Accounting Policies of Credo Brands Marketing Ltd. Company

Mar 31, 2025

2 MATERIAL ACCOUNTING POLICIES

2.1 Basis of Preparation, Presentation and Measurement

The Standalone Financial Statements of the Company
comprises the Standalone Balance Sheet as at March 31,
2025, and the Standalone Statement of Profit and Loss
(including Other Comprehensive Income), the Standalone
Statement of Cash Flows and the Standalone Statement of
Changes in Equity for the year then ended and a summary
of material accounting policies and other explanatory
information (together referred to as the "Standalone
Financial Statements").

The Standalone Financial Statements of the Company are
prepared in accordance with and in compliance, in all material
aspects with Indian Accounting Standards (Ind AS) notified
under Section 133 of the Companies Act, 2013 (the Act) read
along with Companies (Indian Accounting Standards) Rules,
as amended and other relevant provisions of the Act. The
presentation of the Financial Statements is based on Ind AS
Schedule III of the Companies Act, 2013.

The Standalone Financial Statements of the Company have
been prepared on an accrual basis and in accordance with
the historical cost convention, unless otherwise stated.
All assets and liabilities are classified into current and
non-current generally based on the criteria of realisation /
settlement within a twelve month period from the balance
sheet date.

The Standalone Financial Statements are presented in
Indian Rupees (?) and all amounts disclosed in the financial
statements and notes have been rounded off to the nearest
millions, up to two places of decimal, unless otherwise
stated.

2.2 Functional and presentation currency

The Standalone Financial Statements are measured using
the currency of the primary economic environment in
which the entity operates (''the functional currency’). The
Standalone Financial Statements are presented in Indian
rupee (?), which is also the Company’s functional currency.
All amounts have been rounded-off to the nearest millions,
up to two places of decimal, unless otherwise indicated.
Amounts having absolute value of less than '' 5,000 have
been rounded-off and are presented as 0.00 millions in the
Standalone Financial Statements.

2.3 Current and non-current classification

The Company presents assets and liabilities in the
Standalone Balance Sheet based on current / non-current
classification. An asset is treated as current when it is:

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

- Held primarily for the purpose of trading

- 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.

A liability is current when:

- It is expected to be settled in normal operating cycle

- It is held primarily for the purpose of trading

- 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.

The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non¬
current assets and liabilities, respectively.

The operating cycle is the time between the acquisition of
assets for processing and their realisation in cash and cash

equivalents. Based on the nature of product and the time
between procurement of products and their realisation in
cash and cash equivalents, 12 months has been considered
by the Company for the purpose of current / non-current
classification of assets and liabilities.

2.4 Property, plant and equipment
Property plant and equipment are stated at their cost of
acquisition, less accumulated depreciation / amortisation
and impairment loss. Cost of an item of property, plant and
equipment includes purchase price including non-refundable
taxes and duties, borrowing cost directly attributable to the
qualifying asset, any costs directly attributable to bringing
the asset to the location and condition necessary for its
intended use and the present value of the expected cost
for the dismantling / decommissioning of the asset. Parts
(major components) of an item of Property, plant and
equipments having different useful lives are accounted as
separate items of property, plant and equipments.
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the Company and the
cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate
asset is derecognised when replaced. The other repairs
and maintenance are charged to profit or loss during the
reporting period in which they are incurred.

Capital work-in-progress comprises of cost incurred
on property, plant and equipment under construction /
acquisition that are not yet ready for their intended use at the
Balance Sheet Date. Advances paid towards the acquisition
of PPE outstanding at each reporting date is classified as
Capital Advances under "Other Non-Current Assets" and
assets which are not ready for intended use as on the
reporting date are disclosed as "Capital Work in Progress".

2.4.1 Depreciation method and estimated useful lives
Depreciation on the property, plant and equipment (other
than capital work in progress) is provided on a straight line
method over their useful lives which is in consonance of
useful life mentioned in Schedule II to the Companies Act,
2013. The estimated useful lives are as under:

Plant and equipment 15 years

Furniture and fixtures* 10 years

Office equipment 5 years

Vehicles 8 years

Computers 3 years

Leasehold improvements are amortised on a straight line
basis over the respective lease term.

*The Company, based on technical assessment made by
the management, depreciates certain items of furniture and
fixtures at its retail stores at lives which are different from

the useful life prescribed in Schedule II to the Companies
Act, 2013, as detailed below.

Mannequin 5 Years

Signages 3 Years

Other Furniture and Fixtures at Stores 5 years

The management believes that these estimated useful lives
are realistic and reflect fair approximation of the period over
which the assets are likely to be used.

Depreciation method and useful lives are reviewed at each
financial year end and adjusted prospectively.

2.4.2 Derecognition

An item of property, plant and equipment and any significant
part initially recognised is de-recognised upon disposal or
when no future economic benefits are expected from its use
or disposal. Any gain or loss arising on de-recognition of the
asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included
in Profit or Loss when the asset is de-recognised.

2.5 Intangible assets

2.5.1 Recognition and measurement

Intangible assets that are acquired by the Company are stated
at cost of acquisition less amortisation and impairment
losses, if any. Cost of an intangible asset includes purchase
price including non-refundable taxes and duties, borrowing
cost directly attributable to the qualifying asset and any
directly attributable expenditure on making the asset ready
for its intended use. Intangible assets are recognised only if
it is probable that the future economic benefits attributable
to asset will flow to the Company and the cost of asset can
be measured reliably. Subsequent expenditure is capitalised
only when it increases the future economic benefits from
the specific asset to which it relates. Intangible assets
under development comprises of cost incurred on intangible
assets under development that are not yet ready for their
intended use as at the reporting period.

2.5.2 Amortisation and useful lives

Intangible assets with finite lives comprise of trademarks /
brand and software, are amortised over the period of 5 years
and 3 years respectively on straight-line basis. Amortisation
methods and useful lives are reviewed at each financial year
end and adjusted prospectively.

2.5.3 Derecognition policy

An intangible asset is derecognised on disposal, or when
no future economic benefits are expected from use or
disposal. 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 profit or loss when the asset is
derecognised.

2.6 Impairment of non-financial assets

At the end of each reporting period, the Company reviews
the carrying amounts of its non-financial assets to
determine whether there is any indication that those assets
have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss (if
any). When it is not possible to estimate the recoverable
amount of an individual asset, the Company estimates the
recoverable amount of the cash generating unit to which
the asset belongs. When a reasonable and consistent basis
of allocation can be identified, corporate assets are also
allocated to individual cash-generating units, or otherwise
they are allocated to the smallest cash-generating units for
which a reasonable and consistent allocation basis can be
identified.

Recoverable amount is the higher of fair value less costs
of disposal and value in use. 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 for which the estimates of future
cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash generating unit) is
reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss.

When an impairment loss subsequently reverses, the
carrying amount of the asset (or a cash-generating unit) is
increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had
no impairment loss been recognised for the asset (or cash¬
generating unit) in prior years. A reversal of an impairment
loss is recognised immediately in profit or loss.

2.7 Investment properties

Investment properties are properties held to earn rentals
and / or for capital appreciation. Investment properties
are measured initially at cost, including transaction costs.
Subsequent to initial recognition, investment properties are
measured in accordance with Ind AS 16 requirements for
cost model.

Depreciation is recognised so as to write-off the cost over
the estimated useful life of 60 years, using the straight-line
method.

An investment property is derecognised upon disposal or
when the investment property is permanently withdrawn
form use and no future economic benefits are expected from
the disposal. Any gain or loss arising on derecognition of the

property (calculated as difference between the net disposal
proceeds and the carrying amount of the asset) is included
in the Statement of Profit or Loss in the period in which the
property is derecognised.

2.8 Leases

The Company’s lease asset primarily comprise of leases
for buildings / premises. The Company assesses whether a
contract contains a lease, at the inception of a contract. The
determination of whether a contract is (or contains) a lease
is based on the substance of the contract at the inception.
The contract is, or contains, a lease if the contract provide
lessee, the right to control the use of an identified asset for a
period of time in exchange for consideration. A lessee does
not have the right to use an identified asset if, at inception of
the contract, a lessor has a substantive right to substitute
the asset throughout the period of use.

The Company accounts for the lease arrangement as
follows:

(i) Where the Company is the lessee
Right of Use Asset

The Company applies single recognition and
measurement approach for all leases, except for
short term leases and leases of low value assets. On
the commencement of the lease, the Company, in its
Standalone Balance Sheet, recognised the right of use
asset at cost and lease liability at present value of the
lease payments to be made over the lease term.
Subsequently, the right of use asset is measured at
cost less accumulated depreciation [calculated on
straight line method] and any accumulated impairment
loss. Right-of-use assets are depreciated on a straight¬
line basis over the lease term as follows:

Asset category Lease Term

Lease hold premises 3 to 9 years

The right-of-use assets are also subject to impairment.
Refer to the accounting policies in note 2.6 on
impairment of non-financial assets.

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 a revenue generated from respective
stores, 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 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 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) or a change in
the assessment of an option to purchase the underlying
asset. The lease payment made, are apportioned
between the finance charge and the reduction of
lease liability, and are recognised as expense in the
Standalone Statement of profit and loss.

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 of assets 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.

Lease deposits given are a financial asset and are
measured at amortised cost under Ind AS 109 since
it satisfies Solely Payment of Principal and Interest
(SPPI) condition. The difference between the present
value and the nominal value of deposit is considered as
Right of Use Asset and depreciated over the lease term.
Unwinding of discount is treated as finance income and
recognised in the Standalone Statement of profit and
loss.

(ii) Where the Company is the lessor

Leases in which the Company does not transfer
substantially all the risks and rewards of ownership
of an asset are classified as operating leases. Rental
income arising is accounted for on a straight-line
basis over the lease term. Initial direct costs incurred
in negotiating and arranging an operating lease are
added to the carrying amount of the leased asset and

recognised over the lease term on the same basis as
rental income. Contingent rents are recognised as
revenue in the period in which they are earned.

Leases are classified as finance leases when
substantially all of the risks and rewards of ownership
transfer from the Company to the lessee. Amounts
due from lessees under finance leases are recorded
as receivables at the Company’s net investment in the
leases. Finance lease income is allocated to accounting
periods so as to reflect a constant periodic rate of return
on the net investment outstanding in respect of the
lease. Lease deposits received are financial instruments
(financial liability) and are measured at fair value on
initial recognition. The difference between the fair value
and the nominal value of deposits is considered as rent
in advance and recognised over the lease term on a
straight line basis. Unwinding of discount is treated as
interest expense (finance cost) for deposits received
and is accrued as per the EIR method.

2.9 Inventories

Inventories of raw material, finished good and stock-in-trade
are valued at the lower of cost (on First-in-First out basis) and
the net realisable value after providing for obsolescence and
other losses, where considered necessary. Cost includes all
charges in bringing the goods to the point of sale, including
other levies, transit insurance and receiving charges. Net
realisable value represents the estimated selling price for
inventories less all estimated costs of completion and costs
necessary to make the sale.

2.10 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 profit or loss in
the period in which they are incurred.

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Mar 31, 2024

2 MATERIAL ACCOUNTING POLICIES

2.1 Basis of Preparation, Presentation and Measurement

The Standalone Financial Statements of the Company comprises the Standalone Balance Sheet as at March 31, 2024, and the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Cash Flows and the Standalone Statement of Changes in Equity for the year then ended and a summary of material accounting policies and other explanatory information (together referred to as the "Standalone Financial Statements").

The Standalone Financial Statements of the Company are prepared in accordance with and in compliance, in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) read along with Companies (Indian Accounting Standards) Rules, as amended and other relevant provisions of the Act. The presentation of the Financial Statements is based on Ind AS Schedule III of the Companies Act, 2013.

The Standalone Financial Statements of the Company have been prepared on an accrual basis and in accordance with the historical cost convention, unless otherwise stated. All assets and liabilities are classified into current and non-current generally based on the criteria of realisation/ settlement within a twelve month period from the balance sheet date.

The Standalone Financial Statements are presented in Indian Rupees and all amounts disclosed in the financial statements and notes have been rounded off to the nearest million, unless otherwise stated.

2.2 Functional and Presentation Currency

The Standalone Financial Statements are measured using the currency of the primary economic environment in which the entity operates (''the functional currency’). The Standalone Financial Statements are presented in Indian rupee (''), which is also the Company’s functional currency. All amounts have been rounded-off to the nearest million, up to two places of decimal, unless otherwise indicated. Amounts having absolute value of less than '' 5,000 have been rounded and are presented as '' 0.00 million in the Standalone Financial Statements.

2.3 Current and non-current classification

The Company presents assets and liabilities in the Standalone Balance Sheet based on current / non-current classification. An asset is treated as current when it is:

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

- Held primarily for the purpose of trading.

- 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.

A liability is current when:

- It is expected to be settled in normal operating cycle.

- It is held primarily for the purpose of trading.

- 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.

The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as noncurrent assets and liabilities, respectively.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. Based on the nature of service and the

time between rendering of services and their realisation in cash and cash equivalents, 12 months has been considered by the Company for the purpose of current / non-current classification of assets and liabilities.

2.4 Property, Plant & Equipment

Property plant and equipment are stated at their cost of acquisition, less accumulated depreciation/ amortisation and impairment loss. Cost of an item of property, plant and equipment includes purchase price including non - refundable taxes and duties, borrowing cost directly attributable to the qualifying asset, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and the present value of the expected cost for the dismantling / decommissioning of the asset. Parts (major components) of an item of Property, plant and equipments having different useful lives are accounted as separate items of property, plant and equipments. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. The other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Capital work-in-progress comprises of cost incurred on property, plant and equipment under construction / acquisition that are not yet ready for their intended use at the Balance Sheet Date. Advances paid towards the acquisition of PPE outstanding at each reporting date is classified as Capital Advances under "Other Non-Current Assets" and assets which are not ready for intended use as on the reporting date are disclosed as "Capital Work in Progress".

2.4.1 Depreciation method, estimated useful lives and residual value

Depreciation on the property, plant and equipment (other than capital work in progress) is provided on a straight line method over their useful lives which is in consonance of useful life mentioned in Schedule II to the Companies Act, 2013. The estimated useful lives are as under:

Plant and machinery 15 years Furniture and fixtures 10 years Office equipment 5 years

Vehicles 8 years

Computers 3 years

Leasehold improvements are amortised on a straight line

basis over lease term or 5 years whichever is less.

Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted prospectively.

2.4.2 Derecognition

An item of property, plant and equipment and any significant part initially recognised is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in Profit or Loss when the asset is de-recognised.

2.5 Intangible assets

2.5.1 Recognition and measurement

Intangible assets that are acquired by the Company are stated at cost of acquisition less amortisation and impairment losses, if any. Cost of an intangible asset includes purchase price including non - refundable taxes and duties, borrowing cost directly attributable to the qualifying asset and any directly attributable expenditure on making the asset ready for its intended use. Intangible assets are recognised only if it is probable that the future economic benefits attributable to asset will flow to the Company and the cost of asset can be measured reliably. Subsequent expenditure is capitalised only when it increases the future economic benefits from the specific asset to which it relates. Intangible assets under development comprises of cost incurred on intangible assets under development that are not yet ready for their intended use as at the reporting period.

2.5.2 Amortisation and useful lives

Intangible assets with finite lives comprise of trademarks/ brand and software, are amortised over the period of 5 years and 3 years respectively on straight-line basis. Amortisation methods and useful lives are reviewed at each financial year end and adjusted prospectively.

2.5.3 Derecognition policy

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. 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 profit or loss when the asset is derecognised.

2.6 Impairment of non-financial assets

At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication

exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest cash-generating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs of disposal and value in use. 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 for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cashgenerating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

2.7 Investment Property

Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16 requirements for cost model.

Depreciation is recognised so as to write-off the cost less residual value over the estimated useful life of 60 years, using the straight-line method.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn form use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit or Loss in the period in which the property is derecognised.

2.8 Leases

The Company’s lease asset classes primarily consist of leases for buildings. The Company assesses whether a contract contains a lease, at inception of a contract. The determination of whether a contract is (or contains) a lease is based on the substance of the contract at the inception of the lease. The contract is, or contains, a lease if the contract provide lessee, the right to control the use of an identified asset for a period of time in exchange for consideration. A lessee does not have the right to use an identified asset if, at inception of the contract, a lessor has a substantive right to substitute the asset throughout the period of use.

The Company accounts for the lease arrangement as follows:

(i) Where the Company is the lessee Right of Use Asset

The Company applies single recognition and measurement approach for all leases, except for short term leases and leases of low value assets. On the commencement of the lease, the Company, in its Standalone Balance Sheet, recognised the right of use asset at cost and lease liability at present value of the lease payments to be made over the lease term. Subsequently, the right of use asset is measured at cost less accumulated depreciation [calculated on straight line method] and any accumulated impairment loss. Right-of-use assets are depreciated on a straightline basis over the lease term as follows:

Asset category Lease Term

Lease hold premises 3 to 9 years

The right-of-use assets are also subject to impairment. Refer to the accounting policies in note 2.6 on impairment of non-financial assets.

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 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 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) or a change in the assessment of an option to purchase the underlying asset. The lease payment made, are apportioned between the finance charge and the reduction of lease liability, and are recognised as expense in the Consolidated Statements of profit and loss.

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 of assets 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.

Lease deposits given are a financial asset and are measured at amortised cost under Ind AS 109 since it satisfies Solely Payment of Principal and Interest (SPPI) condition. The difference between the present value and the nominal value of deposit is considered as Right of Use Asset and depreciated over the lease term. Unwinding of discount is treated as finance income and recognised in the Consolidated Statements of profit and loss.

) Where the Company is the lessor

Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease. Lease

deposits received are financial instruments (financial liability) and are measured at fair value on initial recognition. The difference between the fair value and the nominal value of deposits is considered as rent in advance and recognised over the lease term on a straight line basis. Unwinding of discount is treated as interest expense (finance cost) for deposits received and is accrued as per the EIR method.

2.9 Inventories

Inventories of raw material, finished good and stock-in-trade are valued at the lower of cost (on First-in-First out basis) and the net realisable value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to the point of sale, including and other levies, transit insurance and receiving charges. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

2.10 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 profit or loss in the period in which they are incurred.