Accounting Policies of HP Adhesives Ltd. Company

Mar 31, 2025

2 SUMMARY OF MATERIAL ACCOUNTING
POLICIES

This note provides a list of the significant accounting
policies adopted in the preparation of these standalone
financial statements. These policies have been
consistently applied to all the years presented, unless
otherwise stated.

Significant accounting policies adopted by the
Company are as under:

2.1 Basis of Preparation

These standalone Ind AS financial statements ("Ind
AS financial statements") have been prepared in
accordance with Indian Accounting Standards (''Ind ASâ)
notified under Section 133 of the Companies Act, 2013
(''the Actâ) read with the Companies (Indian Accounting
Standards) Rules, 2015 as amended by the Companies
(Indian Accounting Standards) Rules, 2016 and other
relevant provisions of the Act, to the extent applicable.

Accounting policies have been consistently applied
except where a newly issued accounting standard is
initially adopted or a revision to an existing accounting
standard requires a change in the accounting policy
hitherto in use.

As the year end figures are taken from the source and
rounded to the nearest digits, the figures reported for
the previous quarters might not always add up to the
year end figures reported in this statement.

(a) Functional and presentation currency

Items included in these standalone financial
statements of the Company are measured
using the currency of the primary economic
environment in which the Company operates
(''the functional currencyâ). The standalone Ind
AS financial statements are presented in Indian
rupee (''), which is also the Companyâs functional
currency. All amounts have been rounded-off to
the nearest Lakhs, up to two places of decimal,
unless otherwise indicated.

(b) Basis of measurement

The separate standalone financial statements of
the Company are prepared in accordance with
Indian Accounting Standards (Ind AS), under the
historical cost convention on the accrual basis
as per the provisions of the Companies Act, 2013
("the Act"), except for:

- Financial instruments - measured at fair
value;

- Plan assets under defined benefit plans -
measured at fair value;

- Asset & Liabilities recognised under Ind AS
116

In addition, for financial reporting purposes, fair
value measurements are categorised into Level 1,
2, or 3 based on the degree to which the inputs
to the fair value measurements are observable
and the significance of the inputs to the fair value
measurements in its entirety, which are described
as follows:

Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities
that the entity can access at the measurement
date;

Level 2 inputs are inputs, other than quoted prices
included within level 1, that are observable for the
asset or liability, either directly or indirectly; and

Level 3 inputs are unobservable inputs for the
asset or liability.

(c) Classification into current and non-current:

The Company presents assets and liabilities in the
standalone balance sheet based on current / nonÂ¬
current classification.

An asset is classified as current when it satisfies

any of the following criteria:

â¢ It is expected to be realised in, or is intended
for sale or consumption in, the Company''s
normal operating cycle;

â¢ It is held primarily for the purpose of being
traded;

â¢ It is expected to be realised within 12 months
after the reporting date; or

â¢ It is cash or cash equivalent unless it is
restricted from being exchanged or used to
settle a liability for at least 12 months after
the reporting date.

â¢ All other assets are classified as non-current.

An liability is classified as current when it satisfies

any of the following criteria:

â¢ It is expected to be settled in the Companyâs
normal operating cycle;

â¢ It is held primarily for the purpose of being
traded

â¢ It is due to be settled within 12 months
after the reporting date; or the Company
does not have an unconditional right to
defer settlement of the liability for at least
12 months after the reporting date. Terms
of a liability that could, at the option of the
counterparty, result in its settlement by the
issue of equity instruments do not affect its
classification.

â¢ All other liabilities are classified as nonÂ¬
current.

Deferred tax assets and liabilities are classified as

non-current only

2.2 Property, plant and equipment

Property, plant and equipment, are stated at cost
of acquisition or construction less accumulated
depreciation and impairment losses, if any. Cost
of property, plant and equipment comprises its
purchase price net of any discounts and rebates,
any import duties and other taxes (other than those
subsequently recovered from the tax authorities),
any directly attributable expenditure on making the
asset ready for its intended use, other incidental
expenses, decommissioning costs, if any, and interest
on borrowings attributable to acquisition of qualifying
asset up to the date the asset is ready for its intended
use.

Assets in the course of construction are capitalised in
the assets under construction account. At the point
when an asset is operating at management''s intended
use, the cost of construction is transferred to the
appropriate category of property, plant and equipment
and depreciation commences. Costs associated with
the commissioning of an asset and any obligatory
decommissioning costs are capitalised where the
asset is available for use but incapable of operating at
normal levels until a year of commissioning has been
completed.

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. All other repairs and maintenance are
charged to Statement of Profit and Loss during the year
in which they are incurred.

Property, plant and equipment''s residual values
and useful lives are reviewed at each Balance Sheet
date and changes, if any, are treated as changes in
accounting estimate.

Depreciation methods, estimated useful lives

The estimate of the useful life of the assets has been
assessed based on technical advice which considers
the nature of the asset, the usage of the asset, expected
physical wear and tear, the operating conditions
of the asset, anticipated technological changes,
manufacturers warranties and maintenance support,
etc. Based on management''s evaluation, the Company
uses straight-line method and has used following
useful lives to provide depreciation of different class of
its property, plant and equipment:

Based on the management''s assessment of useful
life, certain items of property, plant and equipment
are being depreciated over useful lives different from
the prescribed useful lives under Schedule II to the
Companies Act, 2013. Management believes that
such estimated useful lives are realistic and reflect fair

approximation of the period over which the assets are
likely to be used.

Depreciation on addition to property, plant and
equipment is provided on pro-rata basis from the date
of put to use. Depreciation on sale/deduction, from
property, plant and equipment is provided up to the
date preceding the date of sale, deduction as the case
may be. Gains and losses on disposals are determined
by comparing proceeds with carrying amount. These
are included in Statement of Profit and Loss under
''Other Income''. The cost and related accumulated
depreciation are eliminated from the standalone
financial statements upon sale or retirement of the
asset.

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

Residual value of Property, Plant & Equipment is
considered as 5% of the cost.

Intangible Assets

Intangible assets are stated at cost less accumulated
amortisation and impairment. Intangible assets are
amortised over the irrespective individual estimated
useful lives on a straight-line basis, from the date that
they are available for use. The estimated useful life of
an identifiable intangible asset is based on a number of
factors including the effects of obsolescence, demand,
competition, and other economic factors (such as
the stability of the industry, and known technological
advances), and the level of maintenance expenditures
required to obtain the expected future cash flows from
the asset. Amortisation methods and useful lives are
reviewed periodically including at each financial year
end.

The estimated useful lives of intangible assets are as
follows:

Intangible assets with finite lives are assessed for
impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation

period and the amortisation method for an intangible
asset with a finite useful life are reviewed at least at
each financial year end.

2.3 Leases

The Company assesses at contract inception whether
a contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified
asset for a period in exchange for consideration.

Company 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 to use of assets

The Company recognises right-of-use assets
at the commencement date of the lease (i.e., the
date the underlying asset is available for use).
Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment
losses, and adjusted for any 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.

I f ownership of the leased asset transfers to the
Company at the end of the lease term or the
cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated
useful life of the asset.

Right-of-use assets are tested for impairment
whenever there is any indication that their carrying
amounts may not be recoverable. Impairment
loss, if any, is recognised in the Statement of Profit
and Loss.

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 inventories) 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 re-measured 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 Companyâs lease liabilities are included in
financial liabilities.

iii) Short term lease and leases of low value assets

The Company applies the short-term lease
recognition exemption to its short-term leases
contracts including lease of residential premises
and offices (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 office 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.

iv) Single discount rate

The Company has applied the available practical
expedient with respect to single discount rate
wherein single discount rate is used for portfolio
of leases with reasonably similar characteristics.

Lease liability and ROU asset have been
separately presented in the Balance Sheet and

lease payments have been classified as financing
cash flows.

2.4 Capital work in progress

Properties in the course of construction for production,
supply or administrative purposes are carried at cost,
less any recognised impairment loss. Cost includes
professional fees and, for qualifying assets, borrowing
costs capitalised in accordance with the Companyâs
accounting policy. Such properties are classified and
capitalised to the appropriate categories of Property,
Plant and Equipment when completed and ready for
intended use. Depreciation of these assets, on the same
basis as other property assets, commences when the
assets are ready for their intended use.

During the year management has identified
proportionate capitalisation of Building CWIP based
on report issued by independent Civil Engineer
considering the level of completion which justifies the
recognition criteria as per Ind AS 16 - Property, Plant
and Equipment, specifically in relation to said operating
area of production which is ready for intended use and
has started generating revenue, while the balance floors
of building is under final stage of completion. Value of
capitalisation is based on the above report as per actual
expenditure incurred towards the building.

2.5 Impairment

At the end of each reporting year, the Company reviews
the carrying amounts of its tangible and intangible
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). Where 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.
Where 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 group of cash-generating
units for which a reasonable and consistent allocation
basis can be identified.

Intangible assets with indefinite useful lives and
intangible assets not yet available for use are tested for
impairment at least annually, and whenever there is an
indication that the asset may be impaired.

Recoverable amount is the higher of fair value less
costs to sell 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 cashÂ¬
generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or cashÂ¬
generating unit) is reduced to its recoverable amount.
An impairment loss is recognised immediately in the
Statement of Profit and Loss.

2.6 Inventories

Integration of Inventory and Financial module is carried
out by management in accordance with Ind AS 2
standard and same is applied consistently.

Raw materials, packing materials, Promotional items
and Trading Goods :

Valued at lower of cost and net realisable value (NRV).
However, these items are considered to be realisable
at cost, if the finished products, in which they will be
used, are expected to be sold at or above cost. Cost is
determined on first-in-first-out (FIFO) basis. The cost of
inventory comprises its purchase price, including nonÂ¬
refundable purchase taxes, and any directly attributable
costs related to the inventories.

Consumable Stores & Spares are expensed off at the
time of Purchase itself.

Work-in- progress (WIP) & Finished goods

Valued at lower of cost and NRV Cost of Finished goods
and WIP includes cost of raw materials, direct labour,
other direct costs and related production overheads up
to the relevant stage of completion. Net realisable value
is the estimated selling price in the ordinary course
of business, less the estimated costs of completion
and the estimated costs necessary to make the sale.
Costs are assigned to the individual item basis in a
group of inventories on Weighted Average Cost basis.
Comparison of cost and net realisable value is made on
item-by item basis. Costs of purchased inventory are
determined after deducting rebates and discounts.

2.7 Revenue recognition

The Company recognises revenue from sale of goods,
based on the terms of contract and as per the business
practice; the Company determines transaction price
considering the amount it expects to be entitled in
exchange of transferring promised goods to the
customer. Revenue is recognised when it is realised or
is realisable and has been earned after the deduction
of variable components such as discounts, rebates,

incentives, promotional couponing and schemes.
The Company estimates the amount of variable
components based on historical, current and forecast
information available and either expected value method
or most likely method, as appropriate ; Revenue (net of
variable consideration) is recognised only to the extent
that it is highly probable that the amount will not be
subject to significant reversal when uncertainty relating
to its recognition is resolved.

Sale of Goods :

Revenue from sale of products is recognised when
the control on the goods have been transferred to the
customer. The performance obligation in case of sale
of product is satisfied at a point in time i.e., when the
material is shipped to the customer or on delivery to the
customer, as may be specified in the contract.

Revenue from sales is measured net of taxes/duties,
discounts, incentives, rebates etc. The Companyâs
presence across different marketing regions within
the country and the competitive business makes the
assessment of various type of turn over discounts,
discounts, incentives and rebates as complex and
judgemental.

Advance from customers is recognised under
other Current liabilities and released to revenue on
satisfaction of performance obligation.

Other Income

Other income is comprised primarily of interest income
- Interest income is recognised using the effective
interest rate method, other Export benefits - recognised
in the statement of profit and loss when the right to
receive credit as per terms of the scheme is established
in respect of sale and when there is no significant
uncertainty regarding the ultimate collection, dividend
if any, Gain/loss on short term investments and
Exchange gain/loss on forward and on translation of
foreign currency assets and liabilities. Dividend income
is recognised when the right to receive payment is
established.

2.8 Foreign exchange translation

The functional currency of the Company is Indian
Rupees which represents the currency of the primary
economic environment in which it operates.

Monetary balances arising from the transactions
denominated in foreign currency are translated to
functional currency using the exchange rate as on the
reporting date. Any gains or loss on such translation,
are generally recognised in profit or loss.

Foreign exchange differences regarded as an
adjustment to borrowing costs are presented in the
Statement of Profit and Loss, within finance costs. All
other foreign exchange gains and losses are presented
in the Statement of Profit and Loss on a net basis within
other gains/(losses).

Non-monetary items that are measured at fair value in
a foreign currency are translated using the exchange
rates at the date when the fair value was determined.

2.9 Taxes

Income tax comprises current and deferred tax. It is
recognised in the Standalone Statement of Profit and
Loss except to the extent that it relates to a business
combination or to an item recognised directly in equity
or in other comprehensive income. Section 115 BAA
of the Income Tax Act 1961, introduced by Taxation
Laws (Amendment) Ordinance, 2019 gives a one-time
irreversible option to Domestic Companies for payment
of corporate tax at reduced rates. The Company has
opted to recognise tax expense at the new income tax
rate as applicable to the Company.

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

(a) Current tax

Current tax assets and liabilities are measured
at the amount expected to be recovered from or
paid to the taxation authorities in accordance with
relevant tax regulations. Current tax is determined
as the tax payable in respect of taxable income
for the year and is computed in accordance with
relevant tax regulations. Current tax is recognised
in Statement of Profit and Loss except to the extent
it relates to items recognised outside profit or loss
in which case it is recognised outside profit or
loss (either in other comprehensive income (''OCI'')
or in equity). Current tax items are recognised
in relation to the underlying transaction either in
OCI or directly in equity. Management periodically
evaluates positions taken in the tax returns with
respect to situations in which applicable tax

regulations are subject to interpretation and
establishes current tax payable where appropriate.

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.

Provision for Current Tax for the year comprises
of:

a) estimated tax expense which has accrued on
the profit for the year.

(b) Deferred tax

Deferred tax is recognised on temporary
differences between the carrying amounts of
assets and liabilities in the standalone financial
statements and the corresponding tax bases used
in the computation of taxable profit. Deferred tax
liabilities are generally recognised for all taxable
temporary differences. Deferred tax assets are
generally recognised for all deductible temporary
differences to the extent that it is probable that
taxable profits will be available against which
those deductible temporary differences can be
utilised. Such deferred tax assets and liabilities
are not recognised if the temporary difference
arises from the initial recognition (other than in a
business combination) of assets and liabilities in
a transaction that affects neither the taxable profit
nor the accounting profit. In addition, deferred
tax liabilities are not recognised if the temporary
difference arises from the initial recognition of
goodwill.

The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced
to the extent that it is no longer probable that
sufficient taxable profit will be available to allow
all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed
at each reporting date and are recognised to the
extent that it has become probable that future
taxable profits will allow the deferred tax asset to
be recovered.

Deferred tax assets and liabilities are measured at
the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled,
based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting
date.

Deferred tax relating to items recognised outside
profit or loss is recognised outside profit or loss
(either in other comprehensive income or in
equity). Deferred tax items are recognised in
correlation to the underlying transaction either in
Other Comprehensive Income or directly in equity.

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.

2.10 Borrowing costs

Borrowing costs, if any, general or specific, that are
directly attributable to the acquisition or construction
of qualifying assets is capitalised as part of such
assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use.
All other borrowing costs are charged to the Statement
of Profit and Loss.

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

Borrowing cost includes exchange differences arising
from foreign currency borrowings to the extent they are
regarded as an adjustment to the finance cost.

Mar 31, 2024

2 SUMMARY OF MATERIAL ACCOUNTING POLICIES

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.

Significant accounting policies adopted by the Company are as under:

2.1 Basis of Preparation

These standalone Ind AS financial statements ("Ind AS financial statements") have been prepared in accordance with Indian Accounting Standards (''Ind AS'') notified under Section 133 of the Companies Act, 2013 (''the Act'') read with the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) Rules, 2016 and other relevant provisions of the Act, to the extent applicable.

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

As the year end figures are taken from the source and rounded to the nearest digits, the figures reported for the previous quarters might not always add up to the year end figures reported in this statement.

(a) Functional and presentation currency

Items included in these Standalone Financial Statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The standalone Ind AS financial statements are presented in Indian rupee (INR), which is also the Company''s functional currency. All amounts have been rounded-off to the nearest lakh, up to two places of decimal, unless otherwise indicated.

(b) Basis of measurement

The separate financial statements of the Company are prepared in accordance with Indian Accounting Standards (Ind AS), under the historical cost convention on the accrual basis as per the provisions of the Companies Act, 2013 ("the Act"), except for:

- Financial instruments - measured at fair value;

- Plan assets under defined benefit plans -measured at fair value;

- Asset & Liabilities recognised under Ind AS 116

(c) Classification into current and non-current:

The Company presents assets and liabilities in the balance sheet based on current / non-current classification.

An asset is classified as current when it satisfies any of the following criteria:

â¢ It is expected to be realised in, or is intended for sale or consumption in, the Companyâs normal operating cycle;

â¢ I t is held primarily for the purpose of being traded;

â¢ It is expected to be realised within 12 months after the reporting date; or

â¢ It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

â¢ All other assets are classified as non-current.

An liability is classified as current when it satisfies

any of the following criteria:

â¢ It is expected to be settled in the Companyâs normal operating cycle;

â¢ I t is held primarily for the purpose of being traded

â¢ It is due to be settled within 12 months after the reporting date; or the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

â¢ All other liabilities are classified as noncurrent.

Deferred tax assets and liabilities are classified as

non-current only

2.2 Property, plant and equipment

Property, plant and equipment, are stated at cost of acquisition or construction less accumulated depreciation and impairment losses, if any. Cost of property, plant and equipment comprises its purchase price net of any discounts and rebates, any import duties and other taxes (other than those subsequently recovered from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses, decommissioning costs, if any, and interest on borrowings attributable to acquisition of qualifying asset up to the date the asset is ready for its intended use.

I t includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Companyâs accounting policy based on Ind AS 23 -Borrowing costs. Such properties are classified to the appropriate categories of PPE when completed and ready for intended use.

Assets in the course of construction are capitalised in the assets under construction account. At the point when an asset is operating at managementâs intended use, the cost of construction is transferred to the appropriate category of property, plant and equipment and depreciation commences. Costs associated with the commissioning of an asset and any obligatory

decommissioning costs are capitalised where the asset is available for use but incapable of operating at normal levels until a year of commissioning has been completed.

Subsequent costs are included in the assetâs 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. All other repairs and maintenance are charged to Statement of Profit and Loss during the year in which they are incurred.

Property, plant and equipmentâs residual values and useful lives are reviewed at each Balance Sheet date and changes, if any, are treated as changes in accounting estimate.

Depreciation methods, estimated useful lives

The estimate of the useful life of the assets has been assessed based on technical advice which considers the nature of the asset, the usage of the asset, expected physical wear and tear, the operating conditions of the asset, anticipated technological changes, manufacturers warranties and maintenance support, etc. Based on managementâs evaluation, the Company uses straight-line method and has used following useful lives to provide depreciation of different class of its property, plant and equipment:

Based on the management''s assessment of useful life, certain items of property plant and equipment are being depreciated over useful lives different from the prescribed useful lives under Schedule II to the Companies Act, 2013. Management believes that such estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.

Depreciation on addition to property plant and equipment is provided on pro-rata basis from the date of acquisition. Depreciation on sale/deduction from

property plant and equipment is provided up to the date preceding the date of sale, deduction as the case may be. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in Statement of Profit and Loss under ''Other Income''.

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

Residual value of Plant & Machinery is considered as 5% of the cost and for other assets as '' 100.

Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date is classified as capital advances under other non - current assets and the cost of assets not ready to use before such date are disclosed under ''Capital work-in-progressâ. Subsequent expenditures relating to property, plant and equipment is capitalised only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset.

Intangible Assets

I ntangible assets are stated at cost less accumulated amortisation and impairment. Intangible assets are amortised over the irrespective individual estimated useful lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry, and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the asset. Amortisation methods and useful lives are reviewed periodically including at each financial year end.

The Company amortise intangible assets over their estimated useful lives using the straight line method. The estimated useful lives of intangible assets are as follows:

Intangible assets with finite lives are assessed for impairment whenever there is an indication that the

intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end.

2.3 Leases

The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration.

Company 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 to use of assets

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any 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.

I f ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the Statement of Profit and Loss.

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 inventories) 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 re-measured 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 liabilities.

iii) Short term lease and leases of low value assets

The Company applies the short-term lease recognition exemption to its short-term leases contracts including lease of residential premises and offices (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 office 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.

iv) Single discount rate

The Company has applied the available practical expedient with respect to single discount rate

wherein single discount rate is used for portfolio of leases with reasonably similar characteristics.

Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

2.4 Capital work in progress

Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost and related incidental expenses.

During the year management has identified proportionate capitalisation of Building CWIP based on report issued by independent Civil Engineer considering the level of completion which justifies the recognition criteria as per Ind AS 16 - Property, Plant and Equipment, specifically in relation to said operating area of production which is ready for intended use and has started generating revenue, while the balance floors of building is under final stage of completion. Value of capitalisation is based on the above report as per actual expenditure incurred towards the building.

2.5 Impairment

At the end of each reporting year, the Company reviews the carrying amounts of its tangible and intangible 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). Where 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. Where 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 group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell 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 cashgenerating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cashgenerating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit and Loss.

2.6 Inventories

Integration of Inventory and Financial module is carried out by management in accordance with Ind AS 2 standard and same is applied consistently.

Raw materials, stores & spare parts consumables, packing materials and Trading Goods :

Valued at lower of cost and net realisable value (NRV). However, these items are considered to be realisable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost. Cost is determined on first-in-first-out (FIFO) basis. The cost of inventory comprises its purchase price, including nonrefundable purchase taxes, and any directly attributable costs related to the inventories.

Consumable Stores & Spares are expensed off at the time of Purchase itself.

Work-in- progress (WIP) & Finished goods

Valued at lower of cost and NRV. Cost of Finished goods and WIP includes cost of raw materials, direct labour, other direct costs and related production overheads up to the relevant stage of completion. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Costs are assigned to the individual item basis in a group of inventories on Weighted Average Cost basis. Comparison of cost and net realisable value is made on item-by item basis. Costs of purchased inventory are determined after deducting rebates and discounts.

2.7 Revenue recognition

The Company recognises revenue from sale of goods, based on the terms of contract and as per the business practice; the Company determines transaction price considering the amount it expects to be entitled in exchange of transferring promised goods to the customer. Revenue is recognised when it is realised or

is realisable and has been earned after the deduction of variable components such as discounts, rebates, incentives, promotional couponing and schemes. The Company estimates the amount of variable components based on historical, current and forecast information available and either expected value method or most likely method, as appropriate ; Revenue (net of variable consideration) is recognised only to the extent that it is highly probable that the amount will not be subject to significant reversal when uncertainty relating to its recognition is resolved.

Sale of Goods :

Revenue from sale of products is recognised when the control on the goods have been transferred to the customer. The performance obligation in case of sale of product is satisfied at a point in time i.e., when the material is shipped to the customer or on delivery to the customer, as may be specified in the contract.

Revenue from sales is measured net of taxes/ duties, discounts, incentives, rebates etc. given to the customers on the Company''s sales. The Company''s presence across different marketing regions within the country and the competitive business makes the assessment of various type of TOD''s, discounts, incentives and rebates as complex and judgemental.

Advance from customers is recognised under other Current liabilities and released to revenue on satisfaction of performance obligation.

Other Income :

Other income is comprised primarily of interest income - Interest income is recognised using the effective interest rate method, other Export benefits - recognised in the statement of profit and loss when the right to receive credit as per terms of the scheme is established in respect of sale and when there is no significant uncertainty regarding the ultimate collection, dividend if any, Gain/loss on short term investments and Exchange gain/loss on forward and on translation of foreign currency assets and liabilities. Dividend income is recognised when the right to receive payment is established.

2.8 Foreign exchange translation

The functional currency of the Company is Indian Rupees which represents the currency of the primary economic environment in which it operates.

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions are generally recognised in profit or loss. Monetary balances arising from the transactions denominated in foreign currency are translated to functional currency using the exchange rate as on the reporting date. Any gains or loss on such translation, are generally recognised in profit or loss.

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the Statement of Profit and Loss, within finance costs. All other foreign exchange gains and losses are presented in the Statement of Profit and Loss on a net basis within other gains/(losses).

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

2.9 Taxes

Income tax comprises current and deferred tax. It is recognised in the Standalone Statement of Profit and Loss except to the extent that it relates to a business combination or to an item recognised directly in equity or in other comprehensive income. Section 115 BAA of the Income Tax Act 1961, introduced by Taxation Laws (Amendment) Ordinance, 2019 gives a one-time irreversible option to Domestic Companies for payment of corporate tax at reduced rates. The Company has opted to recognise tax expense at the new income tax rate as applicable to the Company.

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

(a) Current tax

it relates to items recognised outside profit or loss in which case it is recognised outside profit or loss (either in other comprehensive income (''OCI'') or in equity). Current tax items are recognised in relation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes current tax payable where appropriate.

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.

Provision for Current Tax for the period comprises of estimated tax expense which has accrued on the profit for the year (1^st April, 2023 to 31^st March, 2024).

(b) Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the

extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in Other Comprehensive Income or directly in equity.

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.

2.10 Borrowing costs

Borrowing costs, if any, general or specific, that are directly attributable to the acquisition or construction of qualifying assets is capitalised as part of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to the Statement of Profit and Loss.

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

Borrowing cost includes exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the finance cost.

Mar 31, 2023

1. COMPANY OVERVIEW

HP Adhesives Limited ("the Company) is a public limited company which is domiciled and incorporated in India under the provisions of the Companies Act, 2013 (CIN L24304MH2019PLC325019.) formed by conversion of Partnership firm in accordance with provisions of Part I of Company XXI of Companies Act,2013 subsequently converted to Public Limited company on 1^st July, 2021 with registered office situated at G-11, Unique House, Chakala Cross Road, Andheri East, Mumbai(MH) 400099. The Company got listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) in India on 27^th December, 2021.

Company is engaged in Manufacturing and distribution of adhesives and sealants along with other ancillary products.

The Annual Financial Statements were authorised for issue in accordance with the resolution passed by Board of Directors on 12^th May, 2023.

2. SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies adopted by the Company are as under:

2.1 Basis of Preparation

These standalone Ind AS financial statements ("Ind AS financial statements") have been prepared in accordance with Indian Accounting Standards (''Ind ASâ) notified under Section 133 of the Companies Act, 2013 (''the Actâ) read with the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) Rules, 2016 and other relevant provisions of the Act, to the extent applicable.

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

The significant exception & judgments made by management in applying the Companyâs accounting policies and key sources of estimation and uncertainties were the same as those described in the last audited financial statements for the year ended 31^st March, 2022.

As the year end figures are taken from the source and rounded to the nearest digits, the figures reported for the previous quarters might not always add up to the year end figures reported in this statement.

(a) Functional and presentation currency

Items included in these Standalone Financial Statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currencyâ). The standalone Ind AS financial statements are presented in Indian rupee (''), which is also the Companyâs functional currency. All amounts have been rounded-off to the nearest lakh, up to two places of decimal, unless otherwise indicated.

(b) Basis of measurement

- Financial instruments - measured at fair value;

- Plan assets under defined benefit plans -measured at fair value;

- Asset & Liabilities recognised under Ind AS 116

The Company presents assets and liabilities in the balance sheet based on current / non-current classification.

An asset is classified as current when it satisfies any of the following criteria:

â¢ It is expected to be realised in, or is intended for sale or consumption in, the Companyâs normal operating cycle;

â¢ It is held primarily for the purpose of being traded;

â¢ It is expected to be realised within 12 months after the reporting date; or

â¢ It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

â¢ All other assets are classified as non-current.

An liability is classified as current when it satisfies

any of the following criteria:

â¢ It is expected to be settled in the Companyâs normal operating cycle;

â¢ It is held primarily for the purpose of being traded

â¢ It is due to be settled within 12 months after the reporting date; or the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

â¢ All other liabilities are classified as noncurrent.

Deferred tax assets and liabilities are classified as

non-current only

2.2 Property, plant and equipment

Property, plant and equipment, are stated at cost of acquisition or construction less accumulated depreciation and impairment losses, if any. Cost of property, plant and equipment comprises its purchase price net of any discounts and rebates, any import duties and other taxes (other than those subsequently recovered from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses, decommissioning costs, if any, and interest on borrowings attributable to acquisition of qualifying asset up to the date the asset is ready for its intended use.

It includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Companyâs accounting policy based on Ind AS 23 -Borrowing costs. Such properties are classified to the appropriate categories of PPE when completed and ready for intended use.

asset is available for use but incapable of operating at normal levels until a year of commissioning has been completed. Revenue generated from production during the trial period is capitalised.

Property, plant and equipmentâs residual values and useful lives are reviewed at each Balance Sheet date and changes, if any, are treated as changes in accounting estimate.

Depreciation methods, estimated useful lives

The estimate of the useful life of the assets has been assessed based on technical advice which considers the nature of the asset, the usage of the asset. expected physical wear and tear, the operating conditions of the asset, anticipated technological changes, manufacturers warranties and maintenance support, etc. Based on managementâs evaluation, the Company uses straight-line method and has used following useful lives to provide depreciation of different class of its property, plant and equipment:

Assets Category	Estimated Useful Life
Building	30 years
Plant & Machinery	15 years
Furniture & Fixtures	10 years
Vehicles	10 years
Computer & Software	3-6 years
Office Equipments	5 years

Based on the managementâs assessment of useful life, certain items of property plant and equipment are being depreciated over useful lives different from the prescribed useful lives under Schedule II to the Companies Act, 2013. Management believes that such estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.

Depreciation on addition to property plant and equipment is provided on pro-rata basis from the date of acquisition. Depreciation on sale/deduction from property plant and equipment is provided up to the date preceding the date of sale, deduction as the case may be. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in Statement of Profit and Loss under ''Other Incomeâ.

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

Residual value of Plant & Machinery is considered as 5% of the cost and for other assets as '' 100.

Gain and losses on disposal of Assets are determine by comparing net disposal proceeds with carrying amount of the asset. These are included in Profit and loss under other Income.

Intangible Assets

Intangible assets are stated at cost less accumulated amortisation and impairment. Intangible assets are amortised over the irrespective individual estimated useful lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry, and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the asset. Amortisation methods and useful lives are reviewed periodically including at each financial year end.

The Company amortise intangible assets over their estimated useful lives using the straight line method. The estimated useful lives of intangible assets are as follows:

Intangible assets	Estimated Useful Life
Trade Mark	5 years

Intangible assets with finite lives are assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end.

2.3 Leases

The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration.

Company 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 to use of assets

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any 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.

I f ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the Statement of Profit and Loss.

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

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 re-measured 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 Companyâs lease liabilities are included in financial liabilities.

iii) Short term lease and leases of low value assets

The Company applies the short-term lease recognition exemption to its short-term leases contracts including lease of residential premises and offices (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 office 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.

iv) Single discount rate

The Company has applied the available practical expedient with respect to single discount rate wherein single discount rate is used for portfolio of leases with reasonably similar characteristics.

Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

2.4 Capital work in progress

Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost and related incidental expenses.

During the year management has identified proportionate capitalisation of Building CWIP based on report issued by independent Civil Engineer considering the level of completion which justifies the recognition criteria as per Ind AS 16 - Property, Plant and Equipment, specifically in relation to said operating area of production which is ready for intended use and has started generating revenue, while the balance floors of building is under final stage of completion. Value of capitalisation is based on the above report as per actual expenditure incurred towards the building.

2.5 Impairment

At the end of each reporting year, the Company reviews the carrying amounts of its tangible and intangible 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). Where 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. Where 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 group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

2.6 Inventories

Integration of Inventory and Financial module is carried out by management in accordance with Ind AS 2 standard and same is applied consistently.

Raw materials, stores & spare parts consumables , packing materials and Trading Goods :

Valued at lower of cost and net realisable value (NRV). However, these items are considered to be realisable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost. Cost is determined on first-in-first-out (FIFO) basis. The cost of inventory comprises its purchase price, including nonrefundable purchase taxes, and any directly attributable costs related to the inventories.

Work-in- progress (WIP) & Finished goods

2.7 Revenue recognition

The Company recognises revenue from sale of goods, based on the terms of contract and as per the business practise; the Company determines transaction price considering the amount it expects to be entitled in exchange of transferring promised goods to the customer. Revenue is recognised when it is realised or is realisable and has been earned after the deduction of variable components such as discounts, rebates, incentives, promotional couponing and schemes. The Company estimates the amount of variable components based on historical, current and forecast information available and either expected value method or most likely method, as appropriate ; Revenue (net of variable consideration) is recognised only to the extent that it is highly probable that the amount will not be

subject to significant reversal when uncertainty relating to its recognition is resolved.

Sale of Goods :

The Company recognises revenues on Sale of products, net of discounts, sales incentives, rebates granted, returns, sales taxes/GST and duties when the products are delivered to customer or when delivered to a carrier for export sale, which is when transfer of control, title, risk and rewards of ownership passes to the customer. Export incentives are recognised as income as per the terms of the scheme in respect of the exports made and included as part of other Income. Revenue from sales is recognised when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell / consume the products, and there is no unfulfilled obligation that could affect the customer''s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract or the acceptance provisions have lapsed. Revenue is measured at the fair value of the consideration received or receivable.

Revenue is measured net of discounts, incentives, rebates etc. given to the customers on the Company''s sales. The Company''s presence across different marketing regions within the country and the competitive business makes the assessment of various type of TOD''s, discounts, incentives and rebates as complex and judgmental.

Advance from customers is recognised under other Current liabilities and released to revenue on satisfaction of performance obligation.

Other Income :

Revenue from transactions or events that do not arise from a contract with a customer not in the scope of Ind AS 115 are continue to be recognised in accordance with the other standards. Such incomes includes Interest which are dealt with in Ind AS 109 and Rental income to be accounted as per Ind AS 116 if any.

Other income is comprised primarily of interest income, Other Export benefits, dividend if any, Gain/loss on investments and Exchange gain/loss on forward and on translation of foreign currency assets and liabilities.

Other Export Benefits

Export benefits are accounted for in the year of export at net market realisable value.

Interest Income

Interest income from a financial asset is recognised on a time basis, by reference to the principal outstanding using the effective interest method provided it is probable that the economic benefits associated with the interest will flow to the Company and the amount of interest can be measured reliably. 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 that financial asset.

Income other than Interest and Dividend

Other income is recognised in the Statement of Profit and Loss when increase in future economic benefits related to an increase in an asset or a decrease of a liability has arisen that can be measured reliably.

2.8 Foreign exchange translation

The functional currency of the Company is Indian Rupees which represents the currency of the primary economic environment in which it operates.

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the Statement of Profit and Loss, within finance costs. All other foreign exchange gains and losses are presented in the Statement of Profit and Loss on a net basis within other gains/(losses).

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

2.9 Taxes

Income tax comprises current and deferred tax. It is recognised in the Standalone Statement of Profit and Loss except to the extent that it relates to a business combination or to an item recognised directly in equity or in other comprehensive income. Section 115 BAA of the Income Tax Act 1961, introduced by Taxation Laws (Amendment) Ordinance, 2019 gives a one-time irreversible option to Domestic Companies for payment

of corporate tax at reduced rates. The Company has opted to recognise tax expense at the new income tax rate as applicable to the Company.

(a) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities in accordance with relevant tax regulations. Current tax is determined as the tax payable in respect of taxable income for the year and is computed in accordance with relevant tax regulations. Current tax is recognised in Statement of Profit and Loss except to the extent it relates to items recognised outside profit or loss in which case it is recognised outside profit or loss (either in other comprehensive income (''OCIâ) or in equity). Current tax items are recognised in relation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes current tax payable where appropriate.

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.

Provision for Current Tax for the period comprises of:

a) estimated tax expense which has accrued on the profit for the year (1^st April, 2022 to 31^stMarch, 2023).

(b) Deferred tax

those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in Other Comprehensive Income or directly in equity.

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.

2.10 Borrowing costs

Borrowing costs, if any, general or specific, that are directly attributable to the acquisition or construction of qualifying assets is capitalised as part of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to the Statement of Profit and Loss.

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

Borrowing cost includes exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the finance cost.

2.11 Provisions, contingent assets and contingent liabilities

(a) Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, considering the risk and uncertainties surrounding the obligation.

If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

(b) Contingent liabilities

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources embodying economic benefits or the amount of such obligation cannot be measured reliably. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.

These are reviewed at each financial reporting date and adjusted to reflect the current best estimates

Contingent assets are not recognised though are disclosed, where an inflow of economic benefits is probable.

2.12 Employee Benefits

(a) Short-term obligations

Employee benefits such as salaries and other benefits along with any other non-monetary benefits falling due wholly within twelve months of rendering the service are classified as short-term employee benefits and undiscounted amount of such benefits are expensed in the Statement of Profit and Loss in in the period in which the employee renders the related services.

(b) Other long-term employee benefit obligations : Post Employment Benefits

(i) Defined contribution plan

Provident Fund: The Companyâs contributions to statutory provident fund in accordance with the Employees Provident Fund and Miscellaneous Provisions Act, 1952 which is a defined contribution plan, are charged to the Statement of Profit and Loss in the period of accrual. The Company has no obligation, other than the contribution payable to the provident fund.

(ii) Defined benefit plans

Defined benefit plan is a post-employment benefit plan other than a defined contribution plan. Under such plan, the obligation for any benefits remains with the Company. The Companyâs liability towards gratuity is in the nature of defined benefit plan.

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount based on the respective employeeâs salary and the tenure of employment. Vesting occurs upon completion of five years of service.

The calculation is performed by a qualified Actuary using the projected unit credit method. When the calculation results in a liability to the Company, the present value

of liability is recognised as provision for employee benefit. Any actuarial gains or losses inrespect of gratuity are recognised in OCI in the period in which they arise.

The Companyâs net obligation is measured at the present value of the estimated future cash flows using a discount rate based on the market yield on government securities of a maturity period equivalent to the weighted average maturity profile of the defined benefit obligations at each reporting date.

Re-measurement, comprising actuarial gains and losses, is recognised in other comprehensive income and is reflected in retained earnings and the same is not eligible to be reclassified to Statement of Profit and Loss.

The Company recognises the net obligation of a defined plan in its Balance Sheet. Defined benefit costs comprising current service cost, past service cost, interest cost and gains or losses on settlements are recognised in the Statement of Profit and Loss as employee benefits expense. Gains or losses on settlement of any defined benefit plan are recognised when the settlement occurs. Past service cost is recognised as expense at the earlier of the plan amendment or curtailment and when the Company recognises related restructuring costs or termination benefits.

(iii) Other employee benefits

Compensated absences if any which accrue to employees and which can be carried to future periods but are excepted to be encashed/ availed within twelve months immediately following the year end are reported as expenses during the year in which employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits. Where the availment or encashment is otherwise not excepted to wholly occur within the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method.

2.13 Financial Instruments

Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments.

Initial Recognition

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

Classification and Subsequent Measurement: Financial Assets

The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income ("FVOCI") or fair value through profit or loss ("FVTPL") on the basis of following:

(i) the entityâs business model for managing the financial assets and

(ii) t he contractual cash flow characteristics of the financial asset.

Amortised Cost

A financial asset shall be classified and measured at amortised cost if both of the following conditions are met:

(i) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and

(ii) 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.

In case of financial asset classified and measured at amortised cost, any interest income, foreign exchange gains/losses and impairment are recognised in the Statement of Profit and Loss.

Fair Value through OCI

A financial asset shall be classified and measured at fair value through OCI if both of the following conditions are met:

(i) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and

(ii) 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.

Where the Company has elected to present the fair value gain on equity instruments in other comprehensive income, there is no subsequent classification of fair value gain or losses to profit and loss account. Dividend from such instruments is recognised in profit and loss account as other income where right to receive is established.

Fair Value through Profit or Loss

A financial asset shall be classified and measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through OCI. All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets. For financial assets at fair value through profit or loss, net gain or losses, including any interest or dividend income are recognised in the Statement of Profit and Loss.

Classification and Subsequent Measurement: Financial Liabilities

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

Financial Liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL. Gains or Losses on liabilities held for trading are recognised in the Statement of Profit and Loss.

Other Financial Liabilities

Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method. Interest expense (based on effective interest method), foreign exchange gains and losses and any gain or loss on derecognition is recognised in the Statement of Profit and Loss.

Impairment of financial assets

In accordance with Ind AS 109, Financial Instruments, the Company applies Expected credit loss (ECL) model for measurement and recognition of impairment loss on financial assets.

For recognition of impairment loss on 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, no impairment is recognised. However, if credit risk has increased significantly, lifetime ECL is used. If in subsequent period, the credit quality of the instrument improves then the entity reverts to recognising impairment loss allowance based on 12 month ECL.

Life time ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument.

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 shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider all contractual terms of the financial instrument (including prepayment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.

Re-Estimation of ECL Provision :

During the period company has calculated ECL provisions considering the trend of trade receivables under different ageing bracket for last two years which was previously calculated on 5 years basis. The effect of such change in estimate is applied prospectively and is expected to have an effect in future periods also for which estimation is impracticable.

ECL impairment loss allowance (or reversal) recognised during the year is recognised as income/expense in the statement of profit and loss. In balance sheet ECL for financial assets measured at amortised cost is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount. Company measures the loss allowance at an amount equal to lifetime expected credit losses for Trade receivables (i.e. ''simplified approachâ).

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. The Company recognises a loss allowance for expected credit losses on financial asset. In case of trade receivables, the Company follows the simplified approach permitted by Ind AS 109 -Financial Instruments for recognition of impairment

loss allowance. The application of simplified approach does not require the Company to track changes in credit risk. The Company calculates the expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.

(iv) Derecognition of financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of the asset or if, the Company has neither transferred nor retained substantially all risk and reward of the asset, but has transferred control of the asset to another party.

On derecognition of a financial asset, other than investments classified as FVOCI, in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.

On derecognition of equity investments classified as FVOCI, accumulated gains or loss recognised in OCI is transferred to retained earnings.

(b) Financial liabilities and equity instruments: Classification as debt or equity

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

Equity instruments

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

The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments

and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets.

Offsetting financial instrument

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle financial asset and liability on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

2.14 Cash & cash equivalents

Cash and cash equivalent in the Balance Sheet comprises Cash at Banks, Cash on Hand and ShortTerm Deposits with an original maturity of three months or less, which are subject to insignificant risk of change in value.

For the purpose of the Statement of cash flows, cash and cash equivalents consist of unrestricted cash and short-term deposits, as defined above as they are considered an integral part of the Companyâs cash management.

Segment reporting

The business of the Company falls within a single line of business i.e. business of Adhesives & Solvent products. All other activities of the Company revolve around its main business. Hence no separate reportable primary segment

Operating segments are reported in a manner consistent with the internal reporting provided to the management. Management assesses the financial performance and position of the Company and makes strategic decisions.

Statement of cash flows

Statement of cash flows is made using the indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferral accruals of past or future cash receipts or payments and item of income or expense associated with investing or financing of cash flows. The cash flows from operating, financing and investing activities of the Company are segregated.

Corporate Social Responsibility (âCSR") expenditure

CSR expenditure incurred by the Company is charged to the Statement of the Profit and Loss.

2.15 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares and share options and buyback of ordinary shares, if any are recognised as a deduction from equity, net of any tax effects.

Share issue expense

The share issue expenses incurred by the Company on account of new shares issued are netted off from securities premium account.

2.16 Earnings per share Basic earnings per share

Basic earnings per share is computed by dividing the net profit after tax by weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the year, if any, is adjusted for treasury shares, bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares).

Diluted earnings per share

Diluted earnings per share is computed by dividing the profit after tax after considering the effect of interest and other financing costs or income (net of attributable taxes) associated with dilutive potential equity shares by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares including the treasury shares held by the Company to satisfy the exercise of the share options by the employees.

2.17 Measurement of EBITDA

During the year under review company has opted NOT to present earnings before interest (finance cost), tax, depreciation and Amortisation (EBITDA) as a separate line item on the face of the Statement of Profit and Loss for the period, same has been applied for presentation of pervious yearâs figures.

3. | SIGNIFICANT ACCOUNTING JUDGMENTS,ESTIMATES AND ASSUMPTIONS

The estimates used in the preparation of the Standalone Financial Statements of each year presented are continuously evaluated by the Company and are based

on historical experience and various other assumptions and factors (including expectations of future events), that the Company believes to be reasonable under the existing circumstances. The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date. Although the Company regularly assesses these estimates, actual results could differ materially from these estimates - even if the assumptions underlying such estimates were reasonable when made, if these results differ from historical experience or other assumptions do not turn out to be substantially accurate. The changes in estimates are recognised in the Standalone Financial Statements in the period in which they become known.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. Actual results could differ from these estimates.

3.1 Significant Judgments

Impairment of Trade Receivables

As per Ind AS 109 impairment allowance has been determined based on expected credit loss method. Trade receivables do not carry interest and are stated at their nominal values as reduced by appropriate allowances for estimated irrecoverable amount are based on ageing of the receivable balances and historical experiences. Individual trade receivables are written off when management deems not be collectible.

Change in Estimate : (ECL Model)

During the period company has re-calculated ECL provisions considering the trend of trade receivables under different ageing bracket for last two years which was previously calculated on 5 years basis. The effect of such change in estimate is applied prospectively and is expected to have a effect in future periods also for which estimation is impracticable.

Impairment of other financial assets

The impairment provision for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation., based on the Companyâs past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognised because it is not probable that an out flow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.

Taxes

Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the nature of business differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes current tax payable, based on reasonable estimates. The amount of such current tax payable is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective domicile of the companies.

Recoverability of deferred taxes

In assessing the recoverability of deferred tax assets, management considers whether it is probable that taxable profit will be available against which the losses can be utilised. The ultimate realisation of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible.

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs

of disposal calculation is based on available data from binding sales transactions, conducted at armâs length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a Discounted Cash Flow (''DCFâ) model.

3.2 Significant estimates(a) Defined benefit plans

The costs of post-retirement benefit obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate; future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

(b) Useful lives of property, plant and equipment

As described in the significant accounting

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