of investments the difference between net disposal
proceeds and the carrying amounts are recognised in the
Statement of profit and loss.

c. Foreign Currency Transactions

The functional currency of the Company is Indian rupee.

Transactions in foreign currency are recorded at exchange
rate prevailing on the date of transaction. Foreign
currency denominated monetary assets and liabilities

are translated at the exchange rate prevailing on the
Balance sheet date and exchange gain or loss arising on
their settlement and restatement are recognized in the
Statement of Profit and Loss.

Non-monetary assets and liabilities that are recorded in
terms of historical cost are not retranslated.

d. Revenue Recognition

Revenue is recognized on satisfaction of performance
obligation upon transfer of control of promised products
or services to customers, at an amount that reflects the
consideration expected to be received by the Company
in exchange for those products or services.

The Company satisfies a performance obligation and
recognises revenue over time, if one of the following
criteria is met:

i. The customer simultaneously receives and
consumes the benefits provided by the Company’s
performance as the Company performs; or

ii. The Company’s performance creates or enhances
an asset that the customer controls as the asset is
created or enhanced; or

iii. The Company’s performance does not create an
asset with an alternative use to the Company and
an entity has an enforceable right to payment for
performance completed to date.

For performance obligations where none of the above
conditions are met, revenue is recognised at the point in
time at which the performance obligation is satisfied.

Revenue from sale of products are recognised by the
Company at a point in time on which the performance
obligation is satisfied.

Revenue from sale of products

Revenue is recognised on transfer of control, being
on dispatch of goods or upon delivery to customer, in
accordance with the terms of sale.

Revenue from manufacture and sale of products from
tie-up manufacturing arrangements:

The Company has entered into arrangements with
Tie-up Manufacturing Units (TMUs), where-in TMUs
manufacture and sell on behalf of the Company. Under
such arrangements, the Company has exposure to
significant risks and rewards associated with the sale
of products i.e., it has the primary responsibility for
providing goods to the customer, has pricing latitude and
is also exposed to inventory and credit risks. Accordingly,
the transactions of the TMUs under such arrangements
have been recorded as gross revenue, excise duty and

expenses as if they were transactions of the Company.
The Company also presents inventory lying with TMU’s
under such arrangements as its own inventory.

The net receivables from/payable to TMUs are recognised
under other financial assets/other financial liabilities as
due from tie up units or due to tie up units respectively.

Interest

Interest income for all debt instruments 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
instrument (for example, prepayment, extension,
call and similar options) but does not consider the
expected credit losses.

e. Income tax

Income tax expense comprises current tax expenses and
net change in the deferred tax assets or liabilities during
the period. Current and deferred taxes are recognised in
the Statement of profit and loss, except when they relate
to item that are recognised in Other comprehensive
income or directly in Equity, in which case, the current and
deferred tax are also recognised in Other comprehensive
income or directly in Equity respectively.

The income tax expense or credit for the period is the tax
payable on the current period’s taxable income based
on the applicable income tax rate adjusted by changes
in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis
of the tax laws enacted in relation to the reporting period.

Deferred income tax is recognised using Balance sheet
approach. Deferred income tax assets and liabilities
are recognised for deductible and taxable temporary
differences arising between the tax base of assets and
liabilities and their carrying amount, except when the
deferred income tax arises from the initial recognition of
an asset or liability in a transaction that is not a business
combination and affects neither accounting nor taxable
profit or loss at the time of recognition.

Deferred tax asset is recognised to the extent that
sufficient taxable profit will be available against which
the deductible temporary differences and the carry
forward of unused tax credits and unused tax losses
can be utilised. Deferred income tax is determined
using tax rates (and laws) that have been enacted or
substantively 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 are reviewed at each reporting date and reduced
when it is no longer probable that sufficient taxable
profit will be available to allow the full or part of deferred
income tax assets to be utilised. At each reporting date,
the Company re-assesses unrecognized deferred tax
assets. It recognizes unrecognized deferred tax asset
to the extent that it has become reasonably certain, as
the case may be, that sufficient future taxable income
will be available against which such deferred tax assets
can be realized.

Deferred tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate
to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on
a net basis, or to realise the asset and settle the liability
simultaneously.

While determining the tax provisions, the Company
assesses whether each uncertain tax position is to be
considered separately or together with one or more
uncertain tax positions depending upon the nature and
circumstances of each uncertain tax position.

f. Leases
As a lessee

The Company applies a single recognition and
measurement approach for all leases, except for
short-term leases and leases of low-value assets. The
Company recognises lease liabilities to make lease
payments and right-of-use assets representing the right
to use the underlying assets.

i. Right of use assets

The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses (if any), and
adjusted for any re-measurement of lease liabilities.
The cost of right-of-use assets includes the amount
of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before
the commencement date less any lease incentives
received. Right-of-use assets are depreciated on a
straight-line basis over the shorter of the lease term
and the estimated useful lives of the assets.

The right-of-use assets are also subject to
impairment. Refer to the accounting policies note g
for impairment of non-financial assets.

ii. Lease liabilities

At the commencement date of the lease, the Company
recognises lease liabilities measured at the present
value of lease payments to be made over the lease
term. The lease payments include fixed payments
(including in-substance fixed payments) less any
lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees.
The lease payments also include the exercise price of
a purchase option reasonably certain to be exercised
by the Company and payments of penalties for
terminating the lease, if the lease term reflects the
Company exercising the option to terminate. Variable
lease payments that do not depend on an index or
a rate are recognised as expenses (unless they are
incurred to produce Property plant and equipment) in
the period in which the event or condition that triggers
the payment occurs.

In calculating the present value of lease payments,
the Company uses its incremental borrowing rate at
the lease commencement date because the interest
rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change
in the lease term, a change in the lease payments
(e.g., changes to future payments resulting from a
change in an index or rate used to determine such
lease payments) or a change in the assessment of
an option to purchase the underlying asset.

The Company’s lease liabilities are included in
financial liability

iii. Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition
exemption to its short-term leases of machinery and
equipment (i.e., those leases that have a lease term of
12 months or less from the commencement date and
do not contain a purchase option). It also applies the
lease of low-value assets recognition exemption to
leases of laptops, lease-lines and office furniture and
equipment that are considered to be low value. Lease
payments on short-term leases and leases of low-
value assets are recognised as expense on a straight¬
line basis over the lease term.

g. Impairment of non-financial assets

The carrying amount of the non-financial assets are
reviewed at each Balance Sheet date to confirm if
there is any indication of impairment based on internal
/external factors. An impairment loss is recognised

whenever the carrying amount of an asset or a cash
generating unit exceeds its recoverable amount. The
recoverable amount of the assets (or where applicable,
that of the cash generating unit to which the asset
belongs) is estimated as the higher of its net selling price
and its value in use. Impairment loss is recognised in the
statement of profit and loss.

After impairment, depreciation / amortisation is provided
on the revised carrying amount of the asset over its
remaining useful life.

A previously recognised impairment loss is increased
or reversed depending on changes in circumstances.
However, the carrying value after reversal is not
increased beyond the carrying value that would have
prevailed by charging usual depreciation / amortisation
if there were no impairment.

h. Inventories

Raw materials, work-in-progress, finished goods and
packing materials are carried at the lower of cost and
net realisable value. Damaged, non-moving / obsolete
stocks are suitably written down/provided for.

In determining cost of raw materials, packing materials,
work-in-progress and finished goods weighted average
cost method is used. Cost of raw material comprises all
costs of purchase, non-refundable duties and taxes and
all other costs incurred in bringing the inventory to their
present location and condition.

Cost of work-in-progress and finished goods includes the
cost of raw materials, packing materials, an appropriate
share of fixed and variable production overheads, excise
duty as applicable and other costs incurred in bringing
the inventories to their present location and condition.

i. Financial Instruments

A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.

a) Financial Assets

(i) Initial Recognition

In the case of financial assets (excluding trade
receivables that do not consist of significant
financial component), not recorded at fair
value through profit or loss (FVPL), financial
assets are recognised initially at fair value
plus transaction costs that are directly
attributable to the acquisition of the financial
asset. Purchases or sales of financial assets
that require delivery of assets within a time
frame established by regulation or convention
in the market place (regular way trades) are
recognised on the trade date, i.e., the date
that the Company commits to purchase or
sell the asset.

(ii) Subsequent Measurement

For purposes of subsequent measurement,
financial assets are classified in
following categories

• Financial Assets at Amortised Cost

Financial assets are subsequently measured
at amortised cost if these financial assets
are held within a business model with
an objective to hold these assets in order
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. Interest
income from these financial assets is included
in finance income using the effective interest
rate (“EIR”) method. Impairment gains or
losses arising on these assets are recognised
in the Statement of Profit and Loss.

• Financial Assets Measured at Fair Value

Financial assets are measured at fair value
through Other Comprehensive Income (‘OCI’) if
these financial assets are held within a business
model with an objective to hold these assets in
order to collect contractual cash flows and to
sell these 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. Movements in the carrying amount
are taken through OCI, except for the recognition
of impairment gains or losses, interest revenue
and foreign exchange gains and losses which are
recognised in the Statement of Profit and Loss.

Financial asset not measured at amortised cost
or at fair value through OCI is carried at FVTPL.
In respect of equity investments (other than for
investment in subsidiaries) which are not held for
trading, the Company has made an irrevocable
election to present subsequent changes in the fair
value of such instruments in Statement of Profit
and Loss. Such an election is made by the Company
on an instrument by instrument basis at the time
of transition for existing equity instruments/ initial
recognition for new equity instruments

(iii) Equity investments

All equity investments in scope of Ind AS 109
are measured at fair value. Equity instruments
included within the FVTPL category are
measured at fair value with all changes
recognized in the statement of profit and loss.

(iv) Impairment of Financial Assets

In accordance with Ind AS 109, the Company
applies the expected credit loss (“ECL”)
model for measurement and recognition of
impairment loss on financial assets and credit
risk exposures.

For recognition of impairment loss on other
financial assets and risk exposure, the
Company determines that whether there has
been a significant increase in the credit risk
since initial recognition. If credit risk has not
increased significantly, 12-month ECL is used
to provide for impairment loss. However, if
credit risk has increased significantly, lifetime
ECL is used. If, in a subsequent period, credit
quality of the instrument improves such that
there is no longer a significant increase in
credit risk since initial recognition, then the
entity reverts to recognising impairment loss
allowance based on 12-month ECL.

ECL 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 entity expects to receive (i.e., all
cash shortfalls), discounted at the original EIR.
Lifetime ECL are the expected credit losses
resulting from all possible default events over
the expected life of a financial instrument.
The 12-month ECL is a portion of the lifetime
ECL which results from default events that
are possible within 12 months after the
reporting date.

ECL impairment loss allowance (or reversal)
recognised during the period is recognised
as income/ expense in the Statement of
Profit and Loss.

(v) De-recognition of Financial Assets

The Company de-recognises a financial asset
only when the contractual rights to the cash
flows from the asset expire, or it transfers
the financial asset and substantially all risks
and rewards of ownership of the asset to
another entity.

If the Company neither transfers nor retains
substantially all the risks and rewards of
ownership and continues to control the
transferred asset, the Company recognizes
its retained interest in the assets and an
associated liability for amounts it may have
to pay. If the Company retains substantially
all the risks and rewards of ownership of a
transferred financial asset, the Company

continues to recognise the financial asset and
also recognises a collateralised borrowing for
the proceeds received.

b) Equity Instruments and Financial Liabilities

Financial liabilities and equity instruments issued
by the Company are classified according to the
substance of the contractual arrangements entered
into and the definitions of a financial liability and an
equity instrument.

Equity Instruments

An equity instrument is any contract that evidences
a residual interest in the assets of the Company after
deducting all of its liabilities. Equity instruments
which are issued for cash are recorded at the
proceeds received, net of direct issue costs. Equity
instruments which are issued for consideration
other than cash are recorded at fair value of the
equity instrument.

Financial Liabilities

• Initial Recognition

Financial liabilities are classified, at initial
recognition, as financial liabilities at FVTPL, loans
and borrowings and payables as appropriate. All
financial liabilities are recognised initially at fair
value and, in the case of loans and borrowings
and payables, net of directly attributable
transaction costs.

• Subsequent Measurement

The measurement of financial liabilities depends on
their classification, as described below

Financial liabilities at FVTPL:

Financial liabilities at FVTPL include financial
liabilities held for trading and financial liabilities
designated upon initial recognition as at FVTPL.
Financial liabilities are classified as held for trading
if they are incurred for the purpose of repurchasing
in the near term. Gains or losses on liabilities held
for trading are recognised in the Statement of
Profit and Loss.

Financial liabilities at amortised cost

After initial recognition, interest-bearing borrowings
and other payables are subsequently measured
at amortised cost using the EIR method. Gains
and losses are recognised in statement of profit
and loss when the liabilities are derecognised
as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account
any discount or premium on acquisition and fees or
costs that are an integral part of the EIR. The EIR

amortisation is included as finance costs in the
statement of profit and loss.

• De-recognition of Financial Liabilities

Financial liabilities are de-recognised when the
obligation specified in the contract is discharged,
cancelled or expired. When an existing financial
liability is replaced by another from the same lender
on substantially different terms, or the terms of an
existing liability are substantially modified, such
an exchange or modification is treated as de¬
recognition of the original liability and recognition
of a new liability. The difference in the respective
carrying amounts is recognised in the Statement of
Profit and Loss.

• Offsetting Financial Instruments

Financial assets and financial liabilities are offset
and the net amount is reported in the Balance Sheet
if there is a currently enforceable legal right to offset
the recognised amounts and there is an intention to
settle on a net basis to realize the assets and settle
the liabilities simultaneously.

c) Cash and cash equivalents

For the purpose of presentation in the statement
of cash flows, cash and cash equivalents includes
cash on hand, deposits held at call with financial
institutions, 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, and
bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the balance sheet.

d) Trade receivable

Trade receivables are amounts due from customers
for goods sold or services performed in the
ordinary course of business and reflects Company’s
unconditional right to consideration (that is,
payment is due only on the passage of time).
Trade receivables that do not contain significant
financing components and for which the Company
has applied the practical expedient are recognised
initially at the transaction price in accordance
with Ind AS 115.

e) Trade payable

A payable is classified as a ‘trade payable’ if it is
in respect of the amount due on account of goods
purchased or services received in the normal course
of business. These amounts represent liabilities for
goods and services provided to the Company prior
to the end of the financial year which are unpaid.

These amounts are unsecured and are usually
settled as per the payment terms stated in the
contract. Trade and other payables are presented
as current liabilities unless payment is not due
within 12 months after the reporting period. They
are recognised initially at their fair value and
subsequently measured at amortised cost using
the EIR method.

j. Property plant and equipment (including Capital
Work-in-Progress)

Freehold land is carried at historical cost less impairment
loss, if any. All other items of property, plant and
equipment are stated at historical cost less accumulated
depreciation / amortisation and impairment loss, if any.
Historical cost includes expenditure that is attributable
to the acquisition/ construction and all other costs
(including borrowing related to qualifying assets), that
are not refundable and are necessary to bring the asset
to its working condition of use as intended.

Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate,
only when it is possible that future economic benefits
associated with the item will flow to the Company
and the cost of the item can be measured reliably. The
carrying amount of any component accounted for as a
separate asset is derecognised when replaced. All other
repairs and maintenance are charged to statement
of profit and loss during the reporting period in which
they are incurred.

The cost of property, plant and equipment which
are incurred before the date they are ready for their
intended use, are disclosed as capital work-in-progress
before such date.

Gains or losses arising from derecognition of property,
plant and equipment are measured as the difference
between the net disposal proceeds and the carrying
amount of the asset and are recognised in the statement
of profit and loss when the asset is derecognised.

Depreciation / Amortisation:

Depreciation is charged on written down value method
on the basis of useful life of assets (mentioned below)
keeping a residual value of assets at 5% of the original
cost, except in case of computers and data processing
units where residual value is estimated at 1% of the
original cost. The assets residual values and useful
lives are reviewed, and adjusted if appropriate, at the
end of each reporting period. Depreciation is calculated
pro-rata from the date of addition or upto the date of
disposal, as the case may be. The Company depreciates
its property, plant and equipment (PPE) over useful life
in manner prescribed in Schedule II to the Act, except
factory building, wherein based on technical evaluation,

Capital costs in respect of upgradation of leased
premises has been amortized over the initial lease period
or its useful lives whichever is lower.

On transition to Ind AS, the Company has elected to
continue with the carrying value of all of its property, plant
and equipment recognised as at 1 April 2017 measured
as per the previous GAAP and use that carrying value as
the deemed cost of the property, plant and equipment.

k. Intangible Assets and amortisation

Intangible assets with a finite useful life are carried at
cost less accumulated amortisation and accumulated
impairment losses, if any. Cost includes expenditure that
is attributable to the acquisition/ development of the
intangible assets including cost necessary to bring the
asset to its intended use or sale.

Identifiable intangible assets are recognised when it is
probable that future economic benefits attributed to the
asset will flow to the Company and the cost of the asset
can be reliably measured.

Software and related implementation costs are
capitalized where it is expected to provide enduring
economic benefits and are amortized over a period of 5
years starting from the month of addition.

Manufacturing License is considered as an asset with
indefinite useful life, since there is no foreseeable limit to
the period over which the asset is expected to generate
net cash inflows for the entity. The acquisition cost of
such asset is carried at deemed cost and is tested for
impairment annually.

Brand, Patent, trademarks and design, and license
(other than manufacturing license) acquisition cost are
amortised over a period of 10 years from the month
of acquisition.

Goodwill represents the cost of acquired business as
established at the date of acquisition of the business in
excess of the acquirer’s interest in the net fair value of
the identifiable assets, liabilities and contingent liabilities
less accumulated impairment losses, if any. Goodwill
is tested for impairment annually or when events or
circumstances indicate that the implied fair value of
goodwill is less than its carrying amount.

Digital Content is amortised over a period of 18 months
to 24 months from the month of capitalisation.

Gains or losses arising from derecognition of an
intangible asset are measured as the difference between
the net disposal proceeds and the carrying amount of
the asset and are recognised in the statement of profit
and loss when the asset is derecognised.

On transition to Ind AS, the Company has elected to
continue with the carrying value of all of its intangible
assets recognised as at 1 April 2017 measured as per
the previous GAAP and use that carrying value as the
deemed cost of the intangible assets.

l. Borrowings

Borrowings are initially recognised at fair value (net of
transaction costs incurred). Any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognized in Statement of profit and loss over
the period of the borrowings using the effective interest
method. Subsequently all borrowings are measured at
amortised cost using the effective interest rate method.

Borrowings are derecognized from the balance
sheet when the obligation specified in the contract
is discharged, cancelled or expired. The difference
between the carrying amount of a financial liability that
has been extinguished or transferred to another party
and the consideration paid, including any non-cash
assets transferred or liabilities assumed, is recognised in
statement of profit and loss. The gain / loss is recognised
in other equity in case of transaction with shareholders.

m. Borrowing Costs

General and specific 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, are added to the cost of those assets, until
such time the assets are substantially ready for their
intended use. All other borrowing costs are recognised
as an expense in statement of Profit and Loss in the
period in which they are incurred.

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Mar 31, 2024

2 MATERIAL ACCOUNTING POLICIES

a. Basis of Preparation

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the ''Act'') and Companies (Indian Accounting Standards) Rules, 2015, as amended and other relevant provisions of the Act.

The accounting policies are applied consistently to all the periods presented in the financial statements, except for amendments applicable from a specified date.

The financial statements have been prepared on a historical cost convention and accrual basis, except for the certain financial assets and liabilities that are measured at fair value.

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle (which is a period not exceeding twelve months) and other criteria set out in Schedule III to Companies Act, 2013.

b. Investment in subsidiaries

Investments in subsidiaries are accounted at cost less impairment in accordance with Ind AS 27 - Separate financial statements.

Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. The recoverable amount is the higher of an asset''s fair value less costs of disposal and value in use. On disposal of investments the difference between net disposal proceeds and the carrying amounts are recognised in the Statement of profit and loss.

c. Foreign Currency Transactions

The functional currency of the Company is Indian rupee.

Transactions in foreign currency are recorded at exchange rate prevailing on the date of transaction. Foreign currency denominated monetary assets and liabilities are translated at the exchange rate prevailing on the Balance sheet date and exchange gain or loss arising on their settlement and restatement are recognized in the Statement of Profit and Loss.

Non-monetary assets and liabilities that are recorded in terms of historical cost are not retranslated.

d. Revenue Recognition

Revenue is recognized on satisfaction of performance obligation upon transfer of control of promised products or services to customers, at an amount that reflects the consideration expected to be received by the Company in exchange for those products or services.

The Company satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:

i. The customer simultaneously receives and consumes the benefits provided by the Company''s performance as the Company performs; or

ii. The Company''s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

iii. The Company''s performance does not create an asset with an alternative use to the Company and an entity has an enforceable right to payment for performance completed to date.

For performance obligations where none of the above conditions are met, revenue is recognised at the point in time at which the performance obligation is satisfied.

Revenue from sale of products are recognised by the Company at a point in time on which the performance obligation is satisfied.

Revenue from sale of products

Revenue is recognised on transfer of control, being on dispatch of goods or upon delivery to customer, in accordance with the terms of sale.

Revenue from manufacture and sale of products from tie-up manufacturing arrangements:

The Company has entered into arrangements with Tie-up Manufacturing Units (TMUs), where-in TMUs manufacture and sell on behalf of the Company. Under such arrangements, the Company has exposure to significant risks and rewards associated with the sale of products i.e., it has the primary responsibility for providing goods to the customer, has pricing latitude and is also exposed to inventory and credit risks. Accordingly, the transactions of the TMUs under such arrangements have been recorded as gross revenue, excise duty and expenses as if they were transactions of the Company. The Company also presents inventory lying with TMU''s under such arrangements as its own inventory.

The net receivables from/payable to TMUs are recognised under other financial assets/other financial liabilities as due from tie up units or due to tie up units respectively.

Interest

Interest income for all debt instruments 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 instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.

e. Income tax

Income tax expense comprises current tax expenses and net change in the deferred tax assets or liabilities during the period. Current and deferred taxes are recognised in the Statement of profit and loss, except when they relate to item that are recognised in Other comprehensive income or directly in Equity, in which case, the current and deferred tax are also recognised in Other comprehensive income or directly in Equity respectively.

The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted in relation to the reporting period.

Deferred income tax is recognised using Balance sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount, except when the deferred income tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of recognition.

Deferred tax asset is recognised to the extent that sufficient taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively 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 are reviewed at each reporting date and reduced when it is no longer probable that sufficient taxable profit will be available to allow the full or part of deferred income tax assets to be utilised. At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India which is likely to give future economic benefit in the form of availability of setoff against future income tax liability. Accordingly, MAT is recognised as deferred tax assets in the Balance sheet when the assets can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.

While determining the tax provisions, the Company assesses whether each uncertain tax position is to be considered separately or together with one or more uncertain tax positions depending upon the nature and circumstances of each uncertain tax position.

f. Leases

As a lessee

The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

i. Right of use assets

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses (if any), and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.

The right-of-use assets are also subject to impairment. Refer to the accounting policies note g for impairment of nonfinancial assets.

ii. Lease liabilities

At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce Property plant and equipment) in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

The Company''s lease liabilities are included in financial liability.

iii. Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of laptops, lease-lines and office furniture and equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

g. Impairment of non-financial assets

The carrying amount of the non-financial assets are reviewed at each Balance Sheet date to confirm if there is any indication of impairment based on internal /external factors. An impairment loss is recognised whenever the carrying amount of an asset or a cash generating unit exceeds its recoverable amount. The recoverable amount of the assets (or where applicable, that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. Impairment loss is recognised in the statement of profit and loss.

After impairment, depreciation / amortisation is provided on the revised carrying amount of the asset over its remaining useful life.

A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation / amortisation if there were no impairment.

h. Inventories

Raw materials, work-in-progress, finished goods and packing materials are carried at the lower of cost and net realisable value. Damaged, non-moving / obsolete stocks are suitably written down/provided for.

In determining cost of raw materials, packing materials, work-in-progress and finished goods weighted average cost method is used. Cost of raw material comprises all costs of purchase, non-refundable duties and taxes and all other costs incurred in bringing the inventory to their present location and condition.

Cost of work-in-progress and finished goods includes the cost of raw materials, packing materials, an appropriate share of fixed and variable production overheads, excise duty as applicable and other costs incurred in bringing the inventories to their present location and condition.

i. Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

a) Financial Assets

(i) Initial Recognition

In the case of financial assets (excluding trade receivables that do not consist of significant financial component), not recorded at fair value through profit or loss (FVPL), financial assets are recognised initially at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

(ii) Subsequent Measurement

For purposes of subsequent measurement, financial assets are classified in following categories

• Financial Assets at Amortised Cost

Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model with an objective to hold these assets in order 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. Interest income from these financial assets is included in finance income using the effective interest rate ("EIR") method. Impairment gains or losses arising on these assets are recognised in the Statement of Profit and Loss.

• Financial Assets Measured at Fair Value

Financial assets are measured at fair value through Other Comprehensive Income (''OCI'') if these financial assets are held within a business model with an objective to hold these assets and collect contractual cash flows or to sell these 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. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the Statement of Profit and Loss.

Financial asset not measured at amortised cost or at fair value through OCI is carried at FVPL. In respect of equity investments (other than for investment in subsidiaries) which are not held for trading, the Company has made an irrevocable election to present subsequent changes in the fair value of such instruments in Statement of Profit and Loss. Such an election is made by the Company on an instrument by instrument basis at the time of transition for existing equity instruments/ initial recognition for new equity instruments

(iii) Equity investments

All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.

(iv) Impairment of Financial Assets

In accordance with Ind AS 109, the Company applies the expected credit loss ("ECL") model for measurement and recognition of impairment loss on financial assets and credit risk exposures.

For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.

ECL 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 entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.

ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the Statement of Profit and Loss.

(v) De-recognition of Financial Assets

The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.

If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the assets and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

b) Equity Instruments and Financial Liabilities

Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity Instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments which are issued for cash are recorded at the proceeds received, net of direct issue costs. Equity instruments which are issued for consideration other than cash are recorded at fair value of the equity instrument.

Financial Liabilities

• Initial Recognition

Financial liabilities are classified, at initial recognition, as financial liabilities at FVPL, loans and borrowings and payables as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

• Subsequent Measurement

The measurement of financial liabilities depends on their classification, as described below

Financial liabilities at FVPL:

Financial liabilities at FVPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the Statement of Profit and Loss.

Financial liabilities at amortised cost

After initial recognition, interest-bearing borrowings and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in statement of profit and loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.

• De-recognition of Financial Liabilities

Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as de-recognition of the original liability and recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.

• Offsetting Financial Instruments

Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis to realize the assets and settle the liabilities simultaneously.

c) Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, 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, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

d) Trade receivable

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business and reflects company''s unconditional right to consideration (that is, payment is due only on the passage of time). Trade receivables are recognised initially at the transaction price as they do not contain significant financing components. The company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them initially at contracted price and subsequently at amortised cost using the effective interest method, less loss allowance.

e) Trade payable

A payable is classified as a ''trade payable'' if it is in respect of the amount due on account of goods purchased or services received in the normal course of business. These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. These amounts are unsecured and are usually settled as per the payment terms stated in the contract. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the EIR method.

j. Property plant and equipment (including Capital Work-in-Progress)

Freehold land is carried at historical cost less impairment loss, if any. All other items of property, plant and equipment are stated at historical cost less accumulated depreciation / amortisation and impairment loss, if any. Historical cost includes expenditure that is attributable to the acquisition/ construction and all other costs (including borrowing related to qualifying assets), that are not refundable and are necessary to bring the asset to its working condition of use as intended.

Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is possible that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to statement of profit and loss during the reporting period in which they are incurred.

The cost of property, plant and equipment which are incurred before the date they are ready for their intended use, are disclosed as capital work-in-progress before such date.

Gains or losses arising from derecognition of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.

Depreciation / Amortisation:

Depreciation is charged on written down value method on the basis of useful life of assets (mentioned below) keeping a residual value of assets at 5% of the original cost, except in case of computers and data processing units where residual value is estimated at 1% of the original cost. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Depreciation is calculated pro-rata from the date of addition or upto the date of disposal, as the case may be. The Company depreciates its property, plant and equipment (PPE) over useful life in manner prescribed in Schedule II to the Act, except factory building, wherein based on technical evaluation, useful life has been estimated to be different from that prescribed in Schedule II of the Act.

Capital costs in respect of upgradation of leased premises has been amortized over the initial lease period or its useful lives whichever is lower.

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2017 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.

k. Intangible Assets and amortisation

Intangible assets with a finite useful life are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Cost includes expenditure that is attributable to the acquisition/ development of the intangible assets including cost necessary to bring the asset to its intended use or sale.

Identifiable intangible assets are recognised when it is probable that future economic benefits attributed to the asset will flow to the Company and the cost of the asset can be reliably measured.

Software and related implementation costs are capitalized where it is expected to provide enduring economic benefits and are amortized over a period of 5 years starting from the month of addition.

Manufacturing License is considered as an asset with indefinite useful life, since there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity. The acquisition cost of such asset is carried at deemed cost and is tested for impairment annually.

Patent, trademarks and design, and license (other than manufacturing license) acquisition cost are amortised over a period of 10 years from the month of acquisition

Goodwill represents the cost of acquired business as established at the date of acquisition of the business in excess of the acquirer''s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities less accumulated impairment losses, if any. Goodwill is tested for impairment annually or when events or circumstances indicate that the implied fair value of goodwill is less than its carrying amount.

Digital Content is amortised over a period of 18 months to 24 months from the month of capitalisation.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as at 1 April 2017 measured as per the previous GAAP and use that carrying value as the deemed cost of the intangible assets.

l. Borrowings

Borrowings are initially recognised at fair value (net of transaction costs incurred). Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in Statement of profit and loss over the period of the borrowings using the effective interest method. Subsequently all borrowings are measured at amortised cost using the effective interest rate method.

Borrowings are derecognized from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in statement of profit and loss. The gain / loss is recognised in other equity in case of transaction with shareholders.

m. Borrowing Costs

General and specific 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, are added to the cost of those assets, until such time the assets are substantially ready for their intended use. All other borrowing costs are recognised as an expense in statement of Profit and Loss in the period in which they are incurred.