Accounting Policies of Emcure Pharmaceuticals Ltd. Company

Mar 31, 2025

1C. Material accounting policies

a) Foreign Currency Translation

Transaction in foreign currencies are translated into the respective
functional currencies of the Company at the exchange rates at the
dates of transactions or an average rate if the average rate
approximates the actual rate at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies
are translated into the functional currency at the exchange rate at
the reporting date. Non-monetary assets and liabilities that are
measured based on historical cost in a foreign currency are
translated at the exchange rate at the date of transaction.
Exchange difference are recognised in statement of profit and loss,
except exchange differences arising from the translation of long
term foreign currency monetary items pertaining to period prior to
transition to Ind AS and which are not related to purchase of
property, plant and equipment and intangible assets which are
recognised directly in other equity.

b) Financial instruments

i. Recognition and initial measurement

Trade receivables are initially recognised when they are originated.
All other financial assets and financial liabilities are initially
recognised when the Company becomes a party to the contractual
provisions of the instrument.

Financial assets and liabilities are initially measured at fair value,
except for trade receivables which are initially measured at
transaction price. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities
(other than financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the fair value
measured on initial recognition of financial asset or financial
liability. Trade receivables that do not contain a significant
financing component are measured at transaction price.

ii. Classification and subsequent measurement
Financial assets

On initial recognition, a financial asset is classified as measured at

- amortised cost; or

- Fair value [either through profit and loss (FVTPL) or through other

comprehensive income (FVOCI)]

Financial assets are not reclassified subsequent to their initial
recognition, except if and in the period the Company changes its
business model for managing financial assets.

A financial asset is measured at amortised cost if it meets both of
the following conditions and is not designated as at FVTPL:

- The asset is held within a business model whose objective is to hold

assets to collect contractual cash flows; and

- The contractual terms of the financial asset give rise on specified

dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for
trading, the Company may irrevocably elect to present subsequent
changes in the investment''s fair value in OCI (designated as FVOCI

- equity investment). This election is made on an
investment-by-investment basis.

All financial assets not classified as measured at amortised cost as

described above are measured at FVTPL. On initial recognition, the
Company may irrevocably designate a financial asset that
otherwise meets the requirements to be measured at amortised
cost as at FVTPL if doing so eliminates or significantly reduces an
accounting mismatch that would otherwise arise.

Financial assets: Business model assessment

The Company makes an assessment of the objective of the business
model in which a financial asset is held at a portfolio level because
this best reflects the way the business is managed and information
is provided to management. The information considered includes:

- The stated policy and objectives for the portfolio and the
operation of those policies in practice.

These include whether management''s strategy focuses on
earning contractual interest income, maintaining a particular
interest rate profile, matching the duration of the financial asset
to the duration of any related liabilities or expected cash outflows
or realising cash flows through the sale of asset;

- How the performance of portfolio is evaluated and reported to the

Company''s management;

- The risk that affect the performance of the business model (and

the financial assets held within that business model) and how
those risks are managed;

- How managers of business are compensated - e.g. whether
compensation is based on the fair value of the assets managed or
the contractual cash flows collected; and

- The frequency, volume and timing of sales of financial assets in

prior periods, the reasons for such sales and expectations about
future sales activity.

Transfers of financial assets to third parties in transactions that do
not qualify for derecognition are not considered sales for this
purpose, consistent with the Company''s continuing recognition of
the assets.

Financial assets that are held for trading or are managed and
whose performance is evaluated on a fair value basis are measured
at FVTPL.

Financial assets: Assessment whether contractual cash flows are
solely payments of principal and interest

For the purpose of this assessment, ''principal'' is defined as the fair
value of financial asset on initial recognition. ''Interest'' is defined as
consideration for time value of money and for credit risk associated
with the principal amount outstanding during a particular period of
time and other basic leading risks and costs (e.g. liquidity risk and
administrative costs), as well as profit margin.

In assessing whether the contractual cash flows are solely
payments of principal and interest, the Company considers
contractual terms of the instrument. This includes assessing
whether the financial asset contains a contractual term that could
change the timing or amount of contractual cash flows such that it
would not meet this condition. In making this assessment, the
Company considers:

- contingent events that would change the amount and timing of

cash flows;

- term that would adjust the contractual rate, including variable
interest rate features;

- prepayment and extension features; and

- term that limits the Company''s claim to cash flows for specified
assets (e.g. non- recourse features).

A prepayment feature is consistent with the solely payments of
principal and interest criterion if the prepayment amount
substantially represents unpaid amount of principal and interest on
principal amount outstanding, which may include reasonable
additional compensation for early termination of contract.
Additionally, for a financial asset acquired on a significant premium
or discount to its contractual par amount, a feature that permits or
require prepayment at an amount that substantially represents the
contractual par amount plus accrued (but unpaid) contractual
interest (which may also include reasonable additional
compensation for early termination) is treated as consistent with
this criterion if the fair value of the prepayment feature is significant
at initial recognition.

Financial liabilities: Classification, subsequent measurement and
gains and losses

Financial liabilities are classified as measured at amortised cost or
FVTPL. A financial liability is classified as at FVTPL if it is classified as
held for trading, or it is a derivative or it is designated as such on
initial recognition. Financial liabilities at FVTPL are measured at fair
value and net gains and losses, including any interest expense, are
recognised in profit or loss. Other financial liabilities are
subsequently measured at amortised cost using the effective
interest method. Interest expense and foreign exchange gains and
losses are recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss.

iii. Derecognition

Financial assets

The Company derecognises a financial asset when the contractual
rights to the cash flows from the financial asset expire, or it transfers
the rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of the
financial asset are transferred or in which the Company neither
transfers nor retains substantially all of the risks and rewards of
ownership and does not retain control of the financial asset.

If the Company enters into transactions whereby it transfers assets
recognised on its balance sheet, but retains either all or

substantially all of the risks and rewards of the transferred assets,
the transferred assets are not derecognised.

Financial liabilities

The Company derecognises a financial liability when its contractual
obligations are discharged or cancelled, or expire.

The Company also derecognises a financial liability when its terms
are modified and the cash flows under the modified terms are
substantially different. In this case, a new financial liability based on
the modified terms is recognised at fair value. The difference
between the carrying amount of the financial liability extinguished
and the new financial liability with modified terms is recognised in
profit or loss.

iv. Offsetting

Financial assets and financial liabilities are offset and the net
amount presented in the balance sheet when, and only when, the
Company currently has a legally enforceable right to set off the
amounts and it intends either to settle them on a net basis or to
realise the asset and settle the liability simultaneously.

c) Property, plant and equipment

i. Recognition and measurement

Items of property, plant and equipment are measured at cost,
which includes capitalised borrowing costs, less accumulated
depreciation and accumulated impairment losses, if any.

Cost of an item of property, plant and equipment comprises its
purchase price, including import duties and non-refundable
purchase taxes, after deducting trade discounts and rebates, any
directly attributable cost of bringing the item to its working
condition for its intended use and estimate costs of dismantling and
removing the item and restoring the site on which it is located.

If significant parts of an item of property, plant and equipment
have different useful lives, then they are accounted for as separated
items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and
equipment is recognised in the statement of profit and loss.

ii. Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the
future economic benefit associated with the expenditure will flow
to the Company.

iii. Depreciation

Depreciation is calculated on cost of items of property, plant and
equipment less their estimated residual values over their estimated
useful lives using the straight line method, and is generally
recognised in the statement of profit and loss. Freehold land is not
depreciated.

Depreciation is provided on pro-rata basis using the straight-line
method over the estimated useful lives of the assets prescribed
under Schedule II to the Companies Act 2013 except for vehicles
and furnitures and fixtures at leasehold premises. The estimated
useful lives of items of property, plant and equipment for the
current and comparative periods are as follows:

Depreciation method, useful lives and residual values are reviewed
at each financial year-end and adjusted if appropriate. Based on
technical evaluation and consequent advice, the management
believes that its estimates of useful lives represents the period over
which the management expects to use these assets.

Depreciation on additions (disposals) during the year is provided on
a pro-rata basis i.e. from (upto) the date on which asset is ready for
use (disposed of).

d) Intangible assets

i. Initial recognition:

Intangible assets are initially measured at cost. Such intangible
assets are subsequently measured at cost less accumulated
amortisation and any accumulated impairment loses, if any.

ii. Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the
future economic benefit associated with the expenditure will flow
to Company.

iii. Amortisation

Amortisation is calculated to write off the cost of intangible assets
less their estimated residual value over their estimated useful lives
using straight line method, as is included in depreciation and
amortisation in statement of profit and loss.

The estimated useful lives are as follows:

Amortisation method, useful lives and residual values are reviewed
at the end of each financial year and adjusted if appropriate.

iv. Intangible Assets under Development

Intangible assets under development are initially recognized at cost.
Such intangible assets are subsequently capitalized only if it is
probable that the future economic benefit associated with the
expenditure will flow to the Company.

v. Impairment

The Company irrespective of whether there is any indication of
impairment, tests an intangible asset not yet available for use for
impairment annually by comparing its carrying amount with its
recoverable amount. The recoverable amount is the higher of its

value in use and its fair value less costs of disposal. Value in use is
based on the estimated future cash flows, discounted to their
present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset. An impairment loss is recognised if the carrying
amount of the intangible asset not yet available for use exceeds its
estimated recoverable amount. Impairment losses are recognised
in the statement of profit and loss.

e) Inventories

Inventories are measured at the lower of cost and net realisable
value. The cost on inventories is based on weighted average
formula, and includes expenditure incurred in acquiring the
inventories, production or conversion cost and other cost incurred in
bringing them to their present location and condition. In case of
manufactured inventory and work-in-progress, cost includes an
appropriate share of fixed production overheads based on normal
operating capacity.

Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and
selling expense.

The net realisable value of work-in- progress is determined with
reference to the selling price of related finished products.

Raw materials, components and other supplies held for use in
production of finished products are not written down below cost
except in cases where material price have declined and it is
estimated that the cost of finished products will exceed their net
realizable value.

The comparison of cost and net realizable value is made on an
item-by-item basis.

The Company considers various factors like shelf life, ageing of
inventory, product discontinuation, price changes and any other
factor which impact the Company''s business in determining the
allowance for obsolete, non-saleable and slow moving inventories.
The Company considers the above factors and adjusts the inventory
provision to reflect its actual experience on a periodic basis.

f) Impairment

i. Impairment of financial instruments

The Company recognises loss allowances for expected credit losses
on financial assets measured at amortised cost.

At each reporting date, the Company assesses whether financial
assets carried at amortised cost are credit - impaired. A financial
asset is ''credit impaired'' when one or more events that have a
detrimental impact on estimated future cash flows of financial
assets have occurred.

Evidence that a financial asset is credit impaired includes the
following observed data:

- significant financial difficulty of the borrower or issuer;

- a breach of contract such as a default or being overdue for a
period of more than 12 months from the credit term offered to
the customer;

- the restructuring of loan or advance by the Company on the
terms that the Company would not consider otherwise;

- it is probable that borrower will enter bankruptcy or the
financial reorganization;

- the disappearance of active market for a security because of

financial difficulties.

In accordance with Ind-AS 109, the Company applies expected
credit loss ("ECL") model for measurement and recognition of
impairment loss. The Company follows ''simplified approach'' for
recognition of impairment loss allowance on trade receivables. The
application of simplified approach does not require the Company
to track changes in credit risk. Rather, it recognises impairment loss
allowance based on lifetime ECLs at each reporting date, right from
its initial recognition.

For recognition of impairment loss on other financial assets the
Company recognises 12 month expected credit losses for all
originated or acquired financial assets if at the reporting date, the
credit risk has not increased significantly since its original
recognition. However, if credit risk has increased significantly,
lifetime ECL is used.

ECL impairment loss allowance (or reversal) is recognized in the
statement of profit and loss.

When determining whether the credit risk of financial asset has
increased significantly since initial recognition and when estimating
expected credit losses, the Company considers reasonable and
supportable information that is relevant and available without
undue cost of effort. This includes both quantitate and qualitative
information and analysis based on Company''s historical experience
and informed credit assessment and including forward - looking
information.

The Company assumes that the credit risk on financial assets has
increased significantly if it is more than 90 days past due.

The Company considers financial asset to be in default when:

a. The borrower is unlikely to pay its credit obligation to the
Company in full, without recourse by the Company to action such as
realising security (if any is held); or

b. The financial asset is 360 days or more past due.

Measurement of expected credit loss

Expected credit loss are probability weighted estimate of credit
losses. Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to the
Company in accordance with the contract and the cash flow that
the Company expects to receive).

Presentation of allowance of expected credit losses in the balance
sheet

Loss allowance for financial assets measured at amortised cost are
deducted from the gross carrying amount of the assets.

Write - off

The Gross carrying amount of financial asset is written off (either
partially of full) to the extent that there is no realistic prospect of
recovery. This is generally the case when Company determines that
the debtor does not have asset or source of income that could
generate sufficient cash flows to repay the amount subject to
write-off. However, financial assets that are written-off could still be
subject to enforcement activities in order to comply with Company''s
procedures for recovery of amounts due.

ii. Impairment of non-financial asset

The Company''s non-financial assets other than inventories and
deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any

such indication exists, then the asset''s recoverable amount is
estimated.

For impairment testing, assets that do not generate independent
cash inflows are grouped together into cash-generating units
(CGUs). Each CGU represents the smallest group of assets that
generates cash inflows that are largely independent of the cash
inflows of other assets or CGUs.

The recoverable amount of a CGU (or an individual asset) is the
higher of its value in use and its fair value less cost of disposal. Value
in use is based on the estimated future cash flows, discounted to
their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the CGU (or the asset).

The Company''s corporate assets (e.g. central office building for
providing support to various CGUs) do not generate independent
cash inflows. To determine impairment of corporate asset,
recoverable amount is determined for the CGUs to which the
corporate asset belongs.

An impairment loss is recognised if the carrying amount of an asset
or CGU exceeds its estimated recoverable amount. Impairment
losses are recognised in the statement of profit and loss.
Impairment loss recognised in respect of a CGU is allocated first to
reduce the carrying amount of any goodwill allocated to the CGU,
and then to reduce the carrying amounts of the other assets of the
CGU (or group of CGUs) on a pro rata basis.

An impairment loss in respect of assets for which impairment loss
has been recognised in prior periods, the Company reviews at each
reporting date whether there is any indication that the loss has
decreased or no longer exists. An impairment loss is reversed if there
has been a change in the estimates used to determine the
recoverable amount. Such a reversal is made only to the extent that
the asset''s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised. An
impairment loss on goodwill is not subsequently reversed.

g) Employee benefits

i. Short term employee benefits

Short term employee benefit obligations are measured on an
undiscounted basis and are expensed as the related service is
provided. A liability is recognised for the amount expected to be
paid, if the Company has a present legal or constructive obligation
to pay this amount as a result of past service provided by the
employee, and the amount of obligation can be estimated reliably.

ii. Share-based payment transactions

Share-based payment are provided to employees of the Group via
the Company''s Employees Stock Option Plan ("Emcure ESOS
2013").

The company accounts for the share-based payment transactions
as equity settled.

The grant date fair value of equity settled share-based payment
awards granted to employees of the Company is recognised as an
employee expense, with a corresponding increase in equity, over
the period that the employees unconditionally become entitled to
the awards. The amount recognised as expense is based on the
estimate of the number of awards for which the related service and
non-market vesting conditions are expected to be met, such that
the amount ultimately recognised as an expense is based on the

number of awards that do meet the related service and non-market
vesting conditions at the vesting date.

The Company also grants the options to the employees of it''s
subsidiaries for which subsidiary does not have an obligation to
settle the share based payment transaction. Total expense for such
options issued to employees of subsidiary is recognised as
investment in the nature of employee stock options issued to
employees of subsidiary and corresponding increase in share
options outstanding account.

iii. Defined contribution plan

A defined contribution plan is a post-employment benefit plan
under which an entity pays fixed contributions into a separate entity
and will have no legal or constructive obligation to pay further
amounts. The Company makes specified monthly contributions
towards Government administered provident fund scheme.
Obligations for contributions to defined contribution plans are
recognised as an employee benefit expense in profit or loss in the
periods during which the related services are rendered by
employees.

Prepaid contributions are recognised as an asset to the extent that
a cash refund or a reduction in future payments is available.

iv. Defined benefit plan

A defined benefit plan is a post-employment benefit plan other
than a defined contribution plan. The Company''s net obligation in
respect of defined benefit plans is calculated separately for each
plan by estimating the amount of future benefit that employees
have earned in the current and prior periods, discounting that
amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligation is performed annually
by a qualified actuary using the projected unit credit method. When
the calculation result is a potential asset for the Company, the
recognised asset is limited to the present value of economic benefit
available in the form of any future refunds from the plan or
reductions in future contributions to the plan (''the asset ceiling''). In
order to calculate the present value of economic benefits,
consideration is given to any minimum funding requirements.

Remeasurement of the net defined benefit liability, which comprise
actuarial gains and losses, the return on plan assets (excluding
interest) and the effect of the asset ceiling (if any, excluding
interest), are recognised in OCI. The Company determines the net
interest expense (income) on the net defined benefit liability (asset)
for the period by applying the discount rate used to measure the
defined benefit obligation at the beginning of the annual period to
the then-net defined benefit liability (asset), taking into account
any changes in the net defined benefit liability (asset) during the
period as a result of contributions and benefit payments. Net
interest expense and other expenses related to defined benefit
plans are recognised in statement of profit and loss.

When the benefits of the plan are changed or when plan is
curtailed, the resulting change in benefit that relates to past service
(''past service cost'' or ''past service gain'') or the gain or loss on
curtailment is recognised immediately in profit or loss. The
Company recognises gain and losses on the settlement of a defined
benefit plan when the settlement occurs.

v. Other long term employee benefit

The Company''s liability in respect of other long-term employee
benefits (compensated absences) is the amount of future benefit

that employees have earned in return for their service in the current
and prior periods, that benefit is discounted to determine its present
value, and the fair value of any related assets is deducted. The
obligation is measured on the basis of an annual independent
actuarial valuation using the Projected Unit Credit method.
Remeasurement gains or losses are recognised in profit or loss in the
period in which they arise.

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Mar 31, 2024

IA. General information:

Emcure Pharmaceuticals Limited (hereinafter referred to as "Company") is a Public Limited Company, incorporated and domiciled in India. The Company has its registered office in Pune and is engaged in developing, manufacturing and marketing a broad range of pharmaceutical products globally. The Company''s core strength lies in developing and manufacturing differentiated pharmaceutical products in-house, which are commercialised through Company''s marketing infrastructure across geographies and business relationships with multi-national pharmaceutical companies.

IB. Basis of preparation

a) Statement of compliance

These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of the Companies Act, 2013, (the ''Act'') and other relevant provisions of the Act as amended from time to time

Details of the Company''s accounting policies are included in Note 1C. These policies have been consistently applied to all the years presented, unless otherwise stated.

b) Functional and presentation currency

The standalone financial statements are presented in Indian Rupees (INR), which is also the Company''s functional currency. All the amounts disclosed in the standalone financial statements and notes have been rounded off to the nearest million, unless otherwise indicated.

c) Basis of Measurement

The standalone financial statements are prepared under the historical cost convention except for the following items:

Items	Measurement Basis
Investment in LLP	Fair value
Equity settled shared based payment options	Fair value
Assets held for sale	Fair value less cost to sell
Net defined benefit (asset) / liability	Fair value of plan assets less present value of defined benefit obligations

d) Use of estimates and judgements

In preparing these standalone financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Assumptions and estimation uncertainties

Information about assumptions and estimations uncertainties that have a significant risk resulting in a material adjustment in the year ended 31 March 2024 is included in following notes:

Note 1C. c) Useful lives of property, plant, equipment;

Note 1C. d) Useful lives of intangible assets;

Note 3 - measurement of discount rate for initial recognition of ROU and Lease Liability as per IND AS 116 Note 5 - Impairment of investments in subsidiaries Note 9 - Valuation of inventories

Note 19 & 22 - recognition and measurement of provisions and contingencies : key assumptions about the likelihood and magnitude of an outflow of resources;

Note 35 - recognition of deferred tax assets: availability of future taxable profit against which tax credit can be used;

Note 39- Impairment of financial instruments

Note 43 - measurement of loans to related parties at amortised cost and interest accrued on these loans; key assumptions for discount rate

Note 44 - measurement of defined benefit obligations: key actuarial assumptions;

e) Measurement of fair values

A number of the Company''s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

The Company has an established control framework with respect to the measurement of fair values. This includes a team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the Head of Treasury.

The team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Further information about the assumptions made in measuring fair values is included in the following notes:

- Note 40: Fair value measurements; ___

- Note 45: Employees stock option plan; and

f) Current versus non current classification

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - non current classification of assets and liabilities.

All assets and liabilities are classified into current and non-current.

Assets

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

- it is expected to be realized in, or is intended for sale or consumption in, the Company''s normal operating cycle;

- it is held for the purpose of being traded;

- it is expected to be realized within 12 months after the reporting date; or

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

Current assets include the current portion of non-current assets / non-current financial assets. All other assets are classified as non-current.

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

- it is expected to be settled in the Company''s normal operating cycle;

- it is held primarily for the purpose of being traded;

- it is expected to be settled within 12 months after the reporting date; or

- the Company does not have any unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

Current liabilities include the current portion of non-current liabilities / non-current financial liabilities. All other liabilities are classified as non-current.

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

Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalent. The operating cycle of the Company is less than 12 months.

1C. Material accounting policies

a) Foreign Currency Translation

Transaction in foreign currencies are translated into the respective functional currencies of the Company at the exchange rates at the dates of transactions or an average rate if the average rate approximates the actual rate at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of transaction. Exchange difference are recognised in statement of profit and loss, except exchange differences arising from the translation of the following item which are recognised diieclly in other equity:

i. Recognition and initial measurement

Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.

Financial assets and liabilities are initially measured at fair value, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. Trade receivables that do not contain a significant financing component are measured at transaction price.

ii. Classification and subsequent measurement Financial assets

On initial recognition, a financial assel is classified as measured at

- amortised cost; or

- Fair value [either through profit and loss (FVTPL) or through other comprehensive income (FVOCI)]

Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

- The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and

- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment''s fair value in OCI (designated as FVOCI - equity investment). This election is made on an investment-by-investment basis.

All financial assets not classified as measured at amortised cost as described above are measured at FVTPL. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets: Business model assessment

The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

- The stated policy and objectives for the portfolio and the operation of those policies in practice.

These include whether management''s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial asset to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of asset;

- How the performance of portfolio is evaluated and reported to the Company''s management;

- The risk that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

- How managers of business are compensated - e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

- The frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

ii. Classification and subsequent measurement (continued)

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Company''s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

Financial assets: Assessment whether contractual cashflows are solely payments of principal and interest

For the purpose of this assessment, ''principal'' is defined as the fair value of financial asset on initial recognition. ''Interest'' is defined as consideration for time value of money and for credit risk associated with the principal amount outstanding during a particular period of time and other basic leading risks and costs (e.g. liquidity risk and administrative costs), as well as profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:

- contingent events that would change the amount and timing of cash flows;

- term that would adjust the contractual rate, including variable interest rate features;

- prepayment and extension features; and

- term that limits the Company''s claim to cash flows for specified assets (e.g. non- recourse features).

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amount of principal and interest on principal amount outstanding, which may include reasonable additional compensation for early termination of contract. Additionally, for a financial asset acquired on a significant premium or discount to its contractual par amount, a feature that permits or require prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is significant at initial recognition.

Financial assets: Subsequent measurement and gains and losses
Financial assets at FVTPL	These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
Financial assets at FVOCI	These assets are subsequently measured at fair value. Fair value changes are recognised in other comprehensive income. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. When such asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other income / expenses.
Financial assets at amortized cost	These assets are subsequently measured at amortized cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

Financial liabilities: Classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

Hi. Derecognition

Financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.

If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.

Financial liabilities

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.

The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.

iv. Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

c) Property, plant and equipment

i. Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalised borrowing costs, less accumulated depreciation and accumulated impairment losses, if any.

Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimate costs of dismantling and removing the item and restoring the site on which it is located.

If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separated items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognised in the statement of profit and loss. ii. Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the future economic benefit associated with the expenditure will flow to the Company.

Hi. Depreciation

Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual values over their estimated useful lives using the straight line method, and is generally recognised in the statement of profit and loss. Freehold land is not depreciated.

Depreciation is provided on pro-rata basis using the straight-line method over the estimated useful lives of the assets prescribed under Schedule II to the Companies Act 2013 except for vehicles and furnitures and fixtures at leasehold premises. The estimated useful lives of items of property, plant and equipment for the current and comparative periods are as follows:

Asset	Management estimated useful life	Useful life as per schedule II
Leasehold improvements Building Plant and machinery Electrical installation Air handling equipment Computers Office equipment Furniture and fixtures Vehicles	As per lease term 30 years 3 to 20 years 10 years 15 years 3-6 years 5 years 10 years 5 years	NA 30 years 10 to 20 years 10 years 15 years 3-6 years 5 years 10 years 8-10 years

Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. Based on technical evaluation and consequent advice, the management believes that its estimates of useful lives represents the period over which the management expects to use these assets.

Depreciation on additions (disposals) during the year is provided on a pro-rata basis i.e. from (upto) the date on which asset is ready for use (disposed of).

d) Intangible assets /''. Initial recognition:

Intangible assets are initially measured at cost. Such intangible assets are subsequently measured at cost less accumulated amortisation and any accumulated impairment loses, if any.

Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the future economic benefit associated with the expenditure will flow to Company.

iii. Amortisation

Amortisation is calculated to write off the cost of intangible assets less their estimated residual value over their estimated useful lives using straight line method, as is included in depreciation and amortisation in statement of profit and loss.

The estimated useful lives are as follows:
Intangible Asset	Management estimated useful life
Brands acquired Software, license rights	5 to 10 years 2 to 10 years

Amortisation method, useful lives and residual values are reviewed at the end of each financial year and adjusted if appropriate.

iv. Intangible Assets under Development

Intangible assets under development are initially recognized at cost. Such intangible assets are subsequently capitalized only if it is probable that the future economic benefit associated with the expenditure will flow to the Company.

v. Impairment

The Company irrespective of whether there is any indication of impairment, tests an intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount. The recoverable amount is the higher of its value in use and its fair value less costs of disposal. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is recognised if the carrying amount of the intangible asset not yet available for use exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit and loss.

e) Inventories

Inventories are measured at the lower of cost and net realisable value. The cost on inventories is based on weighted average formula, and includes expenditure incurred in acquiring the inventories, production or conversion cost and other cost incurred in bringing them to their present location and condition. In case of manufactured inventory and work-in-progress, cost includes an appropriate share of fixed production overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expense.

The net realisable value of work-in- progress is determined with reference to the selling price of related finished products.

Raw materials, components and other supplies held for use in production of finished products are not written down below cost except in cases where material price have declined and it is estimated that the cost of finished products will exceed their net realizable value.

The comparison of cost and net realizable value is made on an item-by-item hasis.

The Company considers various factors like shelf life, ageing of inventory, product discontinuation, price changes and any other factor which impact the Company''s business in determining the allowance for obsolete, non-saleable and slow moving inventories. The Company considers the above factors and adjusts the inventory provision to reflect its actual experience on a periodic basis.

f) Impairment

i. Impairment of financial instruments

The Company recognises loss allowances for expected credit losses on financial assets measured at amortised cost.

At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit - impaired. A financial asset is ''credit impaired'' when one or more events that have a detrimental impact on estimated future cash flows of financial assets have occurred.

Evidence that a financial asset is credit impaired includes the following observed data:

- significant financial difficulty of the borrower or issuer;

- a breach of contract such as a default or being overdue for a period of more than 12 months from the credit term offered to the customer;

- the restructuring of loan or advance by the Company on the terms that the Company would not consider otherwise;

- it is probable that borrower will enter bankruptcy or the financial reorganization;

- the disappearance of active market for a security because of financial difficulties.

In accordance with Ind-AS 109, the Company applies expected credit loss ("ECL") model for measurement and recognition of impairment loss. The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

For recognition of impairment loss on other financial assets the Company recognises 12 month expected credit losses for all originated or acquired financial assets if at the reporting date, the credit risk has not increased significantly since its original recognition. However, if credit risk has increased significantly, lifetime ECL is used.

ECL impairment loss allowance (or reversal) is recognized in the statement of profit and loss.

When determining whether the credit risk of financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost of effort. This includes both quantitate and qualitative information and analysis based on Company''s historical experience and informed credit assessment and including forward - looking information.

The Company assumes that the credit risk on financial assets has increased significantly if it is more than 90 days past due.

The Company considers financial asset to be in default when:

a. The borrower is unlikely to pay its credit obligation to the Company in full, without recourse by the Company to action such as realising security (if any is held); or

b. The financial asset is 360 days or more past due. A P

Measurement of expected credit loss

Expected credit loss are probability weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flow that the Company expects to receive).

Presentation of allowance of expected credit losses in the balance sheet

Loss allowance for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

Write - off

The Gross carrying amount of financial asset is written off (either partially of full) to the extent that there is no realistic prospect of recovery. This is generally the case when Company determines that the debtor does not have asset or source of income that could generate sufficient cash flows to repay the amount subject to write-off. However, financial assets that are written-off could still be subject to enforcement activities in order to comply with Company''s procedures for recovery of amounts due.

ii. Impairment of non-financial asset

The Company''s non-financial assets other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.

For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less cost of disposal. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU (or the asset).

The Company’s corporate assets (e.g. central office building for providing support to various CGUs) do not generate independent cash inflows. To determine impairment of corporate asset, recoverable amount is determined for the CGUs to which the corporate asset belongs.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit and loss. Impairment loss recognised in respect of a CGU is allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets of the CGU (or group of CGUs) on a pro rata basis.

An impairment loss in respect of assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any Indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. An impairment loss on goodwill is not subsequently reversed, ______

g) Employee benefits

i. Short term employee benefits

Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.

/». Share-based payment transactions

Share-based payment are provided to employees of the Group via the Company''s Employees Stock Option Plan ("Emcure ESOS 2013").

The company accounts for the share-based payment transactions as equity settled.

The grant date fair value of equity settled share-based payment awards granted to employees of the Company is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as expense is based on the estimate of the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that do meet the related service and non-market vesting conditions at the vesting date.

The Company also grants the options to the employees of it''s subsidiaries for which subsidiary does not have an obligation to settle the share based payment transaction. Total expense for such options issued to employees of subsidiary is recognised as investment in the nature of employee stock options issued to employees of subsidiary and corresponding increase in share options outstanding account.

///. Defined contribution plan

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions towards Government administered provident fund scheme. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in profit or loss in the periods during which the related services are rendered by employees.

Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

iv. Defined benefit plan

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When the calculation result is a potential asset for the Company, the recognised asset is limited to the present value of economic benefit available in the form of any future refunds from the plan or reductions in future contributions to the plan (''the asset ceiling''). In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements.

Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in statement of profit and loss.

When the benefits of the plan are changed or when plan is curtailed, the resulting change in benefit that relates to past service (''past service cost'' or ''past service gain'') or the gain or loss on curtailment is recognised immediately in profit or loss. The Company recognises gain and losses on the settlement of a defined benefit plan when the settlement occurs.

v. Other long term employee benefit

The Company''s liability in respect of other long-term employee benefits (compensated absences) is the amount of future benefit that employees have earned in return for their service in the current and prior periods, that benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The obligation is measured on the basis of an annual independent actuarial valuation using the Projected Unit Credit method. Remeasurement gains or losses are recognised in profit or loss in the period in which they arise.

h) Provisions (other than for employee benefits). Contingent liabilities and contingent assets

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax-rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. Expected future operating losses are not provided for.

/''. Contingencies

Provision in respect of loss contingencies relating to claims, litigations, assessments, fines, penalties, etc. are recognized when it is probable that a liability has been incurred, and the amount can be estimated reliably.

//''. Contingent liabilities and contingent assets

A contingent liability exists when there is a possible but not probable obligation, or a present obligation that may, but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably. Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the entity. Contingent assets are not recognized in the standalone financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefit will arise, the asset and related income are recognized in the period in which the change occurs. A contingent asset is disclosed, where an inflow of economic benefits is probable.

i) Revenue Sale of goods

Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The Company recognises revenue pertaining to each performance obligation when it transfers control over a product to a customer, which is adjusted for expected refunds, which are estimated based on the historical data, adjusted as necessary. The transaction price is also adjusted for the effect of time value of money if the contract includes significant financing component.

The consideration can be fixed or variable. Where the consideration promised in a contract includes a variable amount, the Company estimates the amount of consideration to which the Company will be entitled in exchange for transferring the promised goods or services to a customer. Variable consideration is only recognised when it is highly probable that a significant reversal will not occur.

The Company recognises refund liability where the Company receives consideration from a customer and expects to refund some or all of that consideration to the customer. The refund liability is measured at the amount of consideration received (or receivable) for which the entity does not expect to be entitled (i.e. amounts not included in the transaction price). The right to recover returned goods asset is measured at the former carrying amount of the inventory less any expected costs to recover goods. The provision on account of the expected amount of returns is included in provisions and the right to recover returned goods is included in inventory.

Sales returns and breakage expiry

When a customer has a right to return the product within a given period, the Company has recognised an allowance for returns. The allowance is measured equal to the value of the sales expected to return in the future period. Revenue is adjusted for the expected value of the returns and cost of sales are adjusted for the value of the corresponding goods to be returned.

The Company has an obligation to accept the goods which will expire. The Company has recognised an allowance for the returns due to expiry. The allowance is measured on the basis of historical trend of expiry against the sales occurred in the current and earlier period. Management considers the sales value for the periods which are equivalent to average general shelf life of products. Revenue is adjusted for the expected value of the returns.

Rendering of services (other than sale of technology / know-how, rights and licenses)

Revenue from rendering of services is recognised in statement of profit and loss by reference to percentage completion method. The Company is involved in rendering services related to its products to its customers. If the services under a single arrangement are rendered in different reporting periods, then the consideration is allocated on a relative fair value basis between the different services.

Rendering of services - sale of technology / know-how, rights, licenses and other intangibles

Income from sale of technology / know-how, rights and licenses is recognised in accordance with the terms of the contract with customers when the related performance obligation is completed, or when control is transferred, as applicable.

Profit share revenues

From time to time the Company enters into marketing arrangements with business partners for the sale of its products in certain markets. Under such arrangements, the Company sells its products to the business partners at a price agreed upon in the arrangement and is also entitled to a profit share which is over and above the agreed price. The profit share is dependent on the business partner''s ultimate net sale proceeds or net profit, subject to any reductions or adjustments that are required by the terms of the arrangement. Such arrangements typically require the business partner to provide confirmation of units sold and net sales or net profit computations for the products covered under the arrangement.

Revenue amount equal to the base purchase price is recognized in these transactions upon delivery of products to the business partners. An additional amount representing the profit share component is recognized as revenue only to the extent that it is highly probable that a significant reversal will not occur.

At the end of each reporting period, the Company updates the estimated transaction price (including updating its assessment of whether an estimate of variable consideration is constrained) to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period.

Profit share revenue is measured as per the percentage of profit share and computation method, specified in the agreement with business partner. -— ~~

j) Government grants

The Company recognises government grants only when there is reasonable assurance that the conditions attached to them will be complied with, and the grants will be received. Government grants received in relation to assets are presented as a reduction to the carrying amount of the related asset. Grants related to income are deducted in reporting the related expense in the statement of profit and loss.

Export entitlements from government authorities are recognised in the statement of profit and loss when the right to receive credit as per the terms of the scheme is established in respect of the exports made by the Company, and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

k) Leases

i. The Company as a lessee

The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate. The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease If the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease. The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.

The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole. The lease payments shall include fixed payments, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

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 and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.

The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.

The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognized as an expense on a straight-line basis over the lease term.

ii. The Company as a lessor

Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.

For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease.

l) Recognition of dividend income, interest income or expenses

Dividend income is recognised in profit or loss on the date on which the Company''s right to receive payment is established Interest income is recognised using effective interest method.

The ''effective interest rate'' is the rate that exactly discounts estimated future cash payments or receipts through the expected life of financial instrument to:

- The gross carrying amount of the financial assets; or

- The amortised cost of the financial liability.

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

m) Income tax

Income tax expense comprises of current and deferred tax. It is recognised in profit or loss except to the extent that it relates to an item recognised directly in equity or in other comprehensive income.

i. Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss of the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.

Significant judgments are involved in determining the provision for income taxes including judgment on whether tax positions are probable of being sustained in tax assessments. A tax assessment can involve complex issues, which can only be resolved over extended time periods.

Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.

ii. Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses and tax credits.

Deferred tax is not recognised for -

temporary differences on the initial recognition of assets or liabilities in a transaction that:

(a) is not a business combination and

(b) at the time of the transaction (i) affects neither accounting nor taxable profit or loss and (ii) does not give rise to equal taxable and de taxable differences related to investments in subsidiaries, associates and joint arrangements to the extent that the group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, in case of a history of recent losses, the Company recognises a deferred lax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised. Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realised.

Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

n) Borrowing cost

Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

o) Financial guarantee contracts

Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance with Ind AS 37 and the amount initially recognised less cumulative amortisation, where appropriate.

The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.

Where guarantees in relation to loans or other payables of subsidiaries are provided for no compensation, the Company has made accounting policy choice of recognising fair value of such financial guarantee as finance cost.

p) Cash and cash equivalents

Cash and ca