Accounting Policies of Mafatlal Industries Ltd. Company

Mar 31, 2025

2A Material accounting policies

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

i. Basis of Preparation

(a) Compliance with Ind AS

The financial statements comply in all
material aspects with Indian Accounting
Standards (Ind AS) notified under Section
133 of the Companies Act, 2013 (''the Act'')
[Companies (Indian Accounting Standards)
Rules, 2015] (as amended) (''the Rules'') and
other relevant provisions of the Act.

(b) Historical cost convention

The financial statements have been prepared
on a historical cost basis, except for the
following:

• Certain financial assets and liabilities
that are measured at fair values;

• Assets held for sale - measured at fair
value less cost to sell or their carrying
amount whichever is lower;

• Defined benefit plans - plan assets
measured at fair value, and

• Share-based payments

(c) New and amended standards adopted by the
Company

The Ministry of Corporate Affairs vide
notification dated September 09, 2024
notified the Companies (Indian Accounting
Standards) Second Amendment Rules,
2024 and Companies (Indian Accounting
Standards) Third Amendment Rules, 2024,
respectively, which amended / notified
certain accounting standards (see below),
and are effective for annual reporting period
on or after April 01,2024:

• Insurance contracts - Ind AS 117

• Lease Liability in Sale and Leaseback -
Amendments to Ind AS 116

The other amendments to Ind AS notified
by these rules are primarily in the nature of
clarifications.

These amendments did not have any material
impact on the amounts recognized in prior
periods and are not expected to significantly
affect the current or future periods.

ii. Segment Reporting

Operating segments are reported in a manner
consistent with the internal reporting provided to
the Chief Operating Decision Maker ("CODM”) of
the Company. The CODM consists of Chairman
and Managing Director who are responsible for
allocating resources and assessing performance
of the operating segments. Refer Note 45 for
segment information presented.

iii. Revenue Recognition

Sale of goods

Revenue is recognized when the control of the
goods is transferred to customer, being when the
goods are shipped or delivered to the customer
and there are no unfulfilled obligations that could
affect the customer''s acceptance of the goods.
Delivery occurs when the goods have been
shipped or delivered to the specific location as the
case may be, the risks of obsolescence and loss
has been transferred, and either the customer has

accepted the goods in accordance with the sales
contract, or the Company has objective evidence
that all criteria for acceptance have been satisfied.

Revenue is recognized based on the price specified
in the contract, net of any trade discounts, volume
rebates and any taxes or duties collected on behalf
of the Government, which are levied on sales
such as goods and services tax, sales tax, value
added tax, etc. Discounts given includes rebates,
price reductions and other incentives given to
customers. The Company bases its estimates
on historical results, taking into consideration
the type of customer, the type of transaction and
the specifics of each arrangement. Accumulated
experience is used to estimate and provide for the
discounts and returns. The volume discounts are
assessed based on anticipated annual purchases.
No element of financing is deemed present
as sales are made with a credit term which is
consistent with market practice.

A receivable is recognized when the goods are
shipped or delivered, as per the terms of sales
contract as this is the point in time that the
consideration is unconditional because only the
passage of time is required before the payment is
due.

Sale of services

Revenue from services is recognized in the
accounting period in which the services are
rendered.

In the case of fixed-price contracts, the customer
pays the fixed amount based on a payment
schedule. If the services rendered by the
Company exceed the payment, a contract asset is
recognized. If the payments exceed the services
rendered, a contract liability is recognized.

iv. Property, plant and equipment:

Freehold land is carried at historical cost. All other
items of property, plant and equipment are stated
at historical cost net of accumulated depreciation
and accumulated impairment losses, if any.

Depreciation methods, estimated useful lives and
residual value:

Depreciation is provided on the straight-line
method to allocate the cost of assets, net of their
residual values, over their estimated useful lives.

Depreciation is calculated on a pro-rata basis from
the date of acquisition / installation till the date the
assets are sold or disposed of:

Leasehold land presented under Right-of-Use
Assets.

Individual assets acquired for less than '' 0.05
Lakhs are entirely depreciated in the year of
acquisition. The residual values are not more than
5% of the original cost of the asset.

Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
are included in the Statement of Profit and Loss
within other gains / (losses).

The carrying amount of an asset is written down
immediately to its recoverable amount if the
carrying amount of the asset is greater than its
estimated recoverable amount.

Refer note 2B (v) in other accounting policies
below relevant to Property, plant and equipment.

v. Intangible assets

Computer software includes enterprise resource
planning project and other cost relating to such
software which provides significant future
economic benefits. These costs comprise of
license fees and cost of system integration
services.

Computer software cost is amortized over a period
of 3 years using straight-line method.

Refer note 2B (vii) in other accounting policies
below relevant to Intangible assets.

vi. Investment properties:

Land and building that is held for long-term rental
yields or for capital appreciation or both, and
that is not in use by the Company, is classified
as investment property. Land held for a currently
undetermined future use is also classified as an
investment property.

The building component of investment properties
net of residual value are depreciated using the
straight-line method over their estimated useful
life of 30 to 60 years from the date of capitalization.

Refer note 2B (viii) in other accounting policies
below relevant to Investment properties.

vii. Impairment of assets:

The carrying amount of assets are reviewed at
each Balance Sheet date to assess if there is
any indication of impairment based on internal
/ external factors. An impairment loss on
such assessment will be recognized wherever
the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount of
the assets is fair value less cost of disposal. A
previously recognized impairment loss is further
provided or reversed depending on changes in
the circumstances and to the extent that carrying
amount of the assets does not exceed the carrying
amount that will be determined if no impairment
loss had previously been recognized.

viii. Trade receivables

Trade receivables are amounts due from
customers for goods sold or services performed
in the ordinary course of business and reflects
Company''s unconditional right to consideration
(that is, payment is due only on the passage of
time). Trade receivables are recognized initially
at the transaction price as they do not contain
significant financing components. The Company
holds the trade receivables with the objective of
collecting the contractual cash flows and therefore
measures them subsequently at amortized cost
using the effective interest method, less loss
allowance.

ix. Inventories

Raw materials, packing materials, work-in¬
progress, finished goods, goods in transit, stock-
in-trade, stores and spares other than specific
spares for machinery are valued at cost or net
realizable value whichever is lower.

Items of inventory are valued at cost or net
realizable value, whichever is lower after providing
for obsolescence and other losses, where
considered necessary. Cost is determined on the
following basis:

• Stores, spares, raw materials, packaging
material and stock-in-trade - Weighted
average cost

• Work-in-progress and finished goods -
Material cost plus appropriate value of
overheads

• Others (land) - At cost on conversion to
stock-in-trade plus cost of improvement

Cost comprises all costs of purchase, costs of
conversion and other costs incurred in bringing
the inventory to the present location and condition.

Due allowances are made for slow moving and
obsolete inventories based on estimates made by
the Company. Items such as spare parts, stand-by
equipment and servicing equipment which is not
plant and machinery gets classified as inventory.

x. Investments and other financial assets

(a) Classification

The Company classifies its financial assets in
the following measurement categories:

• those to be measured subsequently
at fair value (either through other
comprehensive income, or through
profit or loss), and

• those measured at amortized cost.

The classification depends on the business
model of the entity for managing financial
assets and the contractual terms of the cash
flows.

For assets measured at fair value, gains and

losses will either be recorded the Statement
of Profit and Loss or other comprehensive
income. For investments in debt instruments,
this will depend on the business model in
which the investment is held. For investments
in equity instruments that are not held for
trading, this will depend on whether the
Company has made an irrevocable election
(on an instrument-by-instrument basis) at
the time of initial recognition to account for
the equity investment at fair value through
other comprehensive income.

(b) Subsequent measurement

After initial recognition, financial assets are
measured at:

• Fair value {through Other Comprehensive
Income (FVOCI) or through profit or loss
(FVPL)} or,

• Amortized cost
Equity instruments:

The Company subsequently measures all
investments in equity instruments other than
subsidiary Company, associate Company and
joint venture at fair value. The Management
of the Company has elected to present
fair value gains and losses on such equity
investments in other comprehensive income.
There is no subsequent reclassification of
fair value gains and losses to the Statement
of Profit and Loss where FVOCI option is
chosen. Dividends from such investments
continue to be recognized in the Statement
of Profit and Loss as other income when the
right to receive payment is established.

Changes in the fair value of financial assets
at fair value through profit or loss are
recognized in the Statement of Profit and
Loss. Impairment losses (and reversal of
impairment losses) on equity investments
measured at FVOCI are not reported
separately from other changes in fair value.

Investments in subsidiary companies:

Investments in subsidiary companies is

carried at cost less accumulated impairment
losses, if any. Where an indication of
impairment exists, the carrying amount
of the investment is assessed and written
down immediately to its recoverable amount.
On disposal of investments in subsidiary
companies, the difference between net
disposal proceeds and the carrying amounts
are recognized in the Statement of Profit and
Loss.

(c) Impairment of financial assets

The Company assesses on a forward looking
basis the expected credit losses associated
with its assets carried at amortized cost (e.g.
trade receivables, other contractual rights to
receive cash or other financial assets). The
impairment methodology applied depends
on whether there has been a significant
increase in credit risk.

For trade receivables only, the Company
applies the simplified approach required
by Ind AS 109, which requires expected
lifetime losses to be recognized from initial
recognition of the receivables.

The Company''s assessment is that credit
risk in relation to sales made to government
customers or sub-contractors to government
customers is extremely low as the probability
of default is insignificant.

For all non-government customers, the
Company has used a practical expedient by
computing the expected credit loss allowance
for trade receivables based on a provision
matrix by taking into consideration payment
profiles over a period of 36 months before
the reporting date and the corresponding
historical credit loss experience within this
period. The historical loss rates are adjusted
to reflect the current and forward looking
information on macro economic factors
affecting the ability of customers to settle
receivables. The expected credit loss is
based on aging of days, the receivables due
and the expected credit loss rate. Further, the
Company assesses credit risk on an individual

basis in respect of certain customers in case
of event driven situation such as litigations,
disputes, change in customer''s credit risk
history, specific provision are made after
evaluating the relevant facts and expected
recovery.

(d) Income recognition:

• Interest income

Interest income from financial assets
at amortized cost is calculated using
the effective interest rate method and
is recognized in the Statement of Profit
and Loss.

Interest income is calculated by
applying the effective interest rate to
the gross carrying amount of a financial
asset except for financial assets that
subsequently become credit impaired.
For credit impaired financial assets the
effective interest rate is applied to the
net carrying amount of the financial
asset (after the deduction of loss
allowance).

¦ Dividends

Dividends are recognized in the
Statement of Profit and Loss only
when the right to receive payment
is established, it is probable that the
economic benefits associated with
the dividend will flow to the Company,
and the amount of the dividend can be
measured reliably.

Refer note 2B (viii) in other accounting
policies below relevant to Investment
and other financial assets.

ti. Financial liabilities and equity instruments

(i) Classification as debt or equity

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

(ii) Initial recognition and measurement

Financial liabilities are recognized when the
Company becomes a party to the contractual
provisions of the instrument. Financial
liabilities are initially measured at the fair
value.

(iii) Subsequent measurement

Financial liabilities are subsequently
measured at amortized cost using the
effective interest rate method. Financial
liabilities carried at fair value through profit
or loss are measured at fair value with all
changes in fair value recognized in the
Statement of Profit and Loss.

(iv) Derecognition

A financial liability is de-recognized when
the obligation specified in the contract is
discharged, cancelled or expires. A financial
liability is extinguished when the debtor
either:

a) discharges the liability by paying the
creditor, normally with cash, other
financial assets, goods or services or;

b) is legally released from primary
responsibility for the liability either by
process of law or by the creditor.

xii. Offsetting financial instruments

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

xiii. Employee benefits

(a) Post-employment obligations
Defined Benefits plan

Gratuity liability is a defined benefit obligation

and is computed on the basis of an actuarial
valuation by an actuary appointed for the
purpose as per projected unit credit method
at the end of each financial year. The liability
or asset recognized in the Balance Sheet
is the present value of the defined benefit
obligation at the end of the reporting period
less the fair value of plan assets. The liability
so provided is paid to trusts administered
by the Company for all employees, which in
turn invests in eligible securities to meet the
liability as and when it accrues for payment in
future. Any shortfall in the value of assets over
the defined benefit obligation is recognized
as a liability with a corresponding charge to
the Statement of Profit and Loss.

Provident fund contributions for certain
employees are made to a trust administered
by the Company in India. The Company''s
liability is actuarially determined (using the
Projected Unit Credit method) at the end
of the year and any shortfall in the fund
balance maintained by the Trust set up
by the Company is additionally provided.
Actuarial losses and gains are recognized in
other comprehensive income and shall not
be reclassified to the Statement of Profit and
Loss in a subsequent period.

Defined contribution plan

The Company contributes towards
Employees State Insurance Scheme, Family
Pension Fund, Superannuation Fund and
Provident Fund for certain employees, which
are defined contribution schemes.

Refer note 2B (xvii) in other accounting
policies below relevant to Employee benefits.

2.1 Critical estimates and judgments

The preparation of financial statements requires
the use of accounting estimates which, by
definition, will seldom equal the actual results.
Management also needs to exercise judgment in
applying the Company''s accounting policies.

This note provides an overview of the areas
that involved a higher degree of judgment or

complexity, and of items which are more likely
to be materially adjusted due to estimates and
assumptions turning out to be different than those
originally assessed. Detailed information about
each of these estimates and judgments is included
in relevant notes together with information about
the basis of calculation for each affected line
item in the financial statements. In addition, this
note also explains where there have been actual
adjustments this year as a result of changes to
previous estimates.

The areas involving critical estimates or judgments
are:

• Estimation of useful life of property, plant and
equipment: Notes 2A(iv), 2B(v) and 3(a)

• Loss Allowance on trade receivables: Refer
Notes 10 and 39

• Recoverability of deferred tax assets: Refer
Note 36

• Estimation of defined benefit obligation:
Note 41

• Contingent Liabilities: Note 43

Estimates and judgments are continually
evaluated. They are based on historical experience
and other factors, including expectations of future
events that may have a financial impact on the
Company and that are believed to be reasonable
under the circumstances.

2B Summary of other accounting policies

This note provides a list of other accounting
policies adopted in the preparation of these
financial statements to the extent they have not
already been disclosed in note 2A above. These
policies have been consistently applied to all the
years presented, unless otherwise stated.

i. Foreign Currency Transactions

a) Functional and presentation currency

Items included in the financial statements
of the Company are measured using
the currency of the primary economic
environment in which the Company operates
(''the functional currency''). The financial

statements are presented in Indian Rupee
(''), which is the functional and presentation
currency of the Company.

b) Transactions and balances

Foreign currency transactions are
translated into the functional currency
using the exchange rates at the dates of
the transactions. Foreign exchange gains
and losses resulting from the settlement of
such transactions and from the translation of
monetary assets and liabilities denominated
in foreign currencies at year end exchange
rates are generally recognized in the
Statement of Profit and Loss.

Non-monetary items that are measured at
fair value in a foreign currency are translated
using the exchange rates at the date when
the fair value was determined. Translation
differences on assets and liabilities carried at
fair value are reported as part of the fair value
gain or loss.

ii. Income tax

The income tax expense or credit for the period is
the tax payable on the taxable income of the current
period based on the applicable income tax rates
adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences and
unused tax losses. The current income tax charge
is calculated on the basis of the tax laws enacted
or substantively enacted at the end of the reporting
period. The Management periodically evaluates
positions taken in tax returns with respect to
situations in which applicable tax regulation is
subject to interpretation and considers whether it
is probable that a taxation authority will accept an
uncertain tax treatment. The Company measures
its tax balances either based on the most likely
amount or the expected value, depending on
which method provides a better prediction of the
resolution of the uncertainty.

Deferred income tax is provided in full, using the
liability method, on temporary differences arising
between the tax bases of assets and liabilities
and their carrying amounts. Deferred income tax

is also not accounted for if it arises from initial
recognition of an asset or liability in a transaction
other than a business combination that at the time
of the transaction affects neither accounting profit
nor taxable profit / (tax loss). Deferred income
tax is determined using tax rates (and laws) that
have been enacted or substantially enacted by
the Balance Sheet date and are expected to apply
when the related deferred income tax asset is
realized or the deferred income tax liability is
settled.

Deferred tax assets are recognized for all deductible
temporary differences and unused tax losses only
if it is probable that future taxable amounts will
be available to utilize those temporary differences
and losses.

Deferred tax assets and liabilities are offset
when there is a legally enforceable right to offset
current tax assets and liabilities and when the
deferred tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are
offset where the entity has a legally enforceable
right to offset and intends either to settle on a net
basis, or to realize the asset and settle the liability
simultaneously.

Current and deferred tax is recognized in the
Statement of Profit or Loss, except to the extent
that it relates to items recognized in Other
Comprehensive Income or directly in equity. In
this case, the tax is also recognized in Other
Comprehensive Income or directly in equity,
respectively.

iii. Government grants

Government grants are recognized at their fair
value where there is a reasonable assurance that
the grant will be received, and the Company will
comply with all attached conditions.

Government grants relating to the purchase of
property, plant and equipment are included in
non-current liabilities as deferred income and are
credited to the Statement of Profit and Loss in
proportion to depreciation over the expected lives
of the related assets and presented within other
income.

Government grants relating to income are deferred
and recognized in the Statement of Profit and Loss
over the period necessary to match them with the
costs that they are intended to compensate and
presented within other income.

Eligible export incentives are recognized in the
year in which the conditions precedent are met
and there is no significant uncertainty about the
collectability.

iv. Leases
As a lessee

The Company''s lease asset classes primarily
consist of leases for Land and Buildings. The
Company assesses whether a contract is or
contains a lease, at inception of a contract. A
contract is, or contains, a lease if the contract
conveys the right to control the use of an identified
asset for a period of time in exchange for
consideration.

At the date of commencement of the lease, the
Company recognizes a right-of-use asset ("ROU”)
and a corresponding lease liability for all lease
arrangements in which it is a lessee, except for
leases with a term of twelve months or less (short
term leases) and leases of low value assets. For
these short term and leases of low value assets,
the Company recognizes the lease payments as
an operating expense on a straight-line basis over
the term of the lease.

The lease liability is initially measured at the present
value of the future lease payments. The lease
payments are discounted using the interest rate
implicit in the lease or, if not readily determinable,
using the incremental borrowing rates. The lease
liability is subsequently remeasured by increasing
the carrying amount to reflect interest on the lease
liability, reducing the carrying amount to reflect the
lease payments made.

The right-of-use assets are initially recognized at
cost, which comprises the initial amount of the
lease liability adjusted for any lease payments
made at or prior to the commencement date
of the lease plus any initial direct costs less
any lease incentives. They are subsequently

measured at cost less accumulated depreciation
and impairment losses, if any. Right-of-use
assets are depreciated from the commencement
date on a straight-line basis over the shorter of
the lease term and useful life of the underlying
asset.

A lease liability is remeasured upon the occurrence
of certain events such as a change in the lease
term or a change in an index or rate used to
determine lease payments. The remeasurement
normally also adjusts the leased assets.

As a lessor

Lease income from operating leases where the
Company is a lessor is recognized in income on
a straight-line basis over the lease term unless
the receipts are structured to increase in line
with expected general inflation to compensate
for the expected inflationary cost increases.
The respective leased assets are included in the
Balance Sheet based on their nature.

v. Property, Plant and Equipment

Historical cost includes expenditure that is directly
attributable to the acquisition of the items.

Subsequent costs are included in the carrying
amount of asset or recognized as a separate
asset, as appropriate, only when it is probable that
future economic benefits associated with the item
will flow to the Company and the cost of the item
can be measured reliably. The carrying amount of
any component accounted for as a separate asset
is derecognized when replaced. All other repairs
and maintenance expenses are charged to the
Statement of Profit and Loss during the reporting
period in which they are incurred.

Spare parts, stand-by equipment and servicing
equipment are recognized as property, plant and
equipment if they are held for use in the production
or supply of goods or services, for rental to others,
or for administrative purposes and are expected to
be used during more than one period.

Property, plant and equipment which are not ready
for intended use as on the date of Balance Sheet
are disclosed as ''Capital work-in-progress''.

Leasehold improvements are amortized over the
period of lease or estimated useful lives of such
assets, whichever is lower. Period of lease is either
the primary lease period or where the Company as
a lessee has the right of renewal of lease, and it
is intended to renew for further periods, then such
extended period.

The estimated useful life and depreciation method
are reviewed at the end of each annual reporting
period, with the effect of any changes in the
estimate being accounted for on a prospective
basis.

Refer note 2A (iv) in material accounting policies
above relevant to Property, plant and equipment.

vi. Transition to Ind AS

On transition to Ind AS, the Company has elected
to continue with the carrying value of all of
its property, plant and equipment, investment
properties and intangible assets recognized
as at April 01, 2016 measured under IGAAP
as the deemed cost of the property, plant and
equipment, investment properties and intangible
assets.

vii. Intangible assets

Capitalized development costs are recorded as
intangible assets and amortized from the point at
which the asset is available for use.

Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
are included in the Statement of Profit and Loss
within other gains (net).

The estimated useful life and amortization method
are reviewed at the end of each annual reporting
period, with the effect of any changes in the
estimate being accounted for on a prospective
basis.

Refer note 2A (v) in material accounting policies
above relevant to Intangible assets.

Research and development:

Research expenditure and development
expenditure that do not meet the capitalization
criteria as mentioned above are recognized as

an expense as incurred. Development costs
previously recognized as an expense are not
recognized as an asset in a subsequent period.

viii. Investment properties

Investment property is measured initially at its
acquisition cost, including related transaction
costs and where applicable borrowing costs.
Subsequent expenditure is capitalized to the
asset''s carrying amount only when it is probable
that future economic benefits associated with
the expenditure will flow to the Company and the
cost of the item can be measured reliably. All other
repairs and maintenance costs are expensed when
incurred. When part of an investment property is
replaced, the carrying amount of the replaced part
is derecognized.

Refer note 2A (vi) in material accounting policies
above relevant to Investment properties.

ix. Cash and cash equivalents

Cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions,
other short-term highly liquid investments with
original maturities of three months or less that
are readily convertible to known amounts of cash
and which are subject to an insignificant risk
of changes in value, and bank overdrafts. Bank
overdrafts are shown within borrowings in current
liabilities in the Balance Sheet.

x. Trade and other payables

These amounts represent liabilities for goods and
services provided to the Company prior to the end
of financial year which are unpaid. Trade payables
are presented as current liabilities unless payment
is not due within 12 months after the reporting
period. They are recognized initially at their fair
value and subsequently measured at amortized
cost using the effective interest method.

xi. Non-current assets (or disposal groups) held for
sale and discontinued operations

Non-current assets (or disposal groups) are
classified as held for sale if their carrying amount
will be recovered principally through a sale
transaction rather than through continuing use

and a sale is considered highly probable. They are
measured at the lower of their carrying amount
and fair value less costs to sell, except for assets
such as deferred tax assets, assets arising from
employee benefits, financial assets and contractual
rights under insurance contracts, which are
specifically exempt from this requirement.

An impairment loss is recognized for any initial or
subsequent write-down of the asset (or disposal
group) to fair value less costs to sell. A gain is
recognized for any subsequent increases in fair
value less costs to sell of an asset (or disposal
group), but not in excess of any cumulative
impairment loss previously recognized. A gain or
loss not previously recognized by the date of the
sale of the non-current asset (or disposal group)
is recognized at the date of de-recognition.

Non-current assets (including those that are
part of a disposal group) are not depreciated or
amortized while they are classified as held for
sale. Interest and other expenses attributable to
the liabilities of a disposal group classified as held
for sale continue to be recognized.

Non-current assets classified as held for sale and the
assets of a disposal group classified as held for sale
are presented separately from the other assets in
the Balance Sheet. The liabilities of a disposal group
classified as held for sale are presented separately
from other liabilities in the Balance Sheet.

A discontinued operation is a component of the
entity that has been disposed of or is classified as
held for sale and that represents a separate major
line of business or geographical area of operations,
is part of a single co-ordinated plan to dispose of
such a line of business or area of operations, or
is a subsidiary acquired exclusively with a view to
resale. The results of discontinued operations are
presented separately in the Statement of Profit
and Loss.

xii. Investments and other financial assets

(a) Initial recognition and measurement

Regular way purchases and sales of financial
assets are recognized on trade-date, being
the date on which the Company commits

to purchase or sale financial assets. At
initial recognition, the Company measures a
financial asset (excluding trade receivables
which do not contain a significant financing
component) at its fair value plus, in the case
of a financial asset not at fair value through
profit or loss, transaction costs that are
directly attributable to the acquisition of the
financial asset. Transaction costs of financial
assets carried at fair value through profit or
loss are expensed in profit or loss.

(b) Subsequent measurement

Investments in subsidiary companies:

Financial assets are recognized when the
Company becomes a party to the contractual
provisions of the instrument. Financial assets
are recognized initially at fair value plus, in
the case of financial assets not recorded at
fair value through profit or loss, transaction
costs that are attributable to the acquisition
of the financial asset. Transaction costs of
financial assets carried at fair value through
profit or loss are expensed in the Statement
of Profit and Loss.

Fair Value hierarchy

The judgments and estimates made in
determining the fair values of the financial
instruments that are (a) recognized and
measured at fair value and (b) measured at
amortized cost and for which fair values are
disclosed in the financial statements in the
Note 37. To provide an indication about the
reliability of the inputs used in determining
fair value, the Company has classified its
financial instruments into the three levels
prescribed under the accounting standard.
An explanation of each level follows:

Level 1: Level 1 hierarchy includes financial
instruments measured using quoted prices.

Level 2: The fair value of financial instruments
that are not traded in an active market is
determined using valuation techniques which
maximize the use of observable market data
and rely as little as possible on entity-specific

estimates. If all significant inputs required to
fair value an instrument are observable, the
instrument is included in level 2.

Level 3: If one or more of the significant inputs
is not based on observable market data, the
instrument is included in level 3. This is the
case for unlisted equity securities, contingent
consideration and indemnification asset
included in level 3.

Debt instruments

Subsequent measurement of debt
instruments depends on the business model
of the Company for managing the asset
and the cash flow characteristics of the
asset. There are 3 measurement categories
into which the Company classifies its debt
instruments:

• Measured at amortized cost:

Assets that are held for collection of
contractual cash flows where those cash
flows represent solely payments of principal
and interest are measured at amortized cost.
Interest income from these financial assets is
included in Other Income using the effective
interest rate method. Any gain or loss arising
on derecognition is recognized directly in
profit or loss and presented in other gains /
(losses). Impairment losses are presented as
separate line item in the Statement of Profit
and Loss.

• Measured at fair value through Other
Comprehensive Income (FVOCI):

Assets that are held for collection of
contractual cash flows and for selling the
financial assets, where the assets'' cash
flows represent solely payments of principal
and interest, are measured at FVOCI.
Movements in the carrying amount are taken
through OCI, except for the recognition of
impairment gains or losses, interest income
and foreign exchange gains and losses
which are recognized in profit and loss.
When the financial asset is derecognized, the
cumulative gain or loss previously recognized

in OCI is reclassified from equity to profit or
loss and recognized in other gains / (losses).
Interest income from these financial assets is
included in other income using the effective
interest rate method. Foreign exchange gains
and losses are presented in other gains
/ (losses) and impairment expenses are
presented as separate line item in Statement
of Profit and Loss.

• Measured at fair value through profit or loss
(FVPL):

Assets that do not meet the criteria for
amortized cost or FVOCI are measured at
fair value through profit or loss. A gain or loss
on a debt investment that is subsequently
measured at fair value through profit or loss
is recognized in profit or loss and presented
net within other gains / (losses) in the
period in which it arises. Interest income
from these financial assets is included
in the other income. Refer note 2A (x) in
material accounting policy above relevant to
Investments and other financial assets.

(c) Derecognition of financial assets

A financial asset is derecognized only when:

• The Company has transferred the rights
to receive cash flows from the financial
asset or,

• Retains the contractual rights to receive
the cash flows of the financial asset, but
assumes a contractual obligation to pay
the cash flows to one or more recipients.

Where the entity has transferred an asset,
the Company evaluates whether it has
transferred substantially all risks and rewards
of ownership of the financial asset. In such
cases, the financial asset is derecognized.
Where the entity has not transferred
substantially all risks and rewards of
ownership of the financial asset, the financial
asset is not derecognized.

Where the entity has neither transferred
a financial asset nor retains substantially
all risks and rewards of ownership of the

financial asset, the financial asset is de¬
recognized if the Company has not retained
control of the financial asset. Where the
Company retains control of the financial
asset, the asset is continued to be recognized
to the extent of continuing involvement in the
financial asset.

xiii. Derivative instruments

The Company holds derivative financial
instruments such as foreign exchange forward
and commodity futures to mitigate the risk of
changes in exchange rates on foreign currency
exposures and changes in prices of raw materials.
The counterparty for these contracts is generally a
bank.

Derivative financial assets or liabilities are not
designated as hedges. Although the Company
believes that these derivatives constitute hedges
from an economic perspective, they may not
qualify for hedge accounting under Ind AS 109,
Financial Instruments.

Derivatives not designated as hedges are
recognized initially at fair value and attributable
transaction costs are recognized in net profit in
the Statement of Profit and Loss, when incurred.
Subsequent to initial recognition, these derivatives
are measured at fair value through profit or loss
and the resulting exchange gains or losses are
included in Other income. Assets / liabilities in this
category are presented as current assets / current
liabilities if they are expected to be realized within
12 months after the Balance Sheet date.

xiv. Borrowings

Borrowings are initially recognized at fair value,
net of transaction costs incurred. Borrowings
are subsequently measured at amortized cost.
Any difference between the proceeds (net of
transaction costs) and the redemption amount is
recognized in the Statement of Profit and Loss over
the period of the borrowings using the effective
interest method. Fees paid on the establishment
of loan facilities are recognized as transaction
costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down.

In this case, the fee is deferred until the draw down
occurs.

Borrowings are removed from the Balance Sheet
when the obligation specified in the contract is
discharged, cancelled or expired. The difference
between the carrying amount of a financial
liability that has been extinguished or transferred
to another party and the consideration paid,
including any non-cash assets transferred or
liabilities assumed, is recognized in the Statement
of Profit and Loss as other gains / (losses).

Borrowings are classified as current liabilities
unless the Company has an unconditional right
to defer settlement of the liability for at least 12
months after the reporting period.

xv. Borrowing costs

General and specific borrowing costs that
are directly attributable to the acquisition,
construction or production of a qualifying asset
are capitalized during the period of time that is
required to complete and prepare the asset for its
intended use or sale. Qualifying assets are assets
that necessarily take a substantial period of time
to get ready for their intended use or sale.

Investment income earned on the temporary
investment of specific borrowings pending their
expenditure on qualifying assets is deducted from
the borrowing costs eligible for capitalization.

Other borrowing costs are expensed in the period
in which they are incurred.

---

Mar 31, 2024

2A Material accounting policies

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

i. Basis of Preparation

(a) Compliance with Ind AS

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (''the Act’) [Companies (Indian Accounting Standards) Rules, 2015] (as amended) (''the Rules’) and other relevant provisions of the Act.

(b) Historical cost convention

The financial statements have been prepared on a historical cost basis, except for the following:

• Certain financial assets and liabilities that are measured at fair values;

• Assets held for sale - measured at fair value less cost to sell or their carrying amount whichever is lower;

• Defined benefit plans - plan assets measured at fair value, and

• Share-based payments

(c) New amended standards adopted by the Company

The Ministry of Corporate Affairs vide notification dated March 31, 2023 notified the Companies (Indian Accounting Standards) Amendment Rules, 2023, which amended certain accounting standards (see below), and are effective from April 01,2023:

• Disclosure of accounting policies -

amendments to Ind AS 1

• Definition of accounting estimates -

amendments to Ind AS 8

• Deferred tax related to assets and liabilities arising from a single transaction -amendments to Ind AS 12.

The other amendments to Ind AS notified by these rules are primarily in the nature of clarifications.

These amendments did not have any material impact on the amounts recognized in prior periods and are not expected to significantly affect the current or future periods. Specifically, no changes would be necessary as a consequence of amendments made to Ind AS 12 as the Company’s accounting policy already complies with the now mandatory treatment.

ii. Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker ("CODM") of the Company. The CODM consists of Chairman and Managing Director who are responsible for allocating resources and assessing performance of the operating segments. Refer Note 45 for segment information presented.

iii. Revenue Recognition

Sale of goods

Revenue is recognized when the control of the goods is transferred to customer, being when the goods are shipped or delivered to the customer and there are no unfulfilled obligations that could affect the customer’s acceptance of the goods. Delivery occurs when the goods have been shipped or delivered to the specific location as the case may be, the risks of obsolescence and loss has been transferred, and either the customer has accepted the goods in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.

Revenue is recognized based on the price specified in the contract, net of any trade discounts, volume rebates and any taxes or duties collected on behalf of the Government, which are levied on sales such as goods and services tax, sales tax, value added tax, etc. Discounts given includes rebates, price reductions and other incentives given to customers. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Accumulated experience is used to estimate and provide for the discounts and returns. The volume discounts are assessed based on anticipated annual purchases. No element of financing is deemed present as sales are made with a credit term which is consistent with market practice.

A receivable is recognized when the goods are shipped or delivered, as per the terms of sales contract as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

Sale of services

Revenue from services is recognized in the accounting period in which the services are rendered.

In the case of fixed-price contracts, the customer pays the fixed amount based on a payment schedule. If the services rendered by the Company exceed the payment, a contract asset is recognized. If the payments exceed the services rendered, a contract liability is recognized.

iv. Property, plant and equipment:

Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost net of accumulated depreciation and accumulated impairment losses, if any.

Depreciation methods, estimated useful lives and residual value:

Depreciation is provided on the straight-line method to allocate the cost of assets, net of their residual values, over their estimated useful lives.

Depreciation is calculated on a pro-rata basis from the date of acquisition / installation till the date the assets are sold or disposed. The Company has used the following useful lives to provide depreciation on its property, plant and equipment:

Land accounted under finance lease is amortized on a straight-line basis over the period of lease.

Individual assets acquired for less than '' 0.05 Lakhs are entirely depreciated in the year of acquisition. The residual values are not more than 5% of the original cost of the asset.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Profit and Loss within other gains / (losses).

The carrying amount of an asset is written down immediately to its recoverable amount if the carrying

amount of the asset is greater than its estimated recoverable amount.

Refer Note 2B(v) for the other accounting policies below relevant to property, plant and equipment.

v. Intangible assets

Computer software includes enterprise resource planning project and other cost relating to such software which provides significant future economic benefits. These costs comprise of license fees and cost of system integration services.

Computer software cost is amortized over a period of 3 years using straight-line method.

Refer Note 2B(vii) for the other accounting policies below relevant to Intangible assets.

vi. Investment properties:

Land and building that is held for long-term rental yields or for capital appreciation or both, and that is not in use by the Company, is classified as investment property. Land held for a currently undetermined future use is also classified as an investment property.

The building component of investment properties net of residual value are depreciated using the straight-line method over their estimated useful life of 30 to 60 years from the date of capitalization.

Refer Note 2B(viii) for the other accounting policies below relevant to Investment properties.

vii. Impairment of assets:

The carrying amount of assets are reviewed at each Balance Sheet date to assess if there is any indication of impairment based on internal / external factors. An impairment loss on such assessment will be recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of the assets is fair value less cost of disposal. A previously recognized impairment loss is further provided or reversed depending on changes in the circumstances and to the extent that carrying amount of the assets does not exceed the carrying amount that will be determined if no impairment loss had previously been recognized.

viii. Trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business and reflects Company’s unconditional right to consideration (that is, payment is due only on the passage of time). Trade receivables are recognized initially at the transaction price as they do not contain significant financing components. The Company holds

the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method, less loss allowance.

ix. Inventories

Raw materials, packing materials, work-in-progress, finished goods, goods in transit, stock-in-trade, stores and spares other than specific spares for machinery are valued at cost or net realizable value whichever is lower.

Items of inventory are valued at cost or net realizable value, whichever is lower after providing for obsolescence and other losses, where considered necessary. Cost is determined on the following basis:

• Stores, spares, raw materials, packaging material and stock-in-trade - Weighted average cost

• Work-in-progress and finished goods - Material cost plus appropriate value of overheads

• Others (land) - At cost on conversion to stock-intrade plus cost of improvement

Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventory to the present location and condition.

Due allowances are made for slow moving and obsolete inventories based on estimates made by the Company. Items such as spare parts, stand-by equipment and servicing equipment which is not plant and machinery gets classified as inventory.

x. Investments and other financial assets

(a) Classification

The Company classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

• those measured at amortised cost.

The classification depends on the business model of the entity for managing financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in the Standalone Statement of Profit and Loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments that are not held for trading, this will depend on whether the Company has made

an irrevocable election (on an instrument-byinstrument basis) at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.

(b) Subsequent measurement

After initial recognition, financial assets are measured at:

• Fair value {through Other Comprehensive Income (FVOCI) or through profit or loss (FVPL)} or,

• Amortised cost

Equity instruments:

The Company subsequently measures all investments in equity instruments other than subsidiary company, associate company and joint venture at fair value. The Management of the Company has elected to present fair value gains and losses on such equity investments in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to the Standalone Statement of Profit and Loss where FVOCI option is chosen. Dividends from such investments continue to be recognized in the Standalone Statement of Profit and Loss as other income when the right to receive payment is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognized in the Standalone Statement of Profit and Loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

Investments in subsidiary companies:

Investments in subsidiary companies is carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiary companies, the difference between net disposal proceeds and the carrying amounts are recognized in the Standalone Statement of Profit and Loss.

(c) Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost (e.g. trade receivables, other contractual rights to receive cash or other financial assets). The impairment

methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables only, the Company applies the simplified approach required by Ind AS 109, which requires expected lifetime losses to be recognized from initial recognition of the receivables.

The Company’s assessment is that credit risk in relation to sales made to government customers or sub-contractors to government is extremely low as the probability of default is insignificant.

For all non-government customers, the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix by taking into consideration payment profiles over a period of 36 months before the reporting date and the corresponding historical credit loss experience within this period. The historical loss rates are adjusted to reflect the current and forward looking information on macro economic factors affecting the ability of customers to settle receivables. The expected credit loss is based on ageing of days, the receivables due and the expected credit loss rate. Further, the Company assesses credit risk on an individual basis in respect of certain customers in case of event driven situation such as litigations, disputes, change in customer’s credit risk history, specific provision are made after evaluating the relevant facts and expected recovery.

(d) Income recognition:

• Interest income

Interest income from financial assets at amortised cost is calculated using the effective interest rate method and is recognized in the Standalone Statement of Profit and Loss.

I nterest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit impaired. For credit impaired financial assets the effective interest rate is applied to the net carrying amount of the financial asset (after the deduction of loss allowance).

• Dividends

Dividends are recognized in the Standalone Statement of Profit and Loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the

Company, and the amount of the dividend can be measured reliably.

Refer Note 2B(xii) for the other accounting policies below relevant to investments and other financial assets.

xi. Financial liabilities and equity instruments

(i) Classification as debt or equity

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

(ii) Initial recognition and measurement

Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the fair value.

(iii) Subsequent measurement

Financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognized in the Standalone Statement of Profit and Loss.

(iv) Derecognition

A financial liability is de-recognized when the obligation specified in the contract is discharged, cancelled or expires. A financial liability is extinguished when the debtor either:

a) discharges the liability by paying the creditor, normally with cash, other financial assets, goods or services or;

b) I s legally released from primary responsibility for the liability either by process of law or by the creditor.

xii. Offsetting financial instruments

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

xiii. Employee benefits

(a) Post-employment obligations Defined Benefits plan

Gratuity liability is a defined benefit obligation and is computed on the basis of an actuarial valuation by an actuary appointed for the purpose as per projected unit credit method at the end of each financial year. The liability or asset recognized in the Standalone Balance Sheet is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The liability so provided is paid to trusts administered by the Company for all employees, which in turn invests in eligible securities to meet the liability as and when it accrues for payment in future. Any shortfall in the value of assets over the defined benefit obligation is recognized as a liability with a corresponding charge to the Standalone Statement of Profit and Loss.

Provident fund contributions for certain employees are made to a trust administered by the Company in India. The Company’s liability is actuarially determined (using the Projected Unit Credit method) at the end of the year and any shortfall in the fund balance maintained by the Trust set up by the Company is additionally provided. Actuarial losses and gains are recognized in other comprehensive income and shall not be reclassified to the Standalone Statement of Profit and Loss in a subsequent period.

Defined contribution plan

The Company contributes towards Employees State Insurance Scheme, Superannuation Fund and Provident Fund for certain employees, which are defined contribution schemes.

Refer Note 2B(xvii) for the other accounting policies below relevant to Employee benefits.

2.1 Critical estimates and judgements

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company’s accounting policies.

This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information

about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements. In addition, this note also explains where there have been actual adjustments this year as a result of changes to previous estimates.

The areas involving critical estimates or judgements are:

• Estimation of useful life of property, plant and equipment: Notes 2A(iv), 2B(v) and 3(a)

• Estimated useful life of intangible assets: Notes 2A(v), 2B(vii) and 5

• Loss Allowance on trade receivables: Refer Notes 11 and 39

• Recoverability of deferred tax assets: Refer Note 36(e)

• Estimation of defined benefit obligation: Refer Note 41

• Contingent Liabilities: Refer Note 43

• Impairment of assets: Refer Note 2A(vii)

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

2B Summary of other accounting policies

This note provides a list of other accounting policies adopted in the preparation of these financial statements to the extent they have not already been disclosed in note 2A above. These policies have been consistently applied to all the years presented, unless otherwise stated.

i. Foreign Currency Transactions

a) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency’). The financial statements are presented in Indian Rupee (''), which is the functional and presentation currency of the Company.

b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the

settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in the Standalone Statement of Profit and Loss.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.

ii. Income tax

The income tax expense or credit for the period is the tax payable on the taxable income of the current period based on the applicable income tax rates adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. The Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit/ (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the Balance Sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.

Deferred tax assets and liabilities are offset when

there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Current and deferred tax is recognized in the Standalone Statement of Profit or Loss, except to the extent that it relates to items recognized in Other Comprehensive Income or directly in equity. In this case, the tax is also recognized in Other Comprehensive Income or directly in equity, respectively.

iii. Government grants

Government grants are recognized at their fair value where there is a reasonable assurance that the grant will be received, and the Company will comply with all attached conditions.

Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to the Standalone Statement of Profit and Loss in proportion to depreciation over the expected lives of the related assets and presented within other income.

Government grants relating to income are deferred and recognized in the Standalone Statement of Profit and Loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.

Eligible export incentives are recognized in the year in which the conditions precedent are met and there is no significant uncertainty about the collectability.

iv. Leases

As a lessee

The Company’s lease asset classes primarily consist of leases for Land and Buildings. The Company assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for

leases with a term of twelve months or less (short term leases) and leases of low value assets. For these short term and leases of low value assets, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made.

The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.

A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The remeasurement normally also adjusts the leased assets.

As a lessor

Lease income from operating leases where the Company is a lessor is recognized in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the Standalone Balance Sheet based on their nature.

v. Property, Plant and Equipment

Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the carrying amount of asset or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any

component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance expenses are charged to the Standalone Statement of Profit and Loss during the reporting period in which they are incurred.

Spare parts, stand-by equipment and servicing equipment are recognized as property, plant and equipment if they are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and are expected to be used during more than one period.

Property, plant and equipment which are not ready for intended use as on the date of Standalone Balance Sheet are disclosed as ''Capital work-inprogress’.

Leasehold improvements are amortized over the period of lease or estimated useful lives of such assets, whichever is lower. Period of lease is either the primary lease period or where the Company as a lessee has the right of renewal of lease, and it is intended to renew for further periods, then such extended period.

The estimated useful life and depreciation method are reviewed at the end of each annual reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis.

Refer note 2A(iv) for the material accounting policies above relevant to property, plant and equipment.

vi. Transition to Ind AS

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment, investment properties and intangible assets recognized as at April 01, 2016 measured under IGAAP as the deemed cost of the property, plant and equipment, investment properties and intangible assets.

vii. Intangible assets

Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is available for use.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Standalone Statement of Profit and Loss within other gains / (losses).

The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in the

estimate being accounted for on a prospective basis.

Refer Note 2A(v) for the material accounting policies above relevant to Intangible assets.

Research and development:

Research expenditure and development expenditure that do not meet the capitalization criteria as mentioned above are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.

viii. Investment properties

Investment property is measured initially at its acquisition cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalized to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognized.

Refer Note 2A(vi) for the material accounting policies above relevant to Investment properties.

lx. Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the Standalone Balance Sheet.

x. Trade and other payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortised cost using the effective interest method.

xi. Non-current assets (or disposal groups) held for sale and discontinued operations

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.

An impairment loss is recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognized for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset (or disposal group) is recognized at the date of de-recognition.

Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognized.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the Standalone Balance Sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the Standalone Balance Sheet.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the Standalone Statement of Profit and Loss.

xii. Investments and other financial assets (a) Initial recognition and measurement

Regular way purchases and sales of financial assets are recognized on trade-date, being the date on which the Company commits

to purchase or sale financial assets. At initial recognition, the Company measures a financial asset (excluding trade receivables which do not contain a significant financing component) at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

(b) Subsequent measurement

Investments in subsidiary companies:

Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the Standalone Statement of Profit and Loss.

Fair Value hierarchy

The judgements and estimates made in determining the fair values of the financial instruments that are (a) recognized and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements in the Note 37. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows:

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the

instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

Debt instruments

Subsequent measurement of debt instruments depends on the business model of the Company for managing the asset and the cash flow characteristics of the asset. There are 3 measurement categories into which the Company classifies its debt instruments:

• Measured at amortised cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in Other Income using the effective interest rate method. Any gain or loss arising on derecognition is recognized directly in profit or loss and presented in other gains / (losses). Impairment losses are presented as separate line item in the Standalone Statement of Profit and Loss.

• Measured at fair value through Other Comprehensive Income (FVOCI):

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognized in profit and loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in other gains / (losses) Interest income from these financial assets is included in other income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains / (losses) and impairment expenses are presented as separate line item in Standalone Statement of Profit and Loss.

• Measured at fair value through profit or loss (FVPL):

Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss is recognized in profit or loss and presented net within other gains / (losses) in the period in which it arises. Interest income from these financial assets is included in the other income. Refer Note 2A (x) for the material accounting policy above relevant to Investments and other financial assets.

(c) Derecognition of financial assets

A financial asset is derecognized only when:

• The Company has transferred the rights to receive cash flows from the financial asset or,

• Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.

Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is de-recognized if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.

xiii. Derivative instruments

The Company holds derivative financial instruments such as foreign exchange forward and commodity futures to mitigate the risk of changes in exchange rates on foreign currency exposures and changes in prices of raw materials. The counterparty for these contracts is generally a bank.

Derivative financial assets or liabilities are not designated as hedges. Although the Company believes that these derivatives constitute hedges from an economic perspective, they may not qualify

for hedge accounting under Ind AS 109, Financial Instruments.

Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in net profit in the Standalone Statement of Profit and Loss, when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are included in Other income. Assets / liabilities in this category are presented as current assets / current liabilities if they are expected to be realized within 12 months after the Balance Sheet date.

xiv. Borrowings

Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in the Standalone Statement of Profit and Loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs.

Borrowings are removed from the Standalone Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in the Standalone Statement of Profit and Loss as other gains/ (losses).

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

xv. Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other borrowing costs are expensed in the period in which they are incurred.

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Mar 31, 2023

1. Background

Mafatlal Industries Limited (the "Company") is a public limited Company incorporated in India having registered office at Ahmedabad, Gujarat. The shares are listed on the Bombay Stock Exchange. The Company belongs to the reputed industrial house of Arvind Mafatlal Group in India, established in 1905. The Company is engaged in textile manufacturing having its manufacturing unit at Nadiad, Gujarat and trading of textile, technology and its related products.

2. Significant accounting policies

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

a. Basis of preparation

(i) Compliance with Ind AS

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (''the Act’) [Companies (Indian Accounting Standards) Rules, 2015] (as amended) (''the Rules’) and other relevant provisions of the Act.

(ii) Historical cost convention

The financial statements have been prepared on a historical cost basis, except for the following:

• Certain financial assets and liabilities (including derivative instruments) that are measured at fair values;

• Assets held for sale - measured at fair value less cost to sell or their carrying amount whichever is lower;

• Defined benefit plans - plan assets measured at fair value, and

• Share-based payments

(iii) New amended standards adopted by the Company

The Ministry of Corporate Affairs had vide

notification dated March 23, 2022 notified Companies (Indian Accounting Standards) Amendment Rules, 2022 which amended certain accounting standards, and are effective April 01, 2022. These amendments did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

(iv) New amendments issued but not effective

The Ministry of Corporate Affairs has vide

notification dated March 31, 2023 notified

Companies (Indian Accounting Standards) Amendment Rules, 2023 which amends certain accounting standards, and are effective April 01, 2023.

The Rules predominantly amend Ind AS 12, Income taxes, and Ind AS 1, Presentation of financial statements. The other amendments to Ind AS notified by these rules are primarily in the nature of clarifications.

These amendments are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions. Specifically, no changes would be necessary as a consequence of amendments made to Ind AS 12 as the Company’s accounting policy already complies with the now mandatory treatment.

b. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker ("CODM") of the Company. The CODM consists of Chairman and Managing Director who are responsible for allocating resources and assessing performance of the operating segments. Refer Note 45 for segment information presented.

c. Foreign currency transactions

(i) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency’). The financial statements are presented in Indian Rupee (''), which is the functional and presentation currency of the Company.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in the Statement of Profit and Loss.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.

d. Revenue Recognition

Sale of goods

Revenue is recognized when the control of the goods is transferred to customer, being when the goods are shipped or delivered to the customer and there are no unfulfilled obligation that could affect the customer''s acceptance of the goods. Delivery occurs when the goods have been shipped or delivered to the specific location as the case may be, the risks of obsolescence and loss has been transferred, and either the customer has accepted the goods in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.

Revenue is recognized based on the price specified in the contract, net of any trade discounts, volume rebates and any taxes or duties collected on behalf of the Government, which are levied on sales such as sales tax, value added tax, goods and service tax, etc. Discounts given includes rebates, price reductions and other incentives given to customers. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Accumulated experience is used to estimate and provide for the discounts and returns. The volume discounts are assessed based on anticipated annual purchases. No element of financing is deemed present as sales are made with a credit term which is consistent with market practice.

A receivable is recognized when the goods are shipped or delivered, as per the terms of sales contract as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

Sale of services

Revenue from services is recognized in the accounting period in which the services are rendered.

e. Income tax

The income tax expense or credit for the period is the tax payable on the taxable income of the current period based on the applicable income tax rates adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. The Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit / (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the Balance Sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Current and deferred tax is recognized in the Statement of Profit or Loss, except to the extent that it relates to items recognized in Other Comprehensive Income or directly in equity. In this case, the tax is also recognized in Other Comprehensive Income or directly in equity, respectively.

f. Government grants

Government grants are recognized at their fair value where there is a reasonable assurance that the grant will be received, and the Company will comply with all attached conditions.

Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to the Statement of Profit and Loss in proportion to depreciation over the expected lives of the related assets and presented within other income.

Government grants relating to income are deferred and recognized in the Statement of Profit and Loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.

Eligible export incentives are recognized in the year in which the conditions precedent are met and there is no significant uncertainty about the collectability.

g. Leases

As a lessee

The Company’s lease asset classes primarily consist of

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

At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short term leases) and leases of low value assets. For these short term and leases of low value assets, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made.

The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straightline basis over the shorter of the lease term and useful life of the underlying asset.

A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The remeasurement normally also adjusts the leased assets.

As a lessor

Lease income from operating leases where the Company is a lessor is recognized in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the Balance Sheet based on their nature.

h. Property, plant and equipment

Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at acquisition cost net of accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the carrying amount of

asset or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance expenses are charged to the Statement of Profit and Loss during the reporting period in which they are incurred.

Spare parts, stand-by equipment and servicing equipment are recognized as property, plant and equipment if they are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and are expected to be used during more than one period.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Profit and Loss within other gains / (losses).

Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as ''Capital work-in-progress’.

Depreciation methods, estimated useful lives and residual value

Depreciation is provided on the straight-line method to allocate the cost of assets, net of their residual values, over their estimated useful lives.

Depreciation is calculated on a pro-rata basis from the date of acquisition / installation till the date the assets are sold or disposed of

Asset category	Estimated useful life
Buildings	30 to 60 years
Plant and Machinery	9.5 years
Furniture and Fixtures	10 years
Vehicles	8 years
Office Equipment	5 years
Computers and hardware	3 years

Land accounted under finance lease is amortized on a straight-line basis over the period of lease.

Leasehold improvements are amortized over the period of lease or estimated useful lives of such assets, whichever is lower. Period of lease is either the primary lease period or where the Company as a lessee has the right of renewal of lease, and it is intended to renew for further periods, then such extended period.

The carrying amount of an asset is written down immediately to its recoverable amount if the carrying amount of the asset is greater than its estimated recoverable amount.

The estimated useful life and depreciation method are reviewed at the end of each annual reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis.

Individual assets acquired for less than '' 0.05 Lakhs are entirely depreciated in the year of acquisition. The residual values are not more than 5% of the original cost of the asset.

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as at April 01, 2016 measured under IGAAP as the deemed cost of the property, plant and equipment.

i. Intangible assets

Computer software includes enterprise resource planning project and other cost relating to such software which provides significant future economic benefits. These costs comprise of license fees and cost of system integration services.

Computer software cost is amortized over a period of 3 years using straight-line method.

Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is available for use.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Profit and Loss within other gains / (losses).

The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis.

On transition to Ind AS, the Company has elected to continue with the carrying value of intangible assets recognized as at April 01, 2016 measured under IGAAP as the deemed cost of an intangible asset.

Research and development

Research expenditure and development expenditure that do not meet the capitalization criteria as mentioned above are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.

j. Investment properties

Land and building that is held for long-term rental yields or for capital appreciation or both, and that is not in use by the Company, is classified as investment property. Land held for a currently undetermined future use is also classified as an investment property.

Investment property is measured initially at its acquisition cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalized to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When

part of an investment property is replaced, the carrying amount of the replaced part is derecognized.

The building component of investment properties net of residual value are depreciated using the straight-line method over their estimated useful life of 30 to 60 years from the date of capitalization.

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment property recognized as at April 01,2016 measured under IGAAP as the deemed cost of investment property.

k. Impairment of assets

The carrying amount of assets are reviewed at each Balance Sheet date to assess if there is any indication of impairment based on internal / external factors. An impairment loss on such assessment will be recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of the assets is net selling price or value in use, whichever is higher. While assessing value in use, the estimated future cash flows are discounted to the present value by using weighted average cost of capital. A previously recognized impairment loss is further provided or reversed depending on changes in the circumstances and to the extent that carrying amount of the assets does not exceed the carrying amount that will be determined if no impairment loss had previously been recognized.

l. Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

m. Trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business and reflects company’s unconditional right to consideration (that is, payment is due only on the passage of time). Trade receivables are recognized initially at the transaction price as they do not contain significant financing components. The Company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortized cost using the effective interest method, less loss allowance.

n. Trade and other payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently

measured at amortized cost using the effective interest method .

o. Inventories

Raw materials, packing materials, work-in-progress, finished goods, goods in transit, stock-in-trade, stores and spares other than specific spares for machinery are valued at cost or net realizable value whichever is lower. Items of inventory are valued at cost or net realizable value, whichever is lower after providing for obsolescence and other losses, where considered necessary. Cost is determined on the following basis:

• Stores, spares, raw materials, packaging material and stock-in-trade - Weighted average cost

• Work-in-progress and finished goods - Material cost plus appropriate value of overheads

• Others (land) - At cost on conversion to stock-intrade plus cost of improvement

Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventory to the present location and condition.

Due allowances are made for slow moving and obsolete inventories based on estimates made by the Company. Items such as spare parts, stand-by equipment and servicing equipment which is not plant and machinery gets classified as inventory.

p. Non-current assets (or disposal groups) held for sale and discontinued operations

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.

An impairment loss is recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognized for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset (or disposal group) is recognized at the date of de-recognition.

Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognized. Non-current assets classified as held for sale and

the assets of a disposal group classified as held for sale are presented separately from the other assets in the Balance Sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the Balance Sheet.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the Statement of Profit and Loss.

q. Investments and other financial assets

(i) Classification

The Company classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

• those measured at amortized cost.

The classification depends on the business model of the entity for managing financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in the Statement of Profit and Loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election (on an instrument-byinstrument basis) at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.

(ii) Initial recognition and measurement

Regular way purchases and sales of financial assets are recognized on trade-date, being the date on which the Company commits to purchase or sale financial assets. At initial recognition, the Company measures a financial asset (excluding trade receivables which do not contain a significant financing component) at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

(iii) Subsequent measurement

After initial recognition, financial assets are measured at:

• Fair value {through Other Comprehensive Income (FVOCI) or through profit or loss (FVPL)} or,

• Amortized cost Debt instruments

Subsequent measurement of debt instruments depends on the business model of the Company for managing the asset and the cash flow characteristics of the asset. There are 3 measurement categories into which the Company classifies its debt instruments

• Measured at amortized cost

Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortized cost using the EIR method less impairment, if any, the amortization of EIR and loss arising from impairment, if any, is recognized in the Statement of Profit and Loss.

• Measured at fair value through Other Comprehensive Income (FVOCI)

Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through Other Comprehensive Income. Fair value movements are recognized in the OCI. Interest income measured using the EIR method and impairment losses, if any are recognized in the Statement of Profit and Loss. On de-recognition, cumulative gain / (loss) previously recognized in OCI is reclassified from the equity to other income in the Statement of Profit and Loss.

• Measured at fair value through profit or loss (FVPL)

A financial asset not classified as either amortized cost or FVOCI, is classified as FVPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognized as other income in the Statement of Profit and Loss.

Equity instruments

The Company subsequently measures all investments in equity instruments other than subsidiary company associate company and joint venture at fair value. The Management of the Company has elected to present fair value gains and losses on such equity investments in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to the Statement of Profit and Loss where FVOCI option is chosen. Dividends from such investments continue to be recognized in the Statement of Profit and Loss as other

income when the right to receive payment is established. Changes in the fair value of financial assets at fair value through profit or loss are recognized in the Statement of Profit and Loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

Investments in subsidiary company, associate company and joint venture company

Investments in subsidiary company is carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiary companies, associate company and joint venture the difference between net disposal proceeds and the carrying amounts are recognized in the Statement of Profit and Loss.

Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the Statement of Profit and Loss.

Fair Value hierarchy

The judgements and estimates made in determining the fair values of the financial instruments that are (a) recognized and measured at fair value and (b) measured at amortized cost and for which fair values are disclosed in the financial statements in the Note 37. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level is as follows:

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs are not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

(iv) Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost and FVOCI debt instruments (e.g. trade receivables, other contractual rights to receive cash or other financial assets). The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables only, the Company applies the simplified approach required by Ind AS 109, which requires expected lifetime losses to be recognized from initial recognition of the receivables.

Note 39 details how the Company determines whether there has been a significant increase in credit risk.

(v) Derecognition of financial assets

A financial asset is derecognized only when

• The Company has transferred the rights to receive cash flows from the financial asset or,

• Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.

Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is de-recognized if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.

(vi) Income recognition

• Interest income

Interest income from debt instruments is recognized using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a 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.

• Dividends

Dividends are recognized in the Statement of Profit and Loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.

r. Financial liabilities and equity instruments

(i) Classification as debt or equity

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

(ii) Initial recognition and measurement

Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the fair value.

(iii) Subsequent measurement

Financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognized in the Statement of Profit and Loss.

(iv) Derecognition

A financial liability is de-recognized when the obligation specified in the contract is discharged, cancelled or expires.

s. Offsetting financial instruments

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

t. Derivative instruments

The Company holds derivative financial instruments such as foreign exchange forward and commodity futures to mitigate the risk of changes in exchange rates on foreign currency exposures and changes in prices of raw materials. The counterparty for these contracts is generally a bank.

Derivative financial assets or liabilities are not designated as hedges. Although the Company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial Instruments.

Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in net profit in the Statement of Profit and Loss, when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are included in Other income. Assets / liabilities in this category are presented as current assets / current liabilities if they are expected to be realized within 12 months after the Balance Sheet date.

u. Borrowings

Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in the Statement of Profit and Loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs.

Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in the Statement of Profit and Loss as other gains/ (losses).

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

v. Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other borrowing costs are expensed in the period in which they are incurred.

w. Provisions, contingent liabilities and contingent assets

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. These are reviewed at each reporting period and reflect the best current estimate. Provisions are not recognized for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flow estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.

Contingent assets are not recognized in the financial statements unless it is virtually certain that the future event will confirm the asset’s existence and the asset will be realized.

x. Employee benefits

(i) Short-term employee benefits

Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the Balance Sheet.

(ii) Other Long-term employee benefits

The liabilities for earned leave is not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present

value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognized in the Statement of Profit and Loss.

The obligations are presented as current liabilities in the Balance Sheet if the entity does not have an unconditional right to defer settlement for at least 12 months after the reporting period, regardless of when the actual settlement is expected to occur.

(iii) Post-employment obligations Defined Benefits plan

Gratuity liability is a defined benefit obligation and is computed on the basis of an actuarial valuation by an actuary appointed for the purpose as per projected unit credit method at the end of each financial year. The liability or asset recognized in the Balance Sheet is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The liability so provided is paid to trusts administered by the Company for certain employees, which in turn invests in eligible securities to meet the liability as and when it accrues for payment in future. Any shortfall in the value of assets over the defined benefit obligation is recognized as a liability with a corresponding charge to the Statement of Profit and Loss. For other employees, the Company makes contribution for certain employees whereas for some other employees the Company makes contribution to a trust maintained by Life Insurance Corporation (''LIC'') of India.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on Government bonds that have terms approximating to the terms of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur directly in Other Comprehensive Income. They are included in retained earnings in the

Statement of Changes in Equity and in the Balance Sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.

Provident fund contributions for certain employees are made to a trust administered by the Company in India. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of the year and any shortfall in the fund balance maintained by the Trust set up by the Company is additionally provided. Actuarial losses and gains are recognized in other comprehensive income and shall not be reclassified to the Statement of Profit and Loss in a subsequent period.

Defined contribution plan

The Company contributes towards Employees State Insurance Scheme, Family Pension Fund, Superannuation Fund and Provident Fund for certain employees, which are defined contribution schemes.

The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.

(iv) Share based payments

The fair value of options granted under the Employee Option Plan is recognized as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted:

• including any market performance conditions (e.g., the entity''s share price)

• excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales growth targets and remaining an employee of the entity over a specified time period), and

• including the impact of any non-vesting conditions (e.g. the requirement for employees to save or hold shares for a specific period of time).

The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are

expected to vest based on the non-market vesting and service conditions. It recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. Where shares are forfeited due to a failure by the employee to satisfy the service conditions, any expenses previously recognized in relation to such shares are reversed effective from the date of the forfeiture.

y. Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the Company

• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

• the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and

• the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

z. Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

aa. Contributed equity

Equity shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

ab. Operating cycle

Based on the nature of products / activities of the Company and the normal time between acquisition of

assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

ac. Exceptional Items

Exceptional items include income or expense that are considered to be part of ordinary activities, however, are of such significance and nature that separate disclosure enables the user of the financial statements to understand the impact in a more meaningful manner. Exceptional items are identified by virtue of either their size or nature so as to facilitate comparison with prior periods and to assess underlying trends in the financial performance of the Company.

ad. Rounding of amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest Lakhs as per the requirement of Schedule III, unless otherwise stated.

2.1 Critical estimates and judgements

Preparation of the Financial Statements requires use of accounting estimates which, by definition, will seldom equal the actual results. This Note provides an overview of the areas that involved a higher degree of judgements or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the Financial Statements.

The areas involving critical estimates or judgements are:

• Estimation of useful life of property, plant and equipment: Note 2(h) and Note 3(a)

• Loss Allowance on trade receivables: Refer Notes 11 and 39

• Recoverability of deferred tax assets: Refer Note 36

• Estimation of defined benefit obligation: Note 41

• Contingent Liabilities: Note 43

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

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Mar 31, 2018

Notes forming part of the Standalone Financial Statements as at for the year ended March 31, 2018

1. Background

Mafatlal Industries Limited (the "Company") is a public limited Company incorporated under the provisions of the Companies Act, 1956. The shares are listed on the Mumbai Stock Exchange. The Company belongs to the reputed industrial house of Arvind Mafatlal Group in India, established in 1905. The Company is engaged in textile manufacturing and trading, having its manufacturing units at Nadiad and Navsari.

2. Significant accounting policies

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

a. Basis of Preparation

i. Compliance with Ind AS

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

The financial statements up to year ended 31 March 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act.

These financial statements are the first financial statements of the Company under Ind AS. The date of transition is 01 April 2016. Refer note 48 for an explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.

ii. Historical cost convention

The financial statements have been prepared on a historical cost basis, except for the following:

• Certain financial assets and liabilities (including derivative instruments) that are measured at fair values;

• Defined benefit plans - plan assets measured at fair value, and

• Share-based payments

iii. Recent accounting pronouncements

Ministry of Corporate Affairs ("MCA") through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new and amendments to Ind ASs which the Company has not applied as they are effective for annual periods beginning on or after April 01, 2018:

Ind AS 115 - Revenue from Contracts with Customers

Ind AS 115, is effective for periods beginning on or after April 01, 2018. Ind AS 115 sets out the requirements for recognising revenue that apply to all contracts with customers (except for contracts that are within the scope of the Standards on leases, insurance contracts and financial instruments). Ind AS 115 replaces the previous revenue Standards: Ind AS 18 Revenue and Ind AS 11 Construction Contracts, and the related appendices.

The standard establishes a comprehensive framework for determining when to recognise revenue and how much revenue to recognise. Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ''control'' of the goods or services underlying the particular performance obligation is transferred to the customer. The core principle in that framework is that a Company should recognise revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the fair value of consideration to which the Company expects to be entitled in exchange for those goods or services.

Specifically, the standard introduces a 5-step approach to revenue recognition:

• Step 1: Identify the contract(s) with a customer

• Step 2: Identify the performance obligation in contract

• Step 3: Determine the transaction price

• Step 4: Allocate the transaction price to the performance obligations in the contract

• Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

The Company is evaluating the impact of the standard on the financial position and results of operations. As per the transitional provision of the standard, the Company shall apply this Standard using one of the following two methods:

(a) Retrospectively to each prior reporting period presented in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors. The standard is applied retrospectively only to contracts that are not completed contracts at the date of initial application;

(b) Retrospectively with the cumulative effect of initially applying this Standard recognised at the date of initial application.

Ind AS 21 - The effect of changes in Foreign Exchange rates

The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. Company is evaluating the impact of this amendment on its financial statements.

There are no other standards, changes in standards and interpretations that are not in force up to reporting period that the Company expects to have a material impact arising from its application in its financial statements.

b. Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker ("CODM") of the Company. The CODM consists of Chairman, CEO & MD and Executive Director who are responsible for allocating resources and assessing performance of the operating segments. The Company operates only in one Business Segment i.e. textile business segment, hence does not have any reportable Segments as per Indian Accounting Standard 108 "Operating Segments".

c. Foreign Currency Transactions

i. Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The financial statements are presented in Indian rupee (INR), which is the functional and presentation currency of the Company.

ii. Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in the Statement of Profit and Loss.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.

d. Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivables. Amounts disclosed as revenue is net of returns, trade allowances, rebates, discounts, value added taxes, goods and services tax and amount collected on behalf of third parties.

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, there is no continuing managerial involvement with the goods and specific criteria have been met for each of the activities described below.

Timing of recognition

Revenue from sale of goods is recognised when all the significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract. This generally happens upon dispatch of the goods to customers, except for export sales which are recognised when significant risk and rewards are transferred to the buyer as per the terms of contract.

Revenue from services is recognised in the accounting period in which the services are rendered.

Measurement of revenue

Revenue is measured at the fair value of the consideration received or receivable, after the deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the Government which are levied on sales such as sales tax, value added tax, goods and services tax, etc. Discounts given include rebates, price reductions and other incentives given to customers. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Accumulated experience is used to estimate and provide for the discounts and returns. The volume discounts are assessed based on anticipated annual purchases. No element of financing is deemed present as sales are made with a credit term which is consistent with market practice.

e. Income tax

The income tax expense or credit for the period is the tax payable on the taxable income of the current period based on the applicable income tax rates adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. The Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Minimum Alternate Tax (''MAT'') under the provisions of the Income Tax Act, 1961 is recognised as tax expense in the Statement of Profit and Loss. The credit available under the Act in respect of MAT paid will be recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the period for which the MAT credit can be carried forward for set off against the normal tax liability. Such an asset is reviewed at each Balance Sheet date.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit / (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the Balance Sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised statement of Profit or Loss, except to the extent that it relates to items recognised in Other Comprehensive Income or directly in equity. In this case, the tax is also recognised in Other Comprehensive Income or directly in equity, respectively.

f. Government grants

Government grants are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.

Government grants relating to the purchase of Property, Plant and Equipment are included in non-current liabilities as deferred income and are credited to the Statement of Profit and Loss in proportion to depreciation over the expected lives of the related assets and presented within Other Income.

Government grants relating to income are deferred and recognised in the Statement of Profit and Loss over the period necessary to match them with the costs that they are intended to compensate and presented within Other Income.

Eligible export incentives are recognised in the year in which the conditions precedent are met and there is no significant uncertainty about the collectability.

g. Leases

As a lessee Finance lease

Leases of Property, Plant and Equipment where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease''s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Operating Lease

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Statement of Profit and Loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate expected inflationary cost increases for the lessor.

As a lessor Finance Lease

Leases of Property, Plant and Equipment where the Company as a lessor has substantially transferred all the risks and rewards are classified as finance lease. Finance leases are capitalised at the inception of the lease at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rent receivables, net of interest income, are included in other financial assets. Each lease receipt is allocated between the asset and interest income. The interest income is recognised in the Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the asset for each period.

Under combined lease agreements, land and building are assessed individually. Lease rental attributable to the operating lease are charged to Statement of Profit and Loss as lease income whereas lease income attributable to finance lease is recognised as finance lease receivable and recognised on the basis of effective interest rate.

Operating Lease

Lease income from operating leases where the Company is a lessor is recognised as income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the Balance Sheet based on their nature.

Operating Lease Income

Rental income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the Balance Sheet based on their nature.

h. Property, plant and equipment:

Freehold land is carried at historical cost. All other items of Property, Plant and Equipment are stated at acquisition cost net of accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the carrying amount of asset or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance expenses are charged to the Statement of Profit and Loss during the period in which they are incurred.

Spare parts, stand-by equipment and servicing equipment are recognised as property, plant and equipment if they are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and are expected to be used during more than one period.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Profit and Loss within other gains/dosses).

Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as ''Capital work-in-progress''.

Depreciation methods, estimated useful lives and residual value:

Depreciation is provided on the straight-line method to allocate the cost of assets, net of their residual values, over their estimated useful lives.

Depreciation is calculated on a pro-rata basis from the date of acquisition / installation till the date the assets are sold or disposed of:

Asset category	Estimated useful life
Building	30 years
Plant and Machinery	9.5 years
Furniture and Fixtures	10 years
Vehicles	8 years
Office Equipment	5 years
Leasehold Improvements	9 years

Land accounted under finance lease is amortised on a straight-line basis over the period of lease.

The carrying amount of an asset is written down immediately to its recoverable amount if the carrying amount of the asset is greater than its estimated recoverable amount.

The estimated useful life and depreciation method are reviewed at the end of each annual reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis.

Individual assets acquired for less than Rs 5,000/- are entirely depreciated in the year of acquisition.

Transition to Ind AS:

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its Property, Plant and Equipment recognised as at April 01, 2016 measured under IGAAP as the deemed cost of the Property, Plant and Equipment.

i. Intangible assets

Computer software includes enterprise resource planning project and other cost relating to such software which provides significant future economic benefits. These costs comprise of license fees and cost of system integration services.

Computer software cost is amortised over a period of 3 years using straight-line method.

Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is available for use.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Profit and Loss within other gains/dosses).

The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis.

Research and development:

Research expenditure and development expenditure that do not meet the capitalization criteria as mentioned above are recognised as an expense as

incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Transition to Ind AS:

On transition to Ind AS, the Company has elected to continue with the carrying value of Intangible Assets recognised as at April 01, 2016 measured under IGAAP as the deemed cost of Intangible Assets.

j. Investment properties:

Land and building that is held for long-term rental yields or for capital appreciation or both, and that is not in use by the Company, is classified as Investment Property. Land held for a currently undetermined future use is also classified as an Investment Property. Investment property is measured initially at its acquisition cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an Investment property is replaced, the carrying amount of the replaced part is derecognised.

Investment properties are depreciated using the straight-line method over their estimated useful lives which is determined based on technical evaluation performed by the management''s expert.

Transition to Ind AS:

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its Investment Property recognised as at April 01, 2016 measured under IGAAP as the deemed cost of Investment Property.

k. Impairment of assets:

The carrying amount of assets are reviewed at each Balance Sheet date to assess if there is any indication of impairment based on internal / external factors. An impairment loss on such assessment will be recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of the assets is net selling price or value in use, whichever is higher. While assessing value in use, the estimated future cash flows are discounted to the present value by using weighted average cost of capital. A previously recognised impairment loss is further provided or reversed depending on changes in the circumstances and to the extent that carrying amount of the assets does not exceed the carrying amount that will be determined if no impairment loss had previously been recognised.

I. Cash and cash equivalents:

Cash and cash equivalents include cash in hand, demand deposits with bank and other short-term (3 months or less from the date of acquisition), highly

liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value.

m. Trade receivables:

Trade receivables are initially recognised at fair value. Subsequently, these assets are held at amortised cost, using the effective interest rate (EIR) method, less provision for impairment.

n. Trade payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the EIR method.

o. Inventories

Raw materials, packing materials, purchased finished goods, work-in-progress, manufactured finished goods, fuel, stores and spares other than specific spares for machinery are valued at cost or net realisable value whichever is lower.

Items of inventory are valued at cost or net realizable value, whichever is lower after providing for obsolescence and other losses, where considered necessary. Cost is determined on the following basis:

• Stores, spares, raw materials and trading goods

• Weighted average cost

• Process stock and finished goods - Material cost plus appropriate value of overheads

• Others (land) - At cost on conversion to stock-in-trade plus cost of improvement

Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventory to the present location and condition.

Due allowances are made for slow moving and obsolete inventories based on estimates made by the Company. Items such as spare parts, stand-by equipment and servicing equipment which is not plant and machinery gets classified as inventory.

p. Investments and other financial assets i. Classification

The Company classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

• those measured at amortised cost.

The classification depends on the business model of the entity for managing financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election ( on an instrument-by-instrument basis) at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.

ii. Initial recognition and measurement:

Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the Statement of Profit and Loss.

iii. Subsequent measurement

After initial recognition, financial assets are measured at:

• Fair value {through Other Comprehensive Income (FVOCI) or through profit or loss (FVPL)} or,

• Amortised cost Debt instruments

Subsequent measurement of debt instruments depends on the business model of the Company for managing the asset and the cash flow characteristics of the asset. There are 3 measurement categories into which the Company classifies its debt instruments:

Measured at amortised cost:

Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortised cost using the EIR method less impairment, if any, the amortisation of EIR and loss arising from impairment, if any is recognised in the Statement of Profit and Loss.

Measured at fair value through Other Comprehensive Income (OCI):

Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through Other Comprehensive Income. Fair value movements are recognised in the OCI.

Interest income measured using the EIR method and impairment losses, if any are recognised in the Statement of Profit and Loss. On de-recognition, cumulative gain / (loss) previously recognised in OCI is reclassified from the equity to other income in the Statement of Profit and Loss.

Measured at fair value through profit or loss:

A financial asset not classified as either amortised cost or FVOCI, is classified as FVPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised as other income in the Statement of Profit and Loss.

Equity instruments:

The Company subsequently measures all investments in equity instruments other than subsidiary Company, associate Company and Joint Venture Company at fair value. The Management of the Company has elected to present fair value gains and losses on such equity investments in either Other Comprehensive Income or profit & loss. There is no subsequent reclassification of fair value gains and losses to the Statement of profit and loss where FVOCI option is chosen. Dividends from such investments continue to be recognised in the Statement of Profit and Loss as Other income when the right to receive payment is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognised in the Statement of Profit and Loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

Investments in subsidiary Company, associate Company and Joint Venture Company:

Investments in subsidiary Company is carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiary companies, associate Company and Joint Venture Company, the difference between net disposal proceeds and the carrying amounts are recognised in the Statement of Profit and Loss.

Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets

carried at fair value through profit or loss are expensed in the Statement of Profit and Loss.

Fair Value hierarchy

The judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements in the note 36. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows:-

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

iv. Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVTOCI debt instruments (Eg. trade receivables, other contractual rights to receive cash or other financial asset). The impairment methodology applied depends on whether there has been a significant increase in credit risk.

Note 38 details how the Company determines whether there has been a significant increase in credit risk.

For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

v. Derecognition of financial assets

A financial asset is derecognised only when

• The Company has transferred the rights to receive cash flows from the financial asset or

• retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.

Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is de-recognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.

vi. Income recognition: Interest income

Interest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a 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.

Dividends

Dividends are recognised in the Statement of Profit and Loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.

q. Financial liabilities and equity instruments i. Classification as debt or equity

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

ii. Initial recognition and measurement

Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the fair value.

iii. Subsequent measurement

Financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.

iv. Derecognition

A financial liability is de-recognised when the obligation specified in the contract is discharged, cancelled or expires.

r. Offsetting financial instruments

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

s. Derivative instruments

The Company holds derivative financial instruments such as foreign exchange forward and commodity futures to mitigate the risk of changes in exchange rates on foreign currency exposures and changes in prices of raw materials. The counterparty for these contracts is generally a bank.

Derivative financial assets or liabilities are not designated as hedges. Although the Company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial Instruments.

Derivatives not designated as hedges are recognised initially at fair value and attributable transaction costs are recognised in net profit in the Statement of Profit and Loss, when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are included in Other income. Assets / liabilities in this category are presented as current assets / current liabilities if they are expected to be realised within 12 months after the Balance Sheet date.

t. Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the Statement of Profit and Loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs.

Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as Other income / (expense).

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

u. Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

Other borrowing costs are expensed in the period in which they are incurred.

v. Provisions and contingent liabilities

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. These are reviewed at each reporting period and reflect the best current estimate.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flow estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.

w. Employee benefits

i. Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.

ii. Other Long-term employee benefits

The liabilities for earned leave is not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss.

The obligations are presented as current liabilities in the Balance Sheet if the entity does not have an unconditional right to defer settlement for at least 12 months after the reporting period, regardless of when the actual settlement is expected to occur.

iii. Post-employment obligations Defined Benefits plan

Gratuity liability is a defined benefit obligation and is computed on the basis of an actuarial valuation by an actuary appointed for the purpose as per projected unit credit method at the end of each financial year. The liability or asset recognised in the Balance Sheet is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The liability so provided is paid to trusts administered by the Company, which in turn invests in eligible securities to meet the liability as and when it accrues for payment in future. Any shortfall in the value of assets over the defined benefit obligation is recognised as a liability with a corresponding charge to the Additional Statement of Profit and Loss. For other employees, the Company Makes Contribution for certain employees where as for same other employees the Company makes contribution to a trust maintaned by Life Insurance Corporation (''LIC1) of India.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on Government bonds that have terms approximating to the terms of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur directly in Other Comprehensive Income. They are included in retained earnings in the Statement of changes in equity and in the Balance Sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.

Provident fund contributions are made to a trust administered by the Company in India. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of the year and any shortfall in the fund balance maintained by the Trust set up by the Company is additionally provided. Actuarial losses and gains are recognized in other comprehensive income and shall not be reclassified to the Statement of Profit and Loss in a subsequent period.

Defined contribution plan

The Company contributes towards Employees State Insurance Scheme, Provident Fund, Family Pension Fund and Superannuation Fund which are defined contribution schemes.

The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

iv. Share based payments

The fair value of options granted under the Employee Option Plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted:

• including any market performance conditions (e.g., the entity''s share price)

• excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales growth targets and remaining an employee of the entity over a specified time period), and

• including the impact of any non-vesting conditions (e.g. the requirement for employees to save or holdings shares for a specific period of time).

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

x. Earnings per share

\. Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the Company

• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

ii. Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

• the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and

• the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

y. Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

z. Operating cycle

Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

aa. Rounding of amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.

2.1 Critical estimates and judgements

Preparation of the Financial Statements requires use of accounting estimates which, by definition, will seldom equal the actual results. This Note provides an overview of the areas that involved a higher degree of judgements or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the Financial Statements.

The areas involving critical estimates or judgements are:

a. Estimation of useful life of Property, plant and equipment: Note 1 (h)

b. Estimation of defined benefit obligation: Note 40

c. Estimation of fair value of level 3 financial instruments - Note 36

d. Contingent Liabilities - Note 42

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

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Mar 31, 2017

Notes forming part of Financial Statements for the year ended 31^st March, 2017

1. Corporate Information

Mafatlal Industries Limited (the "Company") is a public limited Company incorporated under the provisions of the Companies Act, 1956. The shares are listed on the Mumbai Stock Exchange. The Company belongs to the reputed industrial house of Arvind Mafatlal Group in India, established in 1905. The Company is engaged in textile manufacturing and trading, having its manufacturing units at Nadiad and Navsari.

2. Significant Accounting Policies

a. Basis of accounting and preparation of Financial Statements

The financial statements of the Company have been prepared and presented in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP), including the Accounting Standards prescribed under the relevant provisions of the Companies Act, 2013. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

b. Use of estimates

The preparation and presentation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialized.

c. Inventories

Items of inventory are valued at cost or net realizable value, whichever is lower after providing for obsolescence and other losses, where considered necessary. Cost is determined on the following basis:

Stores, spares, raw materials and trading goods - Weighted average cost

Process stock and finished goods - Material cost plus appropriate value of overheads

Others (land) - At cost on conversion to stock-in-trade plus cost of improvement

d. Depreciation on tangible fixed assets

Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of Plant and Machinery, in whose case the life of the assets has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support.

Individual assets acquired for less than '' 5,000/- are entirely depreciated in the year of acquisition.

e. Revenue recognition

Revenue including other income is recognized when no significant uncertainty as to its determination or realization exists.

f. Export Benefits

Export Benefits available under prevalent schemes are accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate realization / utilization of such benefits.

g. Fixed Assets (Tangible / Intangible)

Fixed assets are recorded at cost of acquisition or construction. They are stated at historical cost less accumulated depreciation, amortization and impairment loss, if any.

Capital Work-in-progress

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

h. Foreign currency transactions and translations

Transactions in foreign currency are recorded at the original rates of exchange in force at the time the transactions are affected. At the year-end, monetary items denominated in foreign currency and forward exchange contracts are reported using closing rates

of exchange. Exchange differences arising thereon and on realization / payment of foreign exchange are accounted, in the relevant year, as income or expense.

In case of forward exchange contracts, or other financial instruments that are in substance forward exchange contracts, the premium or discount arising at the inception of the contracts is amortized as expense or income over the life of the contracts. Gains / losses on settlement of transactions arising on cancellation / renewal of forward exchange contracts are recognized as income or expense.

i. Investments

Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments.

Current investments are carried individually, at the lower of cost and fair value. Cost of investments includes acquisition charges such as brokerage, fees and duties.

Investment properties are carried individually at cost less accumulated depreciation and impairment, if any. Investment properties are capitalized and depreciated where applicable in accordance with the policy stated for fixed assets. Impairment of investment property is determined in accordance with the policy stated for Impairment of Assets.

j. Cash flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

k. Earnings Per Share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued later. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate.

l. Employee benefits

a. The Company contributes towards Employees State Insurance Scheme, Provident Fund, Family Pension Fund and Superannuation Fund which are defined contribution schemes.

Liability in respect thereof is determined on the basis of contribution as required to be made under the statutes / rules.

b. Gratuity liability, a defined benefit scheme, and provision for compensated absences are accrued and provided for on the basis of actuarial valuations made at the year end.

m. Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

n. Operating Lease

Lease arrangements where the risks and rewards incidental to the ownership of an asset substantially vest with the lessor are recognized as Operating Lease. Operating Lease receipts and payments are recognized as income or expense, as the case may be, in the Statement of Profit and Loss on a straight-line basis over the lease term.

o. Taxes on income

Tax expenses comprise both current and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the amount of Income tax payable / recoverable in respect of the taxable income / loss for the reporting period.

Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets and Liabilities are measured using the tax rates and tax laws that have been enacted or are substantively enacted by the balance sheet date. In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only to the extent that there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available to realize such assets. In other situations, deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realize these assets.

Current and deferred tax relating to items directly recognized in reserves is recognized in reserves and not in the Statement of Profit and Loss.

Minimum Alternate Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternate Tax under the Income Tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as "MAT Credit Entitlement". The Company reviews the "MAT Credit Entitlement" asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.

p. Research and development expenses

Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product''s technical feasibility has been established, in which case such expenditure is capitalized. The amount capitalized comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilized for research and development are capitalized and depreciated in accordance with the policies stated for Fixed Assets.

q. Impairment of assets

Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm''s length transaction between knowledgeable willing parties, less the costs of disposal.

r. provisions and contingencies

A provision is recognized when the Company has a present obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed when the Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are not recognized in the financial statements.

s. Service tax input credit

Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is reasonable certainty in availing / utilizing the credits.

t. Operating Cycle

Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

u. Government grants and subsidies

Grants and subsidies from the Government are recognized when there is reasonable assurance that the grant / subsidy will be received and all attaching conditions will be complied with.

The grant or subsidy that relates to interest expenses is recognized as income over the periods necessary to match them on a systematic basis to the interest costs, which it is intended to compensate. The grant or subsidy relating to the fixed assets is deducted in arriving at the carrying amount of the related fixed asset.

b. Terms / rights attached to Equity shares:

The Company has issued only one class of equity shares having a par value of Rs.10/- per share. Each equity shareholder is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by shareholders.

d. In terms of Modified Scheme (MS) approved by BIFR in June 2009, 600,00,000 Fully Redeemable Non-Cumulative Preference Shares of Rs. 10/- each were redeemable over a period of eight years as a subordinated liability to the dues of workers, statutory agencies and the secured creditors. Preference shares redeemed by the Company during the period of five years immediately preceding the reporting date:

e. Aggregate number of Equity shares issued for consideration other than cash during five years immediately preceding the reporting date:

During the year 2013-14, 40,99,415 Equity shares of Rs. 10/- each fully paid-up have been issued to shareholders of erstwhile Mafatlal Denim Limited, as consideration on merger with the Company.

g. During 1987-88, 535,000 shares (of Rs. 100/- each) were allotted on rights basis subject to the result of suit nos. 3181 and 3182 of 1987 filed by three shareholders against the Company and Others in the Ahmedabad City Civil Court. The suits are pending disposal.

(i) For Current maturities of Long Term Borrowings; Refer Note No.11(a) - Other Current Liabilities.

(ii) (a) Term loans of Rs. 909.15 lakhs (Previous year Rs. 1,764.15 lakhs) from a bank are repayable in quarterly installments till March 2018.

These loans are secured by a pari-passu mortgage / hypothecation charge on certain fixed assets, including leasehold land and hypothecation charge on certain current assets of the Company and pledge by promoters / promoter companies of certain shareholding in the Company. The loans carry interest linked to the lenders'' Marginal Cost of funds based Lending Rate (MCLR). The effective rate of interest for the year was in the range of 14.00% to 14.25% p.a. (Previous year 14.25% to 14.90% p.a.).

(b) Term loan of Rs. 4,440.00 lakhs (Previous year Rs. 536.47 lakhs) from a bank are repayable in quarterly installments begining from June 2017, till May 2022 after a moratorium period of 15 months. The loan is secured by mortgage / hypothecation charge on certain Fixed Assets and pari-passu second charge on certain current assets of the Company. The loan carry interest linked to the lenders'' MCLR. The effective rate of interest for the year was 12.25% p.a. (Previous year 12.25% p.a.).

(c) Term loan of Rs. 2,208.33 lakhs (Previous year Rs. 2,499.99 lakhs) from a bank is repayable in monthly installments beginning from September, 2016 till August, 2021 after a moratorium period of 24 months. The loan is secured by mortgage / hypothecation charge on certain Fixed Assets and pledge of Equity shares owned by the Company. The loan carry interest linked to the lenders'' Prime Lending Rates. The effective rate of interest for the year was in the range of 12.50% to 14.25% p.a. (Previous year: 14.25% to 14.50% p.a.).

(d) Term loan of Rs. 2,333.59 lakhs (Previous year Rs. 2,457.63 lakhs) from a bank is repayable in monthly installments beginning from December, 2016 till December, 2021 after a moratorium period of 24 months. The loan is secured by mortgage / hypothecation charge on certain Fixed Assets and second charge on certain current assets of the Company. The loan carry interest linked to the lenders'' Prime Lending Rates. The effective rate of interest for the year was in the range of 12.25% to 12.50% p.a. (Previous year: 12.50% to 13.50% p.a.).

(e) Term loan of Rs. 1,572.78 lakhs (Previous year Rs. Nil) from a bank are repayable in monthly installments begining from July 2016, till June 2025. The loan is secured by mortgage / hypothecation charge on certain Fixed Assets and pari-passu second charge on certain current assets of the Company. The loan carry interest linked to the lenders'' MCLR. The effective rate of interest for the year was 10.75% p.a. (Previous year N.A.).

(iii) Loans for Vehicles from Banks is repayable in monthly installments and the same is secured by hypothecation of respective vehicles.

The effective rate of interest for the year was in the range of 10.50% to 11% p.a. (Previous year 10.50% to 11% p.a).

(iv) (a) Term loan of Rs. 239.25 lakhs (Previous year Rs. 464.25 lakhs) from a Financial Institution is repayable in quarterly installments

till March, 2018. The loan is secured by a pari-passu mortgage / hypothecation charge on the Company''s certain Fixed Assets, including leasehold land and hypothecation charge on certain current assets of the Company and pledge by promoters / promoter companies of certain shareholding in the Company. The loan carry an interest linked to the lenders'' Prime Lending Rates. The effective rate of interest for the current year was in the range of 12.45% to 12.70% p.a. (Previous year 12.70% to 13.25% p.a.).

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Mar 31, 2014

A. Basis of accounting and preparation of Financial Statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 ("the 1956 Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013 Act") in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/ 2013 Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

b. Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

c. Inventories

Items of inventory are valued at cost or net realizable value, whichever is lower. Cost is determined on the following basis:

Stores, spares and raw materials - Weighted average

Process stock and finished goods - Material cost plus appropriate value of overheads

Trading goods – Weighted average cost

Others (land) - At cost on conversion to stock-in trade

d. Depreciation on tangible fixed assets

Depreciation is provided using the Straight Line Method, pro-rata to the period of use, as per the useful life of the assets estimated by the management or at the rates prescribed in Schedule XIV to the Companies Act,1956, whichever is higher, as follows:

Non-Factory Buildings 1.63% Factory Building 3.34%

Plant & Equipment 10.34% Computers 16.21%

Furniture & Fixtures 6.33% Office Equipments 4.75%

Vehicles 9.50%

Individual assets acquired for less than Rs. 5,000/- are entirely depreciated in the year of acquisition.

e. Revenue recognition

Revenue including other income is recognized when no significant uncertainty as to its'' determination or realization exists.

f. Export Benefits

Export Benefits available under prevalent schemes are accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate realization / utilization of such benefits.

g. Tangible fixed assets

Fixed assets are recorded at cost of acquisition or construction. They are stated at historical cost less accumulated depreciation, amortization and impairment loss, if any.

Capital Work-in progress

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

cost and related incidental expenses.

h. Foreign currency transactions and translations

Transactions in foreign currency are recorded at the original rates of exchange in force at the time the transactions are effected. At the year-end, monetary items denominated in foreign currency and forward exchange contracts are reported using closing rates of exchange. Exchange differences arising thereon and on realization/ payment of foreign exchange are accounted, in the relevant year, as income or expense.

In case of forward exchange contracts, or other financial instruments that are in substance forward exchange contracts, the premium or discount arising at the inception of the contracts is amortized as expense or income over the life of the contracts. Gains/ losses on settlement of transactions arising on cancellation/ renewal of forward exchange contracts are recognized as income or expense.

i. Investments

Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties. Investment properties are carried individually at cost less accumulated depreciation and impairment, if any. Investment properties are capitalised and depreciated in accordance with the policy stated for Tangible Fixed Assets. Impairment of investment property is determined in accordance with the policy stated for Impairment of Tangible Assets.

j Employee benefits

a. The Company contributes towards Provident Fund, Family Pension Fund and Superannuation Fund which are defined contribution schemes. Liability in respect thereof is determined on the basis of contribution as required to be made under the statutes/ rules.

b. Gratuity liability, a defined benefit scheme, and provision for compensated absences are accrued and provided for on the basis of actuarial valuations made at the year / period end.

k. Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

l. Operating Lease

Lease arrangements where the risks and rewards incidental to the ownership of an asset substantially vest with the lessor are recognized as Operating Lease. Operating Lease receipts and payments are recognized as income or expense, as the case may be, in the Statement of Profit and Loss on a straight-line basis over the lease term.

m. Taxes on income

Tax expenses comprise both current and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the amount of income tax payable/ recoverable in respect of the taxable income/ loss for the reporting period.

Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets and Liabilities are measured using the tax rates and tax laws that have been enacted or are substantively enacted by the balance sheet date. In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only to the extent that there is a virtual certainty supported by convincing evidence that sufficient

future taxable income will be available to realize such assets. In other situations, deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realize these assets.

Minimum Alternate Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternate Tax under the Income Tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as "MAT Credit Entitlement." The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.

n. Research and development expenses

Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product''s technical feasibility has been established, in which case such expenditure is capitalised. The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilised for research and development are capitalised and depreciated in accordance with the policies stated for Fixed Assets.

o. Impairment of tangible assets

Impairment loss is provided to the extent the carrying amount of assets exceed their recoverable amount. Recoverable amount is the higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash-flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm''s length transaction between knowledgeable, willing parties, less the costs of disposal.

p. Provisions and contingencies

A provision is recognized when the Company has a present obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed when the Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are not recognised in the financial statement.

q. Service tax input credit

Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing/utilizing the credits.

r. Operating Cycle

Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

s. Government grants and subsidies

Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with.

The grant or subsidy that relates to interest expenses is recognized as income over the periods necessary to match them on a systematic basis to the interest costs, which it is intended to compensate. The grant or subsidy relating to the fixed assets is deducted in arriving at the carrying amount of the related fixed asset.

b) (i) Terms / rights attached to Equity shares:

The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each equity shareholder is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31st March, 2014, the amount of dividend, per share, recognized as distributions to equity shareholders is Rs. 3/- (Previous year ended 31st March, 2013 Rs. 5/-).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by shareholders.

(ii) Terms / rights attached to Preference shares:

In terms of Modified Scheme (MS) approved by BIFR in June 2009, 600,00,000 Fully Redeemable Non-Cumulative Preference Shares of Rs. 10/- each were redeemable over a period of eight years as a subordinated liability to the dues of workers, statutory agencies and the secured creditors. 50% of the shares were redeemed during the period ended 31st March, 2012 and remaining 50% of the shares have been redeemed during the current year.

e. Aggregate number of Equity shares issued for consideration other than cash during five years immediately preceding the reporting date:

(i) During the year 2010-11, 300,00,000 Optionally Convertible Fully Redeemable Non-Cummulative Preference Shares of Rs. 10/- each were converted into 48,13,860 Equity shares of Rs. 10/- each of the Company at a premium of Rs. 52.32 per equity share.

(ii) During the current year, 40,99,415 Equity shares of Rs. 10/- each fully paid-up have been issued to shareholders of erstwhile Mafatlal Denim Limited, as consideration on merger with the Company.

g. During 1987-88, 535,000 shares (of Rs. 100/- each) were allotted on rights basis subject to the result of suit nos. 3181 and 3182 of 1987 filed by three shareholders against the Company and Others in the Ahmedabad City Civil Court. The suits are pending disposal.

(i) For Current maturities of Long Term Borrowings; Refer Note No.11(a) - Other Current Liabilities.

(ii) (a) Term loans of Rs. 3,417.15 lacs (Previous year Rs. 4,158.15 lacs) from a bank are repayable in quarterly installments till March 2018. These Loans are secured by a pari passu mortgage / hypothecation charge on the Fixed Assets, including leasehold land and hypothecation charge on all current assets of erstwhile Mafatlal Denim Limited and pledge by promoters/ promoter companies of certain shareholding in the Company. The loans carry interest linked to the lenders'' Prime Lending Rates. The effective rate of interest for the year was in the range of 15.50% to 16.00% p.a. (Previous

Notes forming part of Financial Statements for the year ended 31st March, 2014

(b) Term loan of Rs. 500.00 lacs (Previous year Rs. 750.00 lacs) from a bank is repayable in monthly installments till October 2014. The Loan is secured by a pari passu mortgage / hypothecation charge on the Current Assets of erstwhile Mafatlal Denim Limited and pledge by promoters/ promoter companies of certain shareholding in the Company. The loans carry interest linked to the lenders'' Base Rates. The effective rate of interest for the year was in the range of 13.75% to 14% p.a (Previous year 13.75% p.a.)

(iii) Loans for Vehicles from Banks is secured by hypothecation of respective vehicles. The Loan carries interest in the range of 10.50% to 11% p.a. (Previous year 11% p.a.)

(iv) (a) Term loan of Rs. 899.25 lacs (Previous year Rs. 1,094.25 lacs) from a Financial Institution is repayable in quarterly installments till March 2018. The Loan is secured by a pari passu mortgage / hypothecation charge on the Company''s Fixed Assets, including leasehold land and hypothecation charge on all current assets of erstwhile Mafatlal Denim Limited and pledge by promoters/ promoter companies of certain shareholding in the Company. The loan carry an interest linked to the lenders'' Prime Lending Rates. The effective rate of interest for the current year was at 16.75% p.a. (Previous year 16.50% to 16.75% p.a)

(b) Term loan of Rs. 611.13 lacs (Previous year Rs. 743.65 lacs) from a Financial Institution is repayable in quarterly installments till March 2018. The Loan is secured by pari passu hypothecation charge on the current assets of erstwhile Mafatlal Denim Limited and pledge by promoters/ promoter companies of certain shareholding in the Company. The loan carries interest @ 12.25% p.a.

Note: The Company has recognised deferred tax asset on unabsorbed depreciation to the extent of the corresponding deferred tax liability on the difference between the book balance and the written down value of fixed assets under Income Tax.

* Secured against Fixed Deposits of Rs. 7,420.00 lacs, maturing on various dates, last date of maturity 15th March, 2015. (Previous year: Rs. 3,013.00 lacs, last date of maturity 15th March, 2014).

** Secured by pari passu charge on the current assets and a second Mortgage/ Hypothecation charge on the Fixed assets of erstwhile Mafatlal Denim Limited and pledge by promoters/ promoter companies of certain shareholding in the Company. The cash credit is repayable on demand and carry an interest @ 14.5% p.a. (Previous year 14.5% p.a)

Note:

Building include Rs. 12.86 lacs (Previous year Rs. 12.86 lacs) being the cost of ownership premises in a co-operative society, including cost of shares received for the face value of Rs.2500/-, under the bye-laws of the society.

NOTE 13(b) FIXED ASSETS

* Subject to non disposal undertakings given to financial institutions. The company is currently under liquidation, 33,40,002 Equity shares were not available for physical verification.

# 1,050 nos. - Not available for physical verification.

## Not available for physical verification / confirmation not available; currently under liquidation.

### 66,362 Equity shares (Previous year 110,335) not available for physical verification; currently under liquidation.

$ Equity shares acquired Pursuant to the Scheme of Amalgamation are not held in the name of the Company.

** Not available for physical verification

^ Added pursuant to the Scheme of Amalgamation (Refer Note No.30.3)

*** 13,50,000 Equity Shares of Ibiza Industries Limited have been pledged for loans/deposit taken by the company / other companies.

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Mar 31, 2013

A. Basis of accounting and preparation of Financial Statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous period.

b. Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

c. Inventories

Items of inventory are valued at cost or net realizable value, whichever is lower. Cost is determined on the following basis:

Stores, spares and raw materials - Weighted average

Process stock and finished goods - Material cost plus appropriate value of overheads

Trading goods – Weighted average cost

Others (land) - At cost on conversion to stock-in trade

Fixed assets are recorded at cost of acquisition or construction. They are stated at historical cost less accumulated depreciation and impairment loss, if any.

d. Depreciation on tangible fixed assets

Depreciation is provided using the Straight Line Method,pro-rata to the period of use,as per the useful life of the assets estimated by the management or at the rates prescribed in Schedule XIV to the Companies Act,1956,whichever is higher,as follows:

Individual assets acquired for less than Rs. 5,000/- are entirely depreciated in the year of acquisition.

e. Revenue recognition

Revenue including Other Income is recognized when no significant uncertainty as to determination or realization exists.

f. Export Benefits

Export Benefit available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate realization / utilization of such benefits.

g. Tangible fixed assets

Fixed assets are recorded at cost of acquisition or construction. They are stated at historical cost less accumulated depreciation, amortization and impairment loss, if any.

Capital Work-in progress

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

h. Foreign currency transactions and translations

Transactions in foreign currency are recorded at the original rates of exchange in force at the time the transactions are effected. At the year-end, monetary items denominated in foreign currency and forward exchange contracts are reported using closing rates of exchange. Exchange differences arising thereon and on realization/ payment of foreign exchange are accounted, in the relevant year, as income or expense.

In case of forward exchange contracts, or other financial instruments that are in substance forward exchange contracts, the premium or discount arising at the inception of the contracts is amortized as expense or income over the life of the contracts. Gains/ losses on settlement of transactions arising on cancellation/ renewal of forward exchange contracts are recognized as income or expense.

i. Investments

Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.

Investment properties are carried individually at cost less accumulated depreciation and impairment, if any. Investment properties are capitalised and depreciated in accordance with the policy stated for Tangible Fixed Assets. Impairment of investment property is determined in accordance with the policy stated for Impairment of Tangible Assets.

j Employee benefits

a. The Company contributes towards Provident Fund, Family Pension Fund and Superannuation Fund which are defined contribution schemes. Liability in respect thereof is determined on the basis of contribution as required under the rules.

b. Gratuity liability, a defined benefit scheme, and provision for compensated absences are accrued and provided for on the basis of actuarial valuations made at the year / period end.

k. Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

l. Operating Lease

Lease arrangements where the risks and rewards incidental to the ownership of an asset substantially vest with the lessor are recognized as Operating Lease. Operating Lease receipts and payments are recognized as income or expense, as the case may be, in the Statement of Profit and Loss account on a straight-line basis over the lease term.

m. Taxes on income

Tax expenses comprise both current and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the amount of income tax payable/ recoverable in respect of the taxable income/ loss for the reporting period.

Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets and Liabilities are measured using the tax rates and tax laws that have been enacted or are substantively enacted by the balance sheet date. In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized

only to the extent that there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available to realize such assets. In other situations, deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realize these assets.

Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternate Tax under the Income Tax Act,1961, the said asset is created by way of credit to the statement of profit and loss and shown as "MAT Credit Entitlement.” The company reviews the "MAT credit entitlement” asset at each reporting date and writes down the asset to the extent the company does not have convincing evidence that it will pay normal tax during the specified period.

n. Impairment of tangible assets

Impairment loss is provided to the extent the carrying amount of assets exceed their recoverable amount. Recoverable amount is the higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash-flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm''s length transaction between knowledgeable, willing parties, less the costs of disposal.

o. Provisions and contingencies

A provision is recognized when the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed when the Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognized nor disclosed in the financial statement.

p. Service tax input credit

Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing/utilizing the credits.

q. Operating Cycle

Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

r. Government grants and subsidies

Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with.

The grant or subsidy that relates to interest expenses is recognized as income over the periods necessary to match them on a systematic basis to the interest costs, which it is intended to compensate. The grant or subsidy relating to the fixed assets is deducted in arriving at the carrying amount of the related fixed asset.

---

Mar 31, 2012

A. Basis of accounting and preparation of Financial Statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention.

b. Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

c. Inventories

Items of inventory are valued at cost or net realizable value, whichever is lower. Cost is determined on the following basis: Stores, spares and raw materials - Weighted average ' Process stock and finished goods - Material cost plus appropriate value of overheads Trading goods - Weighted average cost Others (land) - At cost on conversion to stock-in trade

d. Depreciation on tangible fixed assets

Depreciation on fixed assets is provided on the straight-line basis in accordance with the Companies Act, 1956 at the rates and in the manner specified in the Schedule XIV of the Act except as stated below: Cost of leasehold land is written off over the period of lease.

e. Revenue recognition

Revenue including Other Income is recognized when no significant uncertainty as to determination or realization exists.

f. Export Benefits

Export Benefit available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate realization / utilization of such benefits.

g. Tangible fixed assets

Fixed assets are recorded at cost of acquisition or construction. They are stated at historical cost less accumulated depreciation, amortisation and impairment loss, if any.

h. Foreign currency transactions and translations

Transactions in foreign currency are recorded at the original rates of exchange in force at the time the transactions are effected. At the year-end, monetary items denominated in foreign currency and forward exchange contracts are reported using closing rates of exchange. Exchange differences arising thereon and on realization/payment of foreign exchange are accounted, in the relevant year, as income or expense.

In case of forward exchange contracts, or other financial instruments that are in substance forward exchange contracts, the premium or discount arising at the inception of the contracts is amortised as expense or income over the life of the contracts. Gains/ losses on settlement of transactions arising on cancellation/ renewal of forward exchange contracts are recognized as income or expense.

i. Investments

Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties. Investment properties are carried individually at cost less accumulated depreciation and impairment, if any. Investment properties are capitalised and depreciated (where applicable) in accordance with the policy stated for Tangible Fixed Assets. Impairment of investment property is determined in accordance with the policy stated for Impairment of Assets.

j. Employee benefits

a. The Company contributes towards Provident Fund, Family Pension Fund and Superannuation Fund which are defined contribution schemes. Liability in respect thereof is determined on the basis of contribution as required under the statute/ rules.

b. Gratuity liability, a defined benefit scheme, and provision for compensated absences are accrued and provided for on the basis of actuarial valuations made at the period end.

k. Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

I. Operating Lease

Lease arrangements where the risks and rewards incidental to the ownership of an asset substantially vest with the lesser are recognized as Operating Lease. Operating Lease receipts and payments are recognized as income or expense, as the case may be, in the Statement of Profit and Loss on a straight-line basis over the lease term.

m. Taxes on income

Tax expenses comprise both current and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the amount of income tax payable/ recoverable in respect of the taxable income/ loss for the reporting period.

Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets and Liabilities are measured using the tax rates and tax laws that have been enacted or are substantively enacted by the balance sheet date. In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only to the extent that there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available to realize such assets. In other situations, deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realize these assets.

n. Impairment of tangible assets

Impairment loss is provided to the extent the carrying amounf(s) of assets exceed their recoverable amount(s). Recoverable amount is the higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash-flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal.

o. Provisions and contingencies

A provision is recognized when the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed when the Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognized nor disclosed the financial statements.

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Jun 30, 2011

Basis of Accounting

The Financial Statements have been prepared on historical cost basis of accounting.

The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities), as of the date of the Financial Statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the Financial Statements are prudent and reasonable. Actual results could differ from these estimates.

Fixed assets

Fixed assets are recorded at cost of acquisition or construction. They are stated at historical cost less accumulated depreciation and impairment loss, if any.

Depreciation

Depreciation on fixed assets is provided on the straight-line/ written down basis in accordance with the Companies Act, 1956 (refer note 10 of schedule 18). Assets acquired on finance lease are depreciated over the period of lease. Cost of leasehold land is written off over the period of lease.

Investments

Current investments are carried at lower of cost and fair value. Long-term investments are carried at cost. Provision is made to recognize a decline, other than temporary, in the carrying amount of long-term investments.

Inventories

Items of inventory are valued at cost or net realizable value, which ever is lower. Cost is determined on the following basis:

Stores, spares and raw materials

Weighted average

Process stock and finished goods

Material cost plus appropriate value of overheads

Trading goods

FIFO

Others (land)

At cost on conversion to stock-in trade

Employee benefits

a. The Company contributes towards Provident Fund, Family Pension Fund and Superannuation Fund which are defined contribution schemes. Liability in respect thereof is determined on the basis of contribution as required under the statute/ rules.

b. Gratuity liability, a defined benefit scheme, and provision for compensated absences are accrued and provided for on the basis of actuarial valuations made at the period / year end.

Foreign currency transactions

Transactions in foreign currency are recorded at the original rates of exchange in force at the time the transactions are effected. At the year-end, monetary items denominated in foreign currency and forward exchange contracts are reported using closing rates of exchange. Exchange differences arising thereon and on realization/ payment of foreign exchange are accounted, in the relevant year, as income or expense.

In case of forward exchange contracts, or other financial instruments that are in substance forward exchange contracts, the premium or discount arising at the inception of the contracts is amortized as expense or income over the life of the contracts. Gains/ losses on settlement of transactions arising on cancellation/ renewal of forward exchange contracts are recognized as income or expense.

Revenue recognition

Revenue including Other Income is recognized when no significant uncertainty as to determination or realization exists.

Export Benefits

Export Benefit available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate realization / utilization of such benefits.

Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

Taxes on income

Tax expenses comprise both current and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the amount of income tax payable/ recoverable in respect of the taxable income/ loss for the reporting period.

Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets and Liabilities are measured using the tax rates and tax laws that have been enacted or are substantively enacted by the balance sheet date. In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only to the extent that there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available to realize such assets. In other situations, deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realize these assets.

Impairment loss

Impairment loss is provided to the extent the carrying amount(s) of assets exceed their recoverable amount(s). Recoverable amount is the higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash-flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal.

Provisions and contingencies

A provision is recognized when the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed when the Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognized nor disclosed in the financial statement.

Operating Lease

Operating Lease receipts and payments are recognized as income or expense, as the case may be, in the profit and loss account on a straight-line basis over the lease term.

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May 31, 2010

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during thai reporting period. Differences between the actual results and estimates are recognised in the period in which the results are known / materialised.

Fixed assets

Fixed assets are recorded at cost of acquisition or construction. They are stated at historical cost less accumulated depreciation and impairment loss, if any.

Depreciation

Depreciation on fixed assets is provided on the straight-line/ written down basis in accordance with the Companies Act, 1956 (refer note 10 of schedule 18).

Assets acquired on finance lease are depreciated over the period of lease.

Cost of leasehold land is written off over the period of lease.

Investments

Current investments are carried at lower of cost and fair value. Long-term investments are carried at cost. Provision is made to recognize a decline, other than temporary, in the carrying amount of long-term investments.

Inventories

Items of inventory are valued at cost or net realizable value, which ever is lower. Cost is determined on the following basis:

Stores, spares and raw materials

Weighted average

Process stock and finished goods

Material cost plus appropriate value of overheads

Trading goods

FIFO

Others (land)

At cost including accretion to its value on conversion to stock-in-trade

Deferred revenue expenditure

The expenditure on voluntary retirement compensation and retrenchment compensation is treated as deferred revenue expenditure and amortized over a period of five years.

Employee benefits

a. The Company contributes towards Provident Fund, Family Pension Fund and Superannuation Fund which are defined contribution schemes. Liability in respect thereof

is determined on the basis of contribution as required under the statute/ rules.

b. Gratuity liability, a defined benefit scheme, and provision for compensated absences are accrued and provided for on the basis of actuarial valuations made at the period /year end.

Foreign currency transactions

Transactions in foreign currency are recorded at the original rates of exchange in force at the time the transactions are effected. At the year-end, monetary items denominated in foreign currency and forward exchange contracts are reported using closing rates of exchange. Exchange differences arising thereon and on realization/ payment of foreign exchange are accounted, in the relevant year, as income or expense.

In case of forward exchange contracts, or other financial instruments that are in substance forward exchange contracts, the premium or discount arising at the inception of the contracts is amortized as expense or income over the life of the contracts. Gains/ losses on settlement of transactions arising on cancellation/ renewal of forward exchange contracts are recognized as income or expense.

Revenue recognition

Revenue including Other Income is recognized when no significant uncertainty as to determination or realization exists.

Export Benefits

Export Benefit available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate realization / utilization of such benefits.

Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is-one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

Taxes on income

Tax expenses comprise both current and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the amount of income tax payable/ recoverable in respect of the taxable income/ loss for the reporting period.

Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets and Liabilities are measured using the tax rates and tax laws that have been enacted or are substantively enacted by the balance sheet date. In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only to the extent that there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available to realize such assets. In other situations, deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realize these assets.

Impairment loss

Impairment loss is provided to the extent the carrying amount(s) of assets exceed their recoverable amount(s). Recoverable amount is the higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash-flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arms length transaction between knowledgeable, willing parties, less the costs of disposal.

Provisions and contingencies

A provision is recognized when the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed when the Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognized nor disclosed in the financial statement.