Accounting Policies of Shankar Lal Rampal Dye-Chem Ltd. Company

D. Material Accounting Policies

1. Current and Non-Current classification

The Company presents Assets and Liabilities in the Balance Sheet based on
Current/Non-Current classification.

An Asset is Current when it is:

• Expected to be realized or intended to be sold or consumed in normal
operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realized within twelve months after the reporting period; or

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

All other assets are classified as Non-Current. A Liability is Current when:

• It is expected to be settled in normal operating cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months after the reporting period; or

• There is no unconditional right to defer settlement of the liability for at least
twelve months after the reporting period.

All other Liabilities are classified as Non-Current.

Deferred Tax Assets/ Liabilities are classified as Non-Current.

2. Property, Plant and Equipment

I. Initial Recognition and Measurement

An item of property, plant and equipment is recognized as an asset if it is probable
that the future economic benefits associated with the item will flow to the
Company and its cost can be measured reliably. Items of Property, plant and
equipment acquired/constructed are initially recognized at actual cost. The cost of
an item of property, plant and equipment comprises of its purchase price including
import duties and other non-refundable purchase taxes or levies, directly
attributable cost of bringing the asset to its working condition for its intended use
and the initial estimate of decommissioning, restoration and similar liabilities, if
any. Any trade discount or rebate is deducted in arriving at the purchase price. Cost
includes cost of replacing a part of a plant and equipment if the recognition criteria
are met.

Following initial recognition, freehold land is stated at actual cost. All other items of
Property, plant and equipment are stated at actual cost less accumulated
depreciation and impairment loss.

Where an item of property, plant and equipment comprises major components
having different useful lives, these components are accounted for as separate
items.

Items such as spare parts, stand-by equipment and servicing equipment that meet
the definition of property, plant and equipment are capitalized at cost and
depreciated over their useful life.

II. Subsequent Costs

Subsequent expenditure is recognized as an increase in the carrying amount of the
asset when it is probable that future economic benefits deriving from the cost
incurred will flow to the enterprise and the cost of the item can be measured
reliably.

Costs in nature of repairs and maintenance are recognized in the statement of
profit and loss as and when incurred.

The cost of replacing part of an item of Property, Plant and Equipment is recognized
in the carrying amount of the item if it is probable that the future economic benefits
embodied within the part will flow to the Company and its cost can be measured
reliably. The carrying amount of the replaced part is derecognized. The costs of the
day-to-day servicing of Property, Plant and Equipment are recognized in Statement
of Profit or Loss as and when incurred.

III. Derecognition

Property, Plant and Equipment are derecognized when no future economic benefits
are expected from their use or upon their disposal. Gains and Losses on disposal of
an item of Property, Plant and Equipment are determined by comparing the
proceeds from disposal with the carrying amount of Property, Plant and Equipment,
and are recognized in the Statement of Profit and Loss.

3. Capital Work-in-Progress

The cost of self-constructed assets includes the cost of materials & direct labour,any
other costs directly attributable to bringing the assets to the location and condition
necessary for it to be capable of operating in the manner intended by management
and borrowing costs.

Expenses directly attributable to construction of property, plant and equipment
incurred till they are ready for their intended use are identified and allocated on a
systematic basis on the cost of related assets.

Capital work-in-progress includes cost of property, plant and equipment not ready
for the intended use as at the balance sheet date. Advances paid towards the
acquisition of property, plant and equipment outstanding at each Balance Sheet
date is classified as ''capital advances'' under other non-current assets.

4. Depreciation and Amortization

Depreciation on property, plant and equipment is provided on pro rata basis using
the straight- line method based on useful life of the assets as prescribed in Schedule
II to the Companies Act, 2013 in consideration with useful life of the assets as
estimated by the management.

Depreciation on an item of property, plant and equipment sold, discarded,
demolished or scrapped, is provided up to the date on which such item of property,
plant and equipment is sold, discarded, demolished or scrapped.

The estimated useful lives, residual values and methods of depreciation of property,
plant & equipment are reviewed at the end of each financial year. If any of these
expectations differ from previous estimates, such change is accounted for as a
change in an accounting estimate and adjusted prospectively, if any.

5. Intangible Assets/ Intangible assets under Development

I. Initial Recognition and Measurement

An Intangible Asset is recognized if and only if it is probable that the expected future
economic benefits that are attributable to the asset will flow to the company and
the cost of the asset can be measured reliably.

Intangible assets that are acquired by the Company, which have finite useful lives,

are recognized at cost. Subsequent measurement is done at cost less accumulated
amortization and accumulated impairment losses. Cost includes any directly
attributable incidental expenses necessary to make the assets ready for its intended
use.

Expenditure on development activities is capitalized only if the expenditure can be
measured reliably, the product or process is technically and commercially feasible,
future economic benefits are probable and the Company intends to and has
sufficient resources to complete development and to use or sell the asset.

Expenditure incurred which are eligible for capitalizations under intangible assets
are carried as intangible assets under development till they are ready for their
intended use.

II. Subsequent Costs

Subsequent expenditure is recognized as an increase in the carrying amount of the
asset when it is probable that future economic benefits deriving from the cost
incurred will flow to the enterprise and the cost of the item can be measured
reliably.

III. Derecognition

An Intangible Asset is derecognized when no future economic benefits are expected
from their use or upon their disposal. Gains and Losses on disposal of an item of
Intangible Assets are determined by comparing the proceeds from disposal with the
carrying amount of Intangible Assets and are recognized in the Statement of Profit
and Loss.

IV. Amortization

Intangible Assets having definite life is amortized on straight line method in their
useful lives. Useful life of Computer Software is estimated at five years.

6. Borrowing Cost

Borrowing costs directly attributable to the acquisition, construction or production
of qualifying assets, which are assets that necessarily take a substantial period of
time to get ready for their intended use or sale, are added to the cost of the assets,
until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognized in statement of profit and loss in the
period in which they are incurred.

Borrowing cost includes interest, amortization of ancillary costs incurred in
connection with the arrangement of borrowings and exchange differences arising
from foreign currency borrowings to the extent they are regarded as an adjustment
to the interest cost.

7. Statement of Cash Flow

Cash flows are reported using the indirect method prescribed in Ind AS 7 ''Statement
of Cash Flows'', whereby profit for the year is adjusted for the effects of transactions
of a non-cash nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with investing or
financing cash flows. The cash flows from operating, investing and financing
activities of the Company are segregated. The Company considers all highly liquid
investments that are readily convertible to known amounts of cash to be cash
equivalents.

8. Inventories

Inventories are valued at the lower of cost and net realizable value. Cost includes
cost of purchase, cost of conversion and other costs incurred in bringing the
inventories to their present location and condition. Costs of purchased inventory
are determined after deducting rebates and discounts. Net realizable value is the
estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale.

Spare parts other than those capitalized as Property, Plant and Equipment are
carried as inventory.

The diminution in the value of obsolete, unserviceable and surplus stores & spares
is ascertained on review and provided for.

9. Cash and Cash Equivalents

The Company considers all highly liquid financial instruments, which are readily
convertible into known amounts of cash that are subject to an insignificant risk of
change in value and having original maturities of three months or less from the date
of purchase, to be cash equivalents. Cash and cash equivalents consist of balances
with banks which are unrestricted for withdrawal and usage.

10. Foreign Currency Translation

Foreign currency translation The functional currency and presentation currency of
the Company is Indian Rupee. Transactions denominated in foreign currencies
entered into by the Company are recorded in the functional currency (i.e. Indian
Rupees), by applying the exchange rate prevailing on the date of transaction.

Monetary items denominated in foreign currency at the year-end are translated at
the functional currency spot rate of exchange at the reporting date.

Non-monetary items are recorded at exchange rate prevailing on the date of
transaction. 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 is
measured.

11. Government Grants

Government grants are not recognized until there is reasonable assurance that the
Company will comply with the conditions attaching to them and that the grants will
be received.

Government grant if relates to an expense item are recognized in the statement of

profit and loss on a systematic basis over the periods in which the Company
recognize as expenses the related costs for which the grants are intended to
compensate.

When the grant relates to an asset, it is recognized as income in equal amounts
over the expected useful life of the related asset.

C. Significant Accounting Policies

A summary of the significant Accounting Policies applied in the preparation of the
Financial Statements are as given below. These Accounting Policies have been applied
consistently to all periods presented in the Financial Statements.

1. Property, Plant & Equipment

1.1. Initial Recognition and Measurement

An item of Property, Plant and Equipment is recognized as an Asset if and only if 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.

Items of Property, Plant and Equipment are measured at Cost less Accumulated
Depreciation/Amortization and Accumulated impairment losses. Cost includes
expenditure that is directly attributable to bringing the asset, inclusive of non-
refundable taxes & duties, to the location and condition necessary for it to be capable
of operating in the manner intended by management.

When parts of an item of property, plant and equipment have different useful
lives, they are recognized separately.

Items of spare parts, stand-by equipment and servicing equipment which meet the
definition of Property, Plant and Equipment are capitalized.

1.2. Subsequent Costs

Subsequent expenditure is recognized as an increase in the carrying amount of the
asset when It is probable that future economic benefits deriving from the cost
incurred will flow to the enterprise and the cost of the item can be measured reliably.

The cost of replacing part of an item of Property, Plant and Equipment is
recognized in the carrying amount of the item if it is probable that the future
economic benefits embodied within the part will flow to the Company and its cost
can be measured reliably. The carrying amount of the replaced part is derecognized.
The costs of the day-to-day servicing of Property, Plant and Equipment are recognized
in Statement of Profit or Loss as and when incurred.

1.3. Derecognition

Property, Plant and Equipment are derecognized when no future economic
benefits are expected from their use or upon their disposal. Gains and Losses on
disposal of an item of Property, Plant and Equipment are determined by
comparing the proceeds from disposal with the carrying amount of Property, Plant
and Equipment, and are recognized in the Statement of Profit and Loss.

1.4. Depreciation

Assets are depreciated using straight line method overthe estimated useful life of the
asset as specified in Part "C" of Schedule II of Companies Act, 2013 except for Plant
& Machinery, after retaining residual life of 5% of original cost. Assets residual
values and useful lives are reviewed at each financial year end considering the
physical condition of the assets.

Depreciation on additions to/deductions from Property, Plant & Equipment during
the year is charged on pro-rata basis from/up to the date on which the asset is
available for use/disposed.

Where it is probable that future economic benefits deriving from the cost incurred
will flow to the enterprise and the cost of the item can be measured reliably,
subsequent expenditure on a PPE along-with its unamortized depreciable amount
is charged off prospectively over the revised useful life determined by technical
assessment.

In circumstance, where a property is abandoned, the cumulative capitalized costs
relating to the property are written off in the same period.

2. Capital Work-in-Progress

The cost of self-constructed assets includes the cost of materials & direct labour, any
other costs directly attributable to bringing the assets to the location and condition
necessary for it to be capable of operating in the manner intended by management
and borrowing costs.

Expenses directly attributable to construction of property, plant and equipment
incurred till they are ready for their intended use are identified and allocated on a
systematic basis on the cost of related assets.

3. Intangible Assets and Intangible Assets under Development

3.1. Initial recognition and measurement

An Intangible Asset is recognized if and only if it is probable that the expected future
economic benefits that are attributable to the asset will flow to the company and
the cost of the asset can be measured reliably.

Intangible assets that are acquired by the Company, which have finite useful lives, are
recognized at cost. Subsequent measurement is done at cost less accumulated
amortization and accumulated impairment losses. Cost includes any directly
attributable incidental expenses necessaryto make the assets ready for its intended
use.

Expenditure on development activities is capitalized only if the expenditure can be
measured reliably, the product or process is technically and commercially feasible,
future economic benefits are probable and the Company intends to and has sufficient
resources to complete development and to use or sell the asset.

Expenditure incurred which are eligible for capitalizations under intangible assets are
carried as intangible assets under developmenttill they are ready for their intended
use.

3.2. Subsequent Costs

Subsequent expenditure is recognized as an increase in the carrying amount of the
asset when it is probable that future economic benefits deriving from the cost
incurred will flow to the enterprise and the cost of the item can be measured reliably.

3.3. Derecognition

An Intangible Asset is derecognized when no future economic benefits are expected
from their use or upon their disposal. Gains and Losses on disposal of an item of
Intangible Assets are determined by comparing the proceeds from disposal with the
carrying amount of Intangible Assets and are recognized in the Statement of Profit
and Loss.

3.4. Amortization

Intangible Assets having definite life is amortized on straight line method in their
useful lives. Useful life of Computer Software is estimated at five years.

4. Borrowing Cost

Borrowing costs that are directly attributable to the acquisition, construction,
exploration, development or erection of qualifying assets are capitalized as part of cost
of such asset until such time the assets are substantially ready for their intended
use. Qualifying assets are assets which take a substantial period of time to get ready
for their intended use or sale. Capitalization of borrowing costs ceases when
substantially all the activities necessary to prepare the qualifying assets for their
intended uses are complete. Borrowing costs consist of:

(a) interest expense calculated using the effective interest method as described in Ind
AS 109 - ''Financial Instruments'',

(b) finance charges in respect of finance leases recognized in accordance with Ind
AS 116-''Leases'',

(c) exchange differences arising from foreign currency borrowings to the extent
that they are regarded as an adjustment to interest costs and,

(d) other costs that an entity incurs in connection with the borrowing of funds. Income
earned on temporary investment of the borrowings pending their expenditure on the
qualifying assets is deducted from the borrowing costs eligible for capitalization.

All other borrowing costs are charged to revenue as and when incurred.

5. Statement of Cash Flows

Cash Flow Statement has been prepared in accordance with the Indirect method
prescribed in Ind AS 7 ''Statement of Cash Flows''.

6. Inventories

Inventories are valued at the lowerof cost and net realizable value. Cost includes cost
of purchase, cost of conversion and other costs incurred in bringing the inventories to
their present location and condition. Costs of purchased inventory are determined
after deducting rebates and discounts. Net realizable value is the estimated selling
price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.

Spare parts other than those capitalized as Property, Plant and Equipmentare carried
as inventory.

The diminution in the value of obsolete, unserviceable and surplus stores & spares is
ascertained on review and provided for.

7. Cash and Cash Equivalent

Cash and cash equivalent in the Balance Sheet comprises Cash at Banks, Cash on Hand
and Short-Term Deposits with an original maturity of three months or less, which are
subject to insignificant risk of change in value.

8. Government Grants

Government grants are recognised where there is a reasonable assurance that the grant
will be received and the Company will comply with all attached conditions. When the
government grant relates to an asset, the asset is disclosed by deducting that grant in
arriving at the carrying amount of that asset. Government grants that compensate the
Company for expenses incurred are recognised in the statement of profit and loss, as
income or deduction from the relevant expense, on a systematic basis in the periods in
which the expense is recognised.

1. System of accounting

The company adopts the accrual concept in preparation of the accounts.

The assessee follows mercantile system of accounting. Accounting Policies have been framed and adopted based on the Generally Accepted Accounting Principles in India including Accounting Standards and Income Computation Disclosure Standards (ICDS) I to X issued by CBDT, wherever applicable.

2. Inflation

Assets and liabilities are recorded at historical cost. To the company, these costs are not adjusted to reflect the changing value in the purchasing power of money.

3. Fixed assets

Fixed assets are capitalized at cost inclusive of direct installation erection and allied expenses.

4. Inventories

Inventories are valued at cost or net realizable value which ever is lower. Cost is measures on First in First Out basis.

5. Depreciation

Depreciation on fixed assets is provided for on straight line method adopting Life prescribed by Schedule II of the Companies Act; 2013

6. Foreign Currency Transactions

Transactions denominated in Foreign Currencies are normally recorded at the exchange rate prevailing on the day of transaction.

7. Taxes on Income

Current tax is determined as the amount of tax payable to the Taxation Authorities in respect of taxable Income for the year. Deferred tax is recognized, subject to consideration of prudence, in respect of deferred tax assets, on timing differences being difference between taxable income and accounting income that originate in one year and are capable of reversal in one or more subsequent years. In respect of unabsorbed depreciation / carry forward of losses under the tax laws, deferred tax assets are recognized only to the extent that there is virtual certainty that future taxable income will be available against which such deferred tax assets can be realized.

8. Employment Benefits

i. Employee Benefit in the form of provident Fund in pursuance of law is accounted on accrual basis and charged to profit and Loss Statement for the year.

ii. The Company is making provision for gratuity for employees when they completed 5 years of service.

9. Borrowing Costs

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

10. Others

Except where stated, accounting policies are consistent with the generally accepted accounting principles and have been consistently applied.