Indogulf Cropsciences Ltd. நிறுவனத்தின் கணக்கியல் கொள்கைகள்

amount, the impairment loss is recorded in the
Statement of Profit and Loss

b) Revenue recognition

Revenue from Contracts with Customers

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.

Revenue is stated exclusive of Goods and Service
Tax (GST).

The disclosures of significant accounting
judgements, estimates and assumptions relating
to revenue from contracts with customers are
provided in Note 45.

The specific recognition criteria described below
must also be met before revenue is recognised.

Sales of goods

Revenue from the sale of goods is recognised at
the point in time when control is transferred to the
customer which is usually on shipment. Revenue is
measured based on the transaction price, which is
the consideration, adjusted for volume discounts,
rebates, scheme allowances, price concessions,
incentives, and returns, if any, as specified in the
contracts with the customers. Revenue excludes
taxes collected from customers on behalf of the
government. Accruals for discounts/incentives and
returns are estimated (using the most likely method)
based on accumulated experience and underlying
schemes and agreements with customers. Due to
the short nature of credit period given to customers,
there is no financing component in the contract.

Rendering of services

Revenue from sale of services is recognised over the
period of time as per the terms of the contract with
customers based on the stage of completion when
the outcome of the transactions involving rendering
of services can be estimated reliably.

Contract balances
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 (o) financial instruments.

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).

Other income
Interest Income

For all financial instruments measured either
at amortised cost or fair value through other
comprehensive income, interest income is recorded
using the effective interest rate (EIR). EIR is the rate
that exactly discounts the estimated future cash
payments or receipts over the expected life of the
financial instrument or a shorter period, where
appropriate, to the gross carrying amount of the
financial asset. When calculating the effective
interest rate, the Company estimates the expected
cash flows by considering all the contractual
terms of the financial instrument (for example,
prepayment, extension, call and similar options)
but does not consider the expected credit losses.
Interest income is included in other income in the
Statement of Profit and Loss.

Dividends

Revenue is recognised when the Company''s right
to receive the payment is established, which is
generally when shareholders approve the dividend.

c) Property, plant and equipment

Items of property, plant and equipment and
capital work-in progress are stated at cost, net
of accumulated depreciation and accumulated
impairment losses, if any. The cost comprises
purchase price, borrowing costs if capitalization
criteria are met and directly attributable cost of
bringing the asset to its working condition for the
intended use. Any trade discounts and rebates
are deducted in arriving at the purchase price.
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. Subsequent expenditure related to
an item of fixed asset is added to its book value only
if it increases the future benefits from the existing
asset beyond its previously assessed standard of
performance. 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. All other repair and
maintenance costs are recognised in Statement of
Profit and Loss as incurred. In respect of additions to

/deletions from the property, plant and equipment,
depreciation is provided on pro-rata basis i.e.
from (upto) the date on which asset is ready for use
(disposed of).

An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising
on the disposal or retirement of an item of property,
plant and equipment is determined as the difference
between the sales proceeds and the carrying
amount of the asset and is recognised in Statement
of Profit and Loss.

Assets in the course of construction are capitalised
in the assets under Capital work in progress net of
accumulated impairment loss if any. 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 present value of any obligatory
decommissioning costs are capitalised in the
asset when the recognition criteria for provisions
are satisfied. Revenue (net of cost) generated from
production during the trial period is capitalised.

Property, plant and equipment except freehold land
held for use in the production, supply or administrative
purposes, are stated in the consolidated financial
statement at cost less accumulated depreciation
and accumulated impairment losses, if any.

Depreciable amount for assets is the cost of an
asset, or other amount substituted for cost, less its
estimated residual value. Depreciation is recognised
so as to write off the cost of assets (other than
freehold land and properties under construction)
less their residual values over their useful lives,
using written down value method as per the useful
life prescribed in Schedule II to the Companies
Act, 2013.

The Company, based on technical assessment made
by technical expert and management estimate,
depreciates certain items of plant and equipment
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 period over which
the assets are likely to be used. Depreciation on
remaining items of property, plant & equipment has
been provided on Straight Line Method based on
useful life of the assets as prescribed in Schedule
II of the Companies Act, 2013. . Furthermore, the

Company considers climate-related matters,
including physical and transition risks. Specifically,
the Company determines whether climate-related
legislation and regulations might impact either the
useful life or residual values.

d) Investment Properties

Investment properties are properties held for rental
income, capital appreciation or the purpose of future
use is not yet determined by the management as
of the reporting date. Investment properties are
measured initially at cost, including transaction
costs. Subsequent costs are included in the asset''s
carrying amount or recognized as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with the
asset will flow to the Company. All other repair and
maintenance costs are recognized in Statement of
profit and loss as incurred.

Investment properties are subsequently measured
at cost less accumulated depreciation and
accumulated impairment losses, if any. 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 the evaluation
performed by the management based on the
acceptable valuation method.

Investment properties are de-recognized 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,
if any, and the carrying amount of the asset is
recognized in the Statement of profit and loss in the
period of de-recognition.

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.

e) Intangible assets

Intangible assets acquired separately are
measured on initial recognition at cost.
Following initial recognition, intangible assets with
finite life 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 period in which the expenditure
is incurred.

Intangible assets are amortized on a straight- line
basis over the estimated useful economic life.

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.

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

Research costs are expensed as incurred.
Development expenditures on an individual project
are recognised as an intangible asset when
the Company can demonstrate technical and
commercial feasibility of making the asset available
for use or sale.

Following initial recognition of the development
expenditure as an asset, the asset is carried at cost
less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins
when development is complete and the asset is
available for use. It is amortised over the period
of expected future benefit. Amortisation expense
is recognised in the Statement of Profit and Loss
unless such expenditure forms part of carrying
value of another asset.

A summary of the policies applied to the Company''s
intangible assets is as follows:

f) Foreign currencies
Transactions and Balances

Transactions in foreign currency are recorded
applying the exchange rate at the date of transaction.

Monetary assets and liabilities denominated in
foreign currency remaining unsettled at the end of
the year, are translated at the closing rates prevailing
on the Balance Sheet date.

Non-monetary items which are carried in terms of
historical cost denominated in foreign currency are
reported using the exchange rate at the date of initial
transaction.

Exchange differences arising as a result of the
above are recognized as income or expenses in the
Statement of Profit and Loss. Exchange difference
arising on the settlement of monetary items at rates
different from those at which they were initially
recorded during the year, or reported in previous
financial statements, are recognised as income or
expenses in the year in which they arise.

g) Fair value measurement

The Company measures financial instruments, such
as, derivatives and equity investments 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:

a) In the principal market for the asset or
liability, or

b) 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:

a) Level 1 - Quoted (unadjusted) market prices in
active markets for identical assets or liabilities.

b) Level 2 - Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is directly or indirectly
observable.

c) 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
re-assessing categorisation (based on the lowest
level input that is significant to the fair value
measurement as a whole) at the end of each
reporting period.

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.

This note summarises accounting policy for fair
value. Other fair value related disclosures are given
in the relevant notes.

- Quantitative disclosures of fair value
measurement hierarchy (Note 48)

- Financial instruments (including those carried
at amortised cost) (Note 48)

h) 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.

A lease is a contract that contains 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 and low value leases. The Company
recognises lease liabilities to make lease payments
and right-of-use assets representing the right to use
the underlying assets.

The Company has lease contracts for various items
of office premises and warehouses.

i) Right-of-use assets

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

There are renewal terms that can extend the lease
term for up to 1 -2 years and are included in the
lease term when it is reasonably certain that the
Company will exercise the option. The right-of-use
assets are also subject to impairment. Refer to the
accounting policies in section (j) Impairment of
non-financial assets.

The Right-of-use assets are presented as separate
line item in the balance sheet.

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. 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
expense in the period in which the event or condition
that triggers the payment occurs.

In calculating the present value of lease payments,
the Company uses its incremental borrowing rate at
the lease commencement date because the interest
rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in
the lease term, a change in the lease payments.

The lease liabilities are presented as separate line
item in the balance sheet under financial liabilities.

iii) Short-term leases

The Company applies the short-term lease
recognition exemption to its short-term leases of
office premises, and warehouses (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).

Lease payments on short-term leases 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. Rental income arising is accounted for on
a straight-line basis over the lease terms and is
included in other income in the statement of profit
or loss due to its operating nature. 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.

i) Inventories

The items of inventories are measured at cost
after providing for obsolescence, if any. Cost of
inventories comprise of cost of purchase, cost of
conversion and appropriate portion of variable and
fixed proportion overheads and such other costs
incurred in bringing them to their respective present
location and condition. Fixed production overheads
are based on normal capacity of production
facilities.

Stores and spares, packing materials and raw
materials are valued at lower of cost or net realisable
value. However, the aforesaid items are not valued
below cost if the finished products in which they
are to be incorporated are expected to be sold at or
above cost.

Semi-finished products, finished products and
by-products are valued at lower of cost or net
realisable value.

Traded goods are valued at lower of cost and net
realizable value.

Cost of raw material, process chemicals, stores
and spares packing materials, trading and other
products are determined on weighted average basis.

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

j) 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 or cash-generating unit''s (CGU)
net selling price 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. Where the carrying amount of an asset or
CGU 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 net selling price, recent market
transactions are taken into account, if available. If no
such transactions can be identified, an appropriate
valuation model is used.

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

An assessment is made at each reporting date as
to whether there is any indication that previously
recognized impairment losses may no longer exist
or may have decreased. If such indication exists, the
Company estimates the asset''s or cash-generating
unit''s recoverable amount. A previously recognized
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 recognized. 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 recognized for the asset in prior years.
Such reversal is recognized in the Statement of
Profit and Loss unless the asset is carried at a
revalued amount, in which case the reversal is
treated as a revaluation increase.

2. Material accounting policies

2.1. Basis of Preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting
Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 notified
under section 133 of the Companies Act 2013 (“the Act’ ) as amended thereafter and other relevant
provision of the Act.

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) Derivative financial instruments,

(b) Plan assets of defined employee benefit plans, and

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

The financial statements are presented in Indian Rupees (INR) which is also the Company’s functional
currency and all values are rounded to the nearest lacs, except when otherwise indicated.

2.2. Summary of material accounting policies

a) Investment in subsidiaries

A subsidiary is an entity that is controlled by another entity.

The Company’s investments in its subsidiaries and joint venture arc accounted at cost less
impairment.

Impairment of investments

The Company reviews its carrying value of investments carried at cost annually, or more
frequently when there is indication for impairment. If the recoverable amount is less than its
carrying amount, the impairment loss is recorded in the Statement of Profit and Loss

b) Revenue recognition

Revenue from Contracts with Customers

Revenue from contracts with customers is recognised when control of the goods or sen ices 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 dial it is die principal in its revenue arrangements, because it typically controls the
goods or services before transferring them to the customer.

Revenue is stated exclusive of Goods and Service Tax (GST ).

The disclosures of significant accounting judgements, estimates and assumptions relating to
revenue from contracts with customers are provided in Note 43.

The specific recognition criteria described below must also be met before revenue is recognised.
Sales of goods

Revenue from the sale of goods is recognised at the point in time when control is transferred to the
customer which is usually on shipment. Revenue is measured based on the transaction price, which
is the consideration, adjusted for volume discounts, rebates, scheme allowances, price concessions,
incentives, and returns, if any. as specified in the contracts with the customers. Revenue excludes
taxes collected from customers on behalf of the government. Accruals for discounts/incenlives and
returns are estimated (using the most likely method) based on accumulated experience and
underlying schemes and agreements with customers. Due to the short nature of credit period given
to customers, there is no financing component in the contract.

Rendering of services

Revenue from sale of services is recognised over the period of time as per the terms of the contract
with customers based on die stage of completion when the outcome of the transactions involving
rendering of services can he estimated reliably.

Contract balances

Trade receivables

A receivable is recognised if an amount of consideration that is unconditional (i.c., only the
passage of time is required before payment of the consideration is due). Refer to accounting
policies of financial assets in section (o) financial instruments.

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.c.. transfers control of the
related goods or services to the customer).

Other income

Interest Income

l or all financial instruments measured either at amortised cost or lair value through other
comprehensive income, interest income is recorded using the effective intcresi rate (E1R). EIR is
the rate that exactly discounts the estimated future cash payments or receipts over the expected life
of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of
the financial asset. When calculating the effective interest rate, the Company estimates the
expected cash flows by considering all the contractual terms of the financial instrument (for
example, prepayment, extension, call and similar options) but does not consider the expected credit
losses. Interest income is included in other income in the Statement of Profit and Loss.

Dividends

Revenue is recognised when the Company’s right to receive the payment is established, which is
generally when shareholders approve the dividend.

c) Property, plant and equipment

Items of property, plant and equipment and capital work-in progress are stated at cost, net of
accumulated depreciation and accumulated impairment losses, if any. The cost comprises
purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of
bringing the asset to its working condition lor the intended use. Any trade discounts and rebates
are deducted in arriving at the purchase price. Such cost includes the cost of replacing part of the
plant and equipment and borrow ing costs for long-term construction projects if the recognition
criteria arc met. Subsequent expenditure related to an item of fixed asset is added to its book value
only if it increases the future benefits from the existing asset beyond its previously assessed
standard of performance. When significant parts of plant and equipment are required to he
replaced at intervals, the Company depreciates them separately based on their specific useful
lives. All other repair and maintenance costs are recognised in Statement of Profit and Loss as
incurred. In respect of additions to /deletions from the property, plant and equipment, depreciation
is provided on pro-rata basis i.c. from (upto) the date on which asset is ready for use (disposed of)

An item of property, plant and equipment is derecognised upon disposal or when no future
economic benefits are expected to arise from the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item of property, plant and equipment is determined as
the difference between the sales proceeds and the carrying amount of the asset and is recognised
in Statement of Profit and Loss.

Assets in the course of construction are capitalised in the assets under Capital work in progress
net of accumulated impairment loss if any. 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 present value of any obligatory decommissioning costs arc
capitalised in the asset when the recognition criteria for provisions are satisfied. Revenue (net of
cost) generated from production during the trial period is capitalised.

Property, plant and equipment except freehold land held for use in the production, supply or
administrative purposes, are stated in the consolidated financial statement at cost less accumulated
depreciation and accumulated impairment losses, if any.

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its
estimated residual value. Depreciation is recognised so as to write off the cost of assets (other
than freehold land and properties under construction) less their residual values over their useful
lives, using written down value method as per the useful life prescribed in Schedule II to the
Companies Act, 2013.

The Company, based on technical assessment made by technical expert and management
estimate, depreciates certain items of plant and equipment over estimated useful lives which arc
different from the useful life prescribed in Schedule II to the Companies Act. 2013. The
management believes that these estimated useful lives arc realistic and reflect fair approximation
of the period over which the assets arc likely to be used. Depreciation on remaining items of
property, plant & equipment has been provided on Straight Line Method based on useful life of
the assets as prescribed in Schedule II of the Companies Act. 2013. . Furthermore, the Company

considers climate-related matters, including physical and transition risks. Specifically, the
Company determines whether climate-related legislation and regulations might impact either the
useful life or residual values.

d) Investment Properties

Investment properties are properties held for rental income, capital appreciation or the purpose of
future use is not yet determined by the management as of the reporting date. Investment properties
are measured initially at cost, including transaction costs. Subsequent costs are included in the
asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the asset will flow to the Company. All other repair
and maintenance costs arc recognized in Statement of profit and loss as incurred.

Investment properties are subsequently measured at cost less accumulated depreciation and
accumulated impairment losses, if any. 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 the evaluation performed by the management based on the
acceptable valuation method.

Investment properties are de-recognized 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 die net disposal proceeds, if any. and the carrying amount of the asset is
recognized in the Statement of profit and loss in the period of de-recognition.

The Company depreciates building component of investment property over 30 years from the date
of original purchase.

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.

e) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial
recognition, intangible assets with finite life 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 period in which the expenditure is incurred.

Intangible assets arc amortized on a straight- line basis over the estimated useful economic life.

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 arc
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.

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

Research costs are expensed as incurred. Development expenditures on an individual project arc
recognised as an intangible asset when the Company can demonstrate technical and commercial
feasibility of making the asset available for use or sale.

Following initial recognition of the development expenditure as an asset, the asset is carried at
cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the
asset begins w hen development is complete and the asset is available for use. It is amortised over
the period of expected future benefit. Amortisation expense is recognised in the Statement of
Profit and Loss unless such expenditure forms part of carrying value of another asset.

f) Foreign currencies

Transactions and Balances

Transactions in foreign currency are recorded applying the exchange rate at the date of
transaction.

Monetary assets and liabilities denominated in foreign currency remaining unsettled at the end of
the year, arc translated at the closing rates prevailing on the Balance Sheet date.

Non-monetary items which arc carried in terms of historical cost denominated in foreign currency
are reported using the exchange rate at the date of initial transaction.

Exchange differences arising as a result of the above are recognized as income or expenses in the
Statement of Profit and Loss. Exchange difference arising on the settlement of monetary items at
rates different from those at which they were initially recorded during the year, or reported in
previous financial statements, are recognised as income or expenses in the year in which they
arise.

g) Fair value measurement

The Company measures financial instruments, such as. derivatives and equity investments 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:

a) In the principal market for the asset or liability, or

b) 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 arc 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
arc 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:

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

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

c) 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 re¬
assessing categorisation (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.

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.

This note summarises accounting policy for fair value. Other fair value related disclosures are
given in the relevant notes.

- Quantitative disclosures of fair value measurement hierarchy (Note 46)

- Financial instruments (including those carried at amortised cost) (Note 46)

h) 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.

A lease is a contract that contains 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 and low value leases. The Company recognises lease liabilities to make lease payments
and right-of-use assets representing the right to use the underlying assets.

The Company has lease contracts for various items of office premises and warehouses.

i) Right-of-usc assets

The Company recognises right-of-usc assets at the commencement date of the lease ri.e.. the date
the underlying asset is available lor use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for any re-mcasurenient 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 method basis over the
lease term, as follows:

There are renewal terms that can extend the lease term for up to 1-2 years and are included in the
lease term when it is reasonably certain that the Company will exercise the option The righl-of-
use assets are also subject to impairment. Refer to the accounting policies in section (j)
Impairment ofnon-financial assets.

The Right-of-use assets are presented as separate line item in the balance sheet,

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. 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 expense 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 oflease liabilities is increased to reflect

the accretion of interest and reduced for the lease payments made. In addition, the earning
amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a
change in the lease payments.

The lease liabilities are presented as separate line item in the balance sheet under financial
liabilities.

iii) Short-term leases

The Company applies the short-term lease recognition exemption to its short-term leases of
office premises, and warehouses (i.c., those leases that have a lease term of 12 months or less
from the commencement date and do not contain a purchase option).

Lease payments on short-term leases 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. Rental income arising is accounted for
on a straight-line basis over the lease terms and is included in other income in the statement of
profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging
an operating lease arc added to the carrying amount of the leased asset and recognised over the
lease term on the same basis as rental income.

i) Inventories

The items of inventories are measured at cost after providing for obsolescence, if any. Cost of
inventories comprise of cost of purchase, cost of conversion and appropriate portion of variable
and fixed proportion overheads and such other costs incurred in bringing them to their respective
present location jnd condition. Fixed production overheads are based on normal capacity of
production facilities.

Stores and spares, packing materials and raw materials are valued at lower of cost or net realisable
value. However, the aforesaid items are not valued below cost if the finished products in which
they are to be incorporated arc expected to be sold at or above cost.

Semi-finished products, finished products and by-products are valued at lower of cost or net
realisable value.

Traded goods are valued at lower of cost and net realizable value.

Cost of raw material, process chemicals, stores and spares packing materials, trading and other
products are determined on weighted average basis.

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

j) Impairment of non-tinancial assets

The Company assesses at each reporting date whether there is an indication that an asset may he
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 or cash-generating unit''s (CGU) net selling price 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. Where the carrying amount of an
asset or CGU 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 arc
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 net
selling price, recent market transactions are taken into account, if available. If no such
transactions can be identified, an appropriate valuation model is used.

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

An assessment is made at each reporting date as to whether there is any indication that previously
recognized impairment losses may no longer exist or may have decreased. If such indication
exists, the Company estimates the asset’s or cash-generating unit’s recoverable amount. A
previously recognized 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
recognized. 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 recognized for the asset in prior years. Such reversal is
recognized in the Statement of Profit and Loss unless the asset is carried at a revalued amount, in
w hich case the reversal is treated as a revaluation increase.