Since we do not have any qualifying assets, capitalization of borrowing cost is not applicable to us. All borrowing
costs are recognized in our statement of profit and loss in the period in which they are incurred.

Government Grant

Government grants (including export incentives like Duty Drawback, Merchandise Exports from India Scheme
(MEIS)) are recognized only when there is reasonable assurance that we will comply with the conditions attaching
to them and the grants will be received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which we recognize
as expenses the related costs for which the grants are intended to compensate.

Import duty waivers for capital assets purchased under EPCG schemes are recorded as deferred revenue and
recognized in our statement of profit and loss on a systematic basis over periods in which the related performance
obligations are fulfilled.

Employee Benefits
Defined contribution plans
Provident fund

Contribution towards provident fund is determined under the relevant schemes and statute and charged to our
statement of profit and loss during the period of incurrence when the services are rendered by the employees.

Defined benefit plans

Accounting for defined benefit plans is based on actuarial assumptions and different valuation methods to measure
the balance sheet obligation and the expense.

Where defined benefit plans are funded, the plan assets are measured at fair value. At each balance sheet date, the
plan assets and the defined benefit obligations are re-measured. The income statement reflects the change in the
surplus or deficit, except for contributions made to the plan and benefits paid by the plan, along with business.
combinations and Re-measurement gains and losses.

Re-measurement gains and losses comprise actuarial gains and losses, return on plan assets (comprise amounts
included in net interest on the net defined benefit liability or asset) and any change in the effect of the asset ceiling
(excluding amounts included in net interest on the net defined benefit liability or asset). Remeasurements are
recognized in other comprehensive income.

The defined benefit costs are comprised of the following individual components:

. service costs (including current and past service costs as well as gains or losses on curtailments and
settlements);

. net interest costs or income; and

. re-measurement.

We present the first two components of defined benefit costs in profit or loss in the line item ‘Employee benefits
expense’. Curtailment gains and losses are accounted for as past service costs.

Re-measurement of net defined benefit liability or asset pertaining to gratuity comprises actuarial gains or losses
(i.e., changes in the present value resulting from experience adjustments and effects of changes in actuarial
assumptions) and is reflected immediately in the balance sheet with a charge or credit recognized in other
comprehensive income in the period in which they occur. Re-measurement recognized in other comprehensive
income is reflected immediately in retained earnings and is not reclassified to profit or loss.

Short-term employee benefits:

A liability is recognized for benefits accruing to employees in respect of salaries, wages, performance incentives,
medical benefits and other short term benefits in the period the related service is rendered, at the undiscounted
amount of the benefits expected to be paid in exchange for that service.

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