Accounting Policies of Interarch Building Solutions Ltd. Company

Mar 31, 2025

| MATERIAL ACCOUNTING POLICIES
2.1 Basis of preparation

The Financial Statements of the Company have been
prepared in accordance Indian Accounting Standard
(Ind AS) notify under the companies (Indian Accounting
Standards) Rules, 2015, (as amended from time to
time) and presentation and disclosure requirements
of Division II of Schedule III to the Companies Act,
2013, (Ind-AS compliant Schedule III), as applicable.

The Financial Statements have been prepared on a
historical cost basis, except for the following assets
and liabilities which have been measured at fair value
or revalued amount:

a) Certain financial assets and liabilities measured
at fair value (refer accounting policy regarding
financial instruments)

b) Net defined benefit (asset)/ liability

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

The FinancialStatements are presented in Indian
Rupee (Rs.) and all values are rounded to the nearest
Lakhs. (Rs. 00,000), except when otherwise indicated.

2.2 Summary of material accounting policies

I. Current versus non-current classification

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

a) Expected to be realised or intended to be sold or
consumed in normal operating cycle; or

b) Held primarily for the purpose of trading; or

c) Expected to be realised within twelve months
after the reporting year; or

d) Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

a) It is expected to be settled in normal operating
cycle; or

b) It is held primarily for the purpose of trading; or

c) It is due to be settled within twelve months after
the reporting year; or

d) There is no unconditionalright to defer the
settlement of the liability for at least twelve
months after the reporting period.

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as
non-current assets and liabilities.

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

II. Foreign currencies

Items included in the Financial Statements are
measured using the currency of the primary economic
environment in which the entity operates ("the
functional currency"). The financialstatements are
presented in Indian rupee (Rs.), which is Company''s
functional and presentation currency.

Transactions and balances

Transactions in foreign currencies are initially
recorded by the Company''s at functional currency
spot rates at the date the transaction first qualifies
for recognition. Monetary assets and liabilities
denominated in foreign currencies are translated
at the functional currency spot rates of exchange
at the reporting date. Exchange differences arising
on settlement or translation of monetary items are

recognised in profit or loss. Non-monetary items that
are measured in terms of historical cost in a foreign
currency are translated using the exchange rate at the
date of initial transaction.

All foreign exchange gains and losses are presented in
the statement of profit and loss on a net basis.

In determining the spot exchange rate to use on initial
recognition of the related asset, expense or income
(or part of it) on the derecognition of a non-monetary
asset or non-monetary liability relating to advance
consideration, the date of the transaction is the
date on which the Company initially recognises the
non-monetary asset or non-monetary liability arising
from the advance consideration. If there are multiple
payments or receipts in advance, the Company
determines the transaction date for each payment or
receipt of advance consideration.

III. Fair value measurement

The Company measures financial instrument, such as,
derivatives at fair value at each balance sheet date.
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most
advantageous market for the asset or liability.

The principal or the most advantageous market must
be accessible by the Company.

The fair value of an asset or a liability is measured
using the assumptions that market participants would
use when pricing the asset or liability, assuming
that market participants act in their economic best
interest.

A fair value measurement of a non-financial asset
takes into account a market participant''s ability to
generate economic benefits by using the asset in its
highest and best use or by selling it to another market
participant that would use the asset in its highest and
best use.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.

All assets and liabilities for which fair value is
measured or disclosed in the Financial Statements are
categorised within the fair value hierarchy, described
as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:

• Level 1 — Quoted (unadjusted) prices in active
markets for identical assets or liabilities

• Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is directly or indirectly
observable

• Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable

For assets and liabilities that are recognised in the
financial statements on a recurring basis, the Company
determines whether transfers have occurred between
levels in the hierarchy by reassessing categorisation
(based on the lowest level input that is significant to
the fair value measurement as a whole) at the end of
each reporting year.

The Company''s finance department includes team
that determines the policies and procedures for both
recurring fair value measurement, such as valuation
of assets and liabilities required for financial reporting
purposes, including level 3 fair values.

External valuers are involved for valuation of significant
assets, such as Investment properties, corporate
guarantee and personalguarantee. Involvement
of external valuers is decided upon annually by the
finance team after discussion with and approval by the
Chief Financial Officer (CFO), Chief Executive Officer
(CEO) and Managing Director (MD). Selection criteria
include market knowledge, reputation, independence
and whether professional standards are maintained.

The finance team and CFO decides, after discussions
with the CEO, MD and externalvaluers, which
valuation techniques and inputs to use for each case.
At each reporting date, the finance team analyses the
movements in the values of assets and liabilities which
are required to be remeasured or re-assessed as per
the Company''s accounting policies. For this analysis,
the finance team verifies the major inputs applied in
the latest valuation by agreeing the information in the
valuation computation to contracts and other relevant
documents.

The finance team also compares the change in the
fair value of each asset and liability with relevant

external sources to determine whether the change is
reasonable.

On an interim basis, the finance team present the
valuation results to the CFO, CEO, MD and the
Company''s independent auditors. This includes a
discussion of the major assumptions used in the
valuations.

For the purpose of fair value disclosures, the Company
has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the
asset or liability and the level of the fair value hierarchy
as explained above.

Fair value related disclosure for financial instruments
and non-financial assets which are measured at fair
value are disclosed in the relevant notes.

IV. Revenue from contract with customers

The Company enters into two types of contracts with
customers i.e. fixed price contract and variable price
contract. Variable price contracts are such contracts
wherein price of goods or services is calculated by
reference to a base steel price agreed with customers
at the time of contract execution. The Company enters
in variable price contracts for sale of pre-engineered
building and sale of building material contracts. Under
these contracts, price of pre-engineered building and
building material are calculated in reference to steel
prices.

Revenue from contracts with customers is recognised
when control of the goods or services are transferred
to the customer at an amount that reflects the
consideration to which the Company expects to be
entitled in exchange for those goods or services.
The Company has generally concluded that it is the
principal in its revenue arrangements, because
it typically controls the goods or services before
transferring them to the customer.

The disclosure of significant accounting judgements,
estimates and assumptions relating to revenue from
contracts with customers are provided in Note 32.

Sale of Pre-engineered building (PEB) contracts

In respect of pre-engineered building contracts,
revenue is recognised over a period of time using the
input method (equivalent to percentage of completion
method; POCM) of accounting with contract costs
incurred determining the degree of completion of the
performance obligation.

Revenue is measured based on the transaction price,
which is the consideration, adjusted for volume

discounts, price concessions and incentives, if any, as
specified in the contract with the customer. Revenue
also excludes taxes collected from customers on
behalf of the government.

Percentage of completion is determined on the basis
of proportion of the costs of shipment made and cost
of erection incurred as against the total estimated
cost of shipment and erection.

Contracts are combined when the Company believes
the underlying goods and services are a single
performance obligation, single commercial objective
or the consideration in one contract depends on
another. Else contracts are separated.

Where the total cost of a contract, based on technical
and other estimates is expected to exceed the
corresponding contract value, such expected loss
is provided for. The effect of any adjustment from
revisions to estimate is included in the statement
of profit and loss for the year in which revisions are
made.

Liquidated damages (LD) represents the expected
claim which the Company may need to pay for non¬
fulfilment of certain commitments as per the terms
of respective sales contract. These are determined on
case to case basis considering the dynamics of each
contract and the factors relevant to that sale.

The Company provides installation services that
are bundled together with the sale of products
to a customer. Contracts for bundled sales of
product and installation services are considered
as one performance obligations because company
believes underlying goods and services are a single
performance obligation, single commercial objective
or the consideration in one contract depends on
another. Hence the installation services has been
considered as a part of Sale of Pre-engineered
building (PEB) contracts.

Sale of building materials

Revenue from sale of building materials is recognised
at the point in time when control of the asset is
transferred to the customer, generally on delivery of
the material. The payment terms depends upon each
contract entered into with the customer.

The Company considers whether there are
other promises in the contract that are separate
performance obligations to which a portion of
the transaction price needs to be allocated (e.g.,
warranties). In determining the transaction price for

the sale of material, the Company considers the effects
of variable consideration, the existence of significant
financing components, non cash consideration, and
consideration payable to the customer (if any).

(i) Variable Consideration

If the consideration in a contract includes a
variable amount, the Company estimates the
amount of consideration to which it willbe
entitled in exchange for transferring the goods
to the customer. The variable consideration is
estimated at contract inception and constrained
until it is highly probable that a significant revenue
reversal in the amount of cumulative revenue
recognised will not occur when the associated
uncertainty with the variable consideration is
subsequently resolved.

(ii) Significant financing component

The Company applies the practical expedient for
short-term advances received from customers.
That is, the promised amount of consideration
is not adjusted for the effects of a significant
financing component if the year between the
transfer of the promised good or service and the
payment is one year or less.

(iii) Warranty obligations

The Company typically provides warranties for
general repairs of defects that existed at the
time of sale. These assurance-type warranties
are accounted for under Ind AS 37 Provisions,
Contingent Liabilities and Contingent Assets.

(iv) Interest income

Interest income is recognised on a time
proportion basis taking into account the amount
outstanding and the applicable interest rate.
Interest income is included under the head
"other income" in the statement of profit and
loss.

Other

Other items of income are accounted as and when the
right to receive such income arises and it is probable
that the economic benefits will flow to the Company
and the amount of income can be measured reliably.

Contract balances

a. Contract Assets:

Revenue earned but not billed to customers
against Sale of Pre-engineered building (PEB)

contracts is reflected as Contract assets because
the receipt of consideration is conditional on
Company''s performance under the contract
(i.e. transfer control of related goods or services
to the customer). Upon completion of the
installation and acceptance by the customer,
the amount recognised as contract assets is
reclassified to trade receivables.

Contract assets are subject to impairment
assessment. Refer to accounting policies on
impairment of financialassets in section XVI
Financial instruments - initialrecognition and
subsequent measurement.

b. Trade Receivables

A receivable is recognised if an amount of
consideration that is unconditional (i.e., only the
passage of time is required before payment of
the consideration is due). Refer to accounting
policies of financial assets in section XVI Financial
instruments - initial recognition and subsequent
measurement.

c. Contract Liabilities:

A contract liability is recognised if a payment is
received or a payment is due (whichever is earlier)
from a customer before the Company transfers
the related goods or services. Contract liabilities
are recognised as revenue when the Company
performs under the contract (i.e., transfers control
of the related goods or services to the customer).

V. Government grants

Government grants are recognised where there is
reasonable assurance that the grant will be received,
and all attached conditions will be complied with. When
the grant relates to an expense item, it is recognised
as income on a systematic basis over the periods
that the related costs, for which it is intended to
compensate, are expensed. When the grant relates to
an asset, it is recognised as income in equal amounts
over the expected useful life of the related asset.
When the Company receives grants of non¬
monetary assets, the asset and the grant are
recorded at fair value amounts and released
to profit or loss over the expected useful life in
a pattern of consumption of the benefit of the
underlying asset i.e. by equal annual instalments.
The Company has elected to present the grant in the
balance sheet as deferred income, which is recognised
in profit or loss on a systematic and rational basis over
the useful life of the asset.

VI. Taxes:

a. Current Income Tax

Current income tax assets and liabilities
are measured at the amount expected to
be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to
compute the amount are those that are enacted
or substantively enacted, at the reporting date in
the countries where the Company operates and
generates taxable income.

Current income tax relating to items recognised
outside profit or loss is recognised outside profit
or loss (either in other comprehensive income
or 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 considers whether
it is probable that a taxation authority will accept
an uncertain tax treatment. The Company shall
reflect the effect of uncertainty for each uncertain
tax treatment by using either most likely method
or expected value method, depending on
which method predicts better resolution of the
treatment.

b. Deferred tax

Deferred tax is provided using the liability method
on temporary differences between the tax
bases of assets and liabilities and their carrying
amounts for financial reporting purposes at the
reporting date.

Deferred tax liabilities are recognised for all
taxable temporary differences, except when
the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in
a transaction that is not a business combination
and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss.

Deferred tax assets are recognised for all
deductible temporary differences, the carry
forward of unused tax credits and any unused
tax losses. Deferred tax assets are recognised to
the extent that it is probable that taxable profit
will be available against which the deductible
temporary differences, and the carry forward of
unused tax credits and unused tax losses can
be utilised, except when the deferred tax asset
relating to the deductible temporary difference
arises from the initial recognition of an asset or
liability in a transaction that is not a business

combination and, at the time of the transaction,
affects neither the accounting profit nor taxable
profit or loss.

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 willbe 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 OCI or directly in equity.

The Company offsets deferred tax assets and
deferred tax liabilities if and only if it has a legally
enforceable right to set off current tax assets and
current tax liabilities and the deferred tax assets
and deferred tax liabilities relate to income taxes
levied by the same taxation authority.

In assessing the recoverability of deferred tax
assets, the Company relies on the same forecast
assumptions used elsewhere in the Financial
Statements and in other management reports.

c. Goods and service taxes (GST) paid on
acquisition of assets or on incurring
expenses

Expenses and assets are recognised net of the
amount of goods and service taxes paid, except :

- when the tax incurred on a purchase of
assets or services is not recoverable from
the taxation authority as input tax credit,
in which case, the tax paid is recognised as
part of the cost of acquisition of the asset or
as part of the expense item, as applicable.

- when receivables and payables are stated
with the amount of tax included.

The net amount of tax recoverable from, or
payable to, the taxation authority is included as
part of other current assets or liabilities in the
balance sheet.

VII. Property, plant and equipment

Under the previous GAAP, Property, plant and
equipment and capital work in progress were carried
in the balance sheet at cost net of accumulated
depreciation and accumulated impairment loss (if
any). On transition to Ind AS, the Company has elected
to measure all items of property, plant and equipment
at the date of transition i.e. April 01, 2021 to Ind AS
at its fair value and use that fair values as its deemed
cost at that date.

Capitalwork in progress is stated at cost, net of
accumulated impairment loss, if any. Property, plant
and equipment are stated at cost, net of accumulated
depreciation and accumulated impairment losses,
if any. Such cost includes the cost of replacing part
of the plant and equipment and borrowing costs for
long-term construction projects if the recognition
criteria are met. When significant parts of plant and
equipment are required to be replaced at intervals, the
Company depreciates them separately based on their
specific useful lives. Likewise, when a major inspection
is performed, its cost is recognised in the carrying
amount of the plant and equipment as a replacement
if the recognition criteria are satisfied. All other repair
and maintenance costs are recognised in profit or loss
as incurred. The present value of the expected cost
for the decommissioning of an asset after its use (if
any) is included in the cost of the respective asset if
the recognition criteria for a provision are met. As per
estimate of the management, the Company does not
have any expected cost of decommission on any asset.

When significant parts are required to be replaced at
regular intervals, the Company recognises such parts
as separate component of assets and depreciates
separately based on their specific useful life. When
an item of PPE is replaced, then its carrying amount
is de-recognised and cost of the new item of PPE is
recognised.

*The Company, based on technical assessment
made by technical expert and management
estimate, depreciates Buildings and Vehicle over
estimated useful lives which are different from
the useful life prescribed in Schedule II to the
Companies Act, 2013. The management believes
that these estimated useful lives are realistic and
reflect fair approximation of the year over which
the assets are likely to be used.

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

The residual values, useful lives and methods of
depreciation of property, plant and equipment
are reviewed at each financial year end and
adjusted prospectively, if appropriate.

VIII. Investment properties

On transition to Ind AS (i.e. April 01, 2021), the
Company has elected to continue with the carrying
value of all investment properties measured as per
the previous GAAP and use that carrying value as the
deemed cost of investment properties.

Investment properties are measured initially at cost,
including transaction costs. Subsequent to initial
recognition, investment properties are stated at cost
less accumulated depreciation and accumulated
impairment loss, if any.

The cost includes the cost of replacing parts and
borrowing costs for long-term construction projects if
the recognition criteria are met.

Depreciation on factory buildings component of
investment property having gross block of Rs. 132.52
Lakhs is calculated on a straight line basis over the
remaining useful life after considering the overall useful
life of 40 years (as re-assessed by the management in
an earlier year based on technical evaluation), which
is higher than the useful life prescribed in Schedule II
to Companies Act, 2013.

Depreciation on residential property component of
investment property of Rs. 30.52 Lakhs, which is yet to
be put to use, will be calculated once the said property
is put to use.

Depreciation on Leasehold land component of
investment property taken on lease is calculated over
the useful life or the year of primary lease of 90 years,
whichever is lower.

Though the Company measures investment properties
using cost-based measurement, the fair value of
investment properties are disclosed in the notes. Fair
values are determined based on an annual evaluation
performed by an accredited external independent
valuer applying a valuation model recommended by
the International Valuation Standards Committee.

Investment properties are derecognised either
when they have been disposed of or when they are
permanently withdrawn from use and no future
economic benefit is expected from their disposal. The
difference between the net disposal proceeds and the
carrying amount of the asset is recognised in profit
or loss in the year of derecognition. In determining
the amount of consideration from the derecognition
of investment properties the Company considers
the effects of variable consideration, existence

of a significant financing component, non-cash
consideration, and consideration payable to the buyer
(if any).

Transfers are made to (or from) investment properties
only when there is a change in use. Transfers between
investment property, owner-occupied property and
inventories do not change the carrying amount of
the property transferred and they do not change the
cost of that property for measurement or disclosure
purposes.

IX. Intangible assets:

On transition to Ind AS, the Company has elected
to continue with the carrying value of all intangible
assets recognised as at April 1,2021 measured as per
the previous GAAP and use that carrying value as the
deemed cost of such other intangible assets.

Intangible assets acquired separately are measured
on initialrecognition at cost. Following initial
recognition, intangible assets are carried at cost less
any accumulated amortisation and accumulated
impairment losses. Internally generated intangibles,
excluding capitalised development costs, are not
capitalised and the related expenditure is reflected in
profit or loss in the year in which the expenditure is
incurred.

Intangible assets with finite lives are amortised over
the useful economic life and assessed for impairment
whenever there is an indication that the intangible
asset may be impaired. The amortisation period and
the amortisation method for an intangible asset with
a finite useful life are reviewed at least at the end
of each reporting period. Changes in the expected
useful life or the expected pattern of consumption
of future economic benefits embodied in the asset
are considered to modify the amortisation period or
method, as appropriate, and are treated as changes
in accounting estimates. The amortisation expense on
intangible assets with finite lives is recognised in the
statement of profit and loss unless such expenditure
forms part of carrying value of another asset.

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

Computer software:

Cost relating to software and software licenses, which
are acquired, are capitalised and amortised on a
straight-line basis over their estimated useful lives
of three years or actual year of license, whichever is
lower.

X. Borrowing costs

Borrowing costs directly attributable to the
acquisition, construction or production of an asset
that necessarily takes a substantial period of time to
get ready for its intended use or sale are capitalised
as part of the cost of the asset. All other borrowing
costs are expensed in the period in which they occur.
Borrowing costs consist of interest and other costs
that an entity incurs in connection with the borrowing
of funds.

XI. 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 of time 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 of Use Assets:

The Company recognises right-of-use assets at
the commencement date of the lease (i.e., the
date the underlying asset is available for use).
Right-of-use assets are measured at cost, less
any accumulated depreciation and accumulated
losses, and adjusted for any remeasurement of
lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments
made at or before the commencement date less
any lease incentives received. 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, as follows:

Plant and machinery 8 years

Building 10 years

Land 90/99 years

If 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.

The right-of-use assets are also subject to
impairment. Refer to the accounting policies in
section XIII. Impairment of non-financial assets.

On transition to Ind AS (i.e. April 01, 2021), the
Company has elected to measure Right-of-use
assets (Leasehold land) at its fair value and use
fair value as its deemed cost.

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 year in which the event or condition that
triggers the payment occurs.

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

disposed off before maturity are de-recognised
from the balance sheet and the resulting gains/
(losses) are included in the statement of profit
and loss within other expenses /other income.
Lease liabilities and right of use assets have been
presented as separate line in the balance sheet.
Lease payments have been classified as cash
used in financing activities.

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

The Company applies the short-term lease
recognition exemption to its short-term leases
of building and plant and equipment (i.e., those
leases that have a lease term of 12 months or
less from the commencement date and do not
contain a purchase option), except in case of lease
contracts with related parties since there exist
economic incentive for the Company to continue
using the leased premises for a period longer
than 11 months and considering the contract
is with the related parties, it does not foresee
non-renewal of the lease term for future periods,
thus basis the substance and economic of the
arrangements, management believes that under
Ind AS 116, the lease terms in the arrangements
with related parties have been determined
considering the period for which management
has an economic incentive to use the leased
assets (i.e., reasonably certain to use the asset
for the said period of economic incentive). Such
assessment of incremental period is based on
management assessment of various factors
including the remaining useful life of the assets
as on the date of transition. The management
has assessed period of arrangement with related
parties as 7-10 years as at April 01, 2021. It also
applies the lease of low-value assets recognition
exemption to leases of plant and equipment that
are considered to be low value. Lease payments
on short-term leases and leases of low-value
assets are recognised as expense on a straight¬
line basis over the lease term.

Company as a Lessor

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

are added to the carrying amount of the leased
asset and recognised over the lease term on the
same basis as rental income. Contingent rents
are recognised as revenue in the year in which
they are earned.

Leases are classified as finance leases when
substantially allof the risks and rewards of
ownership transfer from the Company to
the lessee. Amounts due from lessees under
finance leases are recorded as receivables at the
Company''s net investment in the leases. Finance
lease income is allocated to accounting year so
as to reflect a constant periodic rate of return on
the net investment outstanding in respect of the
lease.

XII. Inventories

Inventories are valued at the lower of cost and net
realisable value.

Costs incurred in bringing each product to its present
location and condition are accounted for as follows:

i. Raw materials and components, packing
materials and stores and spares:

Cost includes cost of purchase and other
costs incurred in bringing the inventories to
their present location and condition. However,
materials and other items held for use in the
production of inventories are not written down
below cost if the finished products in which
they will be incorporated are expected to be
sold at or above cost. Cost of raw materials and
components, packing materials and stores and
spares is determined on a moving weighted
average method. Stores and spares which do
not meet the definition of property, plant and
equipment are accounted as inventories.

ii. Work in progress, Semi-finished goods and
finished goods.

Lower of cost and net realisable value. Cost
includes cost of direct materials and labour and
a proportion of manufacturing overheads based
on normal operating capacity. Cost is determined
on a moving weighted average basis.

Scrap is valued at net realisable value.

Net realisable value is the estimated selling
price in the ordinary course of business, less
estimated costs of completion and estimated
costs necessary to make the sale.

XIII. Impairment of non - financial assets

The Company assesses, at each reporting date,
whether there is an indication that an asset may be
impaired. If any indication exists, or when annual
impairment testing for an asset is required, the
Company estimates the asset''s recoverable amount.
An asset''s recoverable amount is the higher of an
asset''s fair value less costs of disposal and its value
in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate
cash inflows that are largely independent of those
from other assets or groups of assets. When the
carrying amount of an asset exceeds its recoverable
amount, the asset is considered impaired and is
written down to its recoverable amount.

In assessing value in use, the estimated future cash
flows are discounted to their present value using a
pre-tax discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset. In determining fair value
less costs of disposal, recent market transactions are
taken into account. If no such transactions can be
identified, an appropriate valuation model is used.
These calculations are corroborated by valuation
multiples or other available fair value indicators.

The Company bases its impairment calculation on
detailed budgets and forecast calculations, which
are prepared separately for each of the Company''s
CGUs to which the individual assets are allocated.
These budgets and forecast calculations generally
cover a period of five years. For longer year, a long¬
term growth rate is calculated and applied to project
future cash flows after the fifth year. To estimate cash
flow projections beyond periods covered by the most
recent budgets/forecasts, the Company extrapolates
cash flow projections in the budget using a steady or
declining growth rate for subsequent years, unless
an increasing rate can be justified. In any case, this
growth rate does not exceed the long-term average
growth rate for the products, industries, or country or
countries in which the Company operates, or for the
market in which the asset is used.

Impairment losses of continuing operations including
impairment on inventories, are recognised in the
statement of profit and loss.

The impairment assessment for all assets is made at
each reporting date to determine whether there is
an indication that previously recognised impairment
losses no longer exist or have decreased. If such
indication exists, the Company estimates the asset''s
or CGU''s recoverable amount. A previously recognised
impairment loss is reversed only if there has been a
change in the assumptions used to determine the
asset''s recoverable amount since the last impairment
loss was recognised. The reversal is limited so that
the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount
that would have been determined, net of depreciation,
had no impairment loss been recognised for the
asset in prior years. Such reversal is recognised in the
statement of profit and loss unless the asset is carried
at a revalued amount, in which case, the reversal is
treated as revaluation increase.

The Company assesses where climate risks could
have a significant impact, such as the introduction
of emission-reduction legislation that may increase
manufacturing costs. These risks in relation to climate-
related matters are included as key assumptions
where they materially impact the measure of
recoverable amount, These assumptions have been
included in the cash-flow forecasts in assessing value-
in-use amounts.