Accounting Policies of The Phosphate Company Ltd. Company

Mar 31, 2024

2. Material Accounting Poilicies 11) Basis of Preparation

These accounts have been prepared in accordance with Indian Accounting Standards (Ind AS) prcsmbed under Action 133 of the Companies Act 2013 (’Act¹) read with relevant Rules. These financial statements arc prepared in accordance with historical cost convention on the ac^al basis exrept for certain financial instruments which are measured at fair values.

b) Revenue from Contract with Customer

Revenue b measured at the fair value of the consideration received or receivable, net of returns, discounts, volume rebates, outgoing sales taxes and goods and service tax. The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company regardless of when the payment is being made. The specific recognition criteria descrilK-d below must also be met before revenue is recognised.

Sale of Products

Revenue from contracts wth customeis is recognised when control of the goods or services arc transferred to the customer at an amount that reflects the consideration to which the Company expects tu be entitled in exchange fur those g^oods or services. Revenue is measured at the- fair value of the conSiderntion received or receivable, net of returns, discounts, volume rebates, and goods and servicc tax. The Company rtecogtiiscs revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits, will flow tu the Company regardless uf when the payment is. being made.

specific rewgjUtion criteria described Ix-low must also be met before revenue is recognised.

Contract balances Trade receivables

A receivable represents the Company''s right to an amount of consideration that is unconditional (i.c, only the passage of time is required before payment of the consideration is due)

Refund Liabilities

A refund liability is the obligation to refund some or all of the consideration received (or receivable) from the customer and is measured at the amount the Company ultimately expects it will have- to return to the customer, The Company updates its estimates of refund liabilities (and tie corresponding change in the transaction phere) at the end of each reporting parted. Refer to above accountiig policy on variable consideration.

Dividend income i.s recognized when the company''s right to receive dividend is established. Interest income is recognized using the offective interest meihod. All other inccnme are reccignized on accrual basis-

c) Subsidy

Subsidy / Conc''SSion rtroivable on he Company''s product are accounted when there is .» reasonable assurarure and certaiiuty that such subsidy will be retetivable and the company'' will be able to comply with the requirements attached with its realisation,

d) Property, Plant & Equipment

Property, Plant and Equipment are stated at c06t, less accumulated deprecation and accumulated impairment loss, if any. The cost of Property, Plant & E:quipmc.nt comprises of its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use. Interest and other financial charges on loans borrowed specifically for acquisition of capital assets are capitalized till ihe s.tarl of commercial production.

Depreciation is provided on the straight line method for building which is provided on written down value method over the estimated useful lives of assets and are in line with the requirements of Part Co( Schedule II of the Companies Acl, 2013.

Advances paid towards the acquisition o( property. plant and equipment outstanding at each balance sheet date is classified as Capital Advances under other Non-Current Assets and the cos.1 of assets, not put to use before such date are diselosed under ‘Capital Work in Progress''.

Ihe cnc;t and related accumulated depreciation arc eliminated from the financed Statements. uJ)()n sale or retirement of the asset and the resultant gains or losses are recognized in ^ Statement of Profit & Loss. ''Die method of depreciation, useful lives and residual values are reviewed at each financial year end and adjusted prospectively, if appropriate.

e) Inventories

Inventories are valued at cost or net riMlisnblo v.ihiv whkhever is lower. Closing Mock hits been valued on FIFO basts, Cost comprises expenditure incurred in tle normal co.urse of business in bringing such inventories to its location and indudes, where apptk''able, appropriate overheads based on normal level of activity.

Net realisable value i.s the estimated selling price in the ordinaiy course of business, Ira estimated costs of completion and the estimated costs necessary to make the.- sale.

f) Financial Instruments

Initial recognition and measurement

The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions ol the instrummt All financial assets and liabilities arc recognizod at fair value on initial recognition, exorpi for trade receivables which arc initially measured at tr^wnction prico. Transaction CO$ts Hurt are directly attributable to the <''IC(Ju&liition or issue'' of financial assets ;md financial liabilities, which ate not at fair value through preilit or loss, are added to the fair value on initial recognition, Regular way purchase and sale of financial assets are accounted for at trade date.

Subsequent measurement

i. Non derivative financial instruments

1) Financial assets carried .ii amortiud cost

A financial asset is subsequently measured ill amortized cost if it is held within a business model whose objective is to hold lire asset h\ order to collect contractual cash Hows and the contractual terms of the financial asset give rise on specified dates to cash flows that are wlely payments of piincipal and interest on the principal amount outstasidmg.

2) Financial assets at fair value through other comprehensive income

;\ financial asset is subsequenlly measured at fair value through other comprehensive income if ii is held within a busiines.s model whose ot>;ecti\ e is acfoeved by both collating contractual cash flows and selling financial assets .and the contractual terns of the financial asset give rise on specified dates to cashflows that are sold)'' payments of principal and interest on theprincipal amount outstanding.

3) Financial assets al fair value through prom or loss

A financial asset whim is lot classified in any of iheahovecategories are subsequently fair valued through profit or loss

4) Financial liabilities

Financial liabilities are subsequently carried at amortized cost using the effective interest method, excopt for contingent consideration recognized in i busi^OC$$ combination which is subsequently measured at fair value through profit and loss. for trade .and other payables maturing, within one year from the Ralanco Sheet date, the cartying amounts approximate fair value due to tile short maturity these

instruments.

5) Investment i n subsidiaries

lnvesrment in subsidiaries is carried at cost in the separate financial statements,

ii. Derivative financial instruments

The Company holds derivative financial insttuments such .as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. Such derivative financial instalments arc initi.ally recognized at fair value on the date on which a derivative contract is entered into and aresubsequently re-measuredat fair vaJue throogh profit or less

Derecognition of financial Instruments

The compasiv derecognizes a financial asset when the contractual rights to the cash fiows from the financal asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS IOCJ A financial liability (or a part of a financial liability) is derecognized from the Company''s belance Sheet when the obligation specified in the contract is discharged or cancelled or expires.

g) Fitir Value Measurement

The Company uses valuation techniques that are appropriate in the ciretunsta^ncts and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing 1he use of unobservable inputs Ail methods of assessing fail'' vdue result in general approximation of value and such value may never ectually be realized

AH .assets and liabilities for which fair value is measured or di.sdased in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest lcvd input that is significant to the fair value measurement as a whole: i) Level 1 — Quoted (unadjusted) market prices m active markets for identical assets or liabilities.

U) bevel 2 — Valuation techniques for which tht! lowest level input that ls significant to the (air value measurement is directly or indirectly observable.

iii) Level 3 — Valuation techniques for which the lowest lt''Vd input that is significant to the fair value measurement is unobservable

h) Impairment

Impairment is^ogni.z.ed basest On the followmg principle:

Financial Assets

The Company recognizes loss allowanra using Ihe Expected Credjl lASS (ECL} model for the financial assets which are n(II fair valued through profit or . Loss allowance for trade receivables with no significant financing component is measured .11 an amount equal to llfe time ECL. For all other financial a^sscts, expected credit l^o:,s,es are measured at an amount ^ual to the 12 month E^L unless there has been a significant increase in credit risk from initial recognition in which case those are measured at life time OCL The amount ol expected cr-c:dit losses (or revtlal) that is required to adjust die loss allowance at therep0rting date to the amount that is required to be recognized is ^reoognirredas an impairment gain or loss in profit or loss.

Non-Finand.11 Assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and are tested .annually for impairment, or more frequently i.f events or things in drtoinstances indicate that they might be impaired, Other «a^5:$4:1S are tested for impainnent whenever events or changes in circumslanecs indicale that the carrying amount may out be recoverable. An impairment loss is recognized for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amiunt is the higher of an assets fair value less costs of disposal and value in use. For the purpore of assessing impairment assets are grouped at the lowest level for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups ol .assets (C"Jsh generating unit] Non* financial asseits other than goodwill that suffered an impairment are reviewed for possible reversal ol the impairment al the end of reporting period.