Accounting Policies of Alpex Solar Ltd. Company

Mar 31, 2025

2.2 Summary of material accounting policies

a) Use of estimates

The preparation of the financial statements in conformity
with the principles of Ind AS requires the management to
make judgements, estimates and assumptions that effect
the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the
end of the reporting period. Although these estimates are
based on the management''s best knowledge of current
events and actions, uncertainty about these assumptions
and estimates could result in the outcomes requiring a
material adjustment to the carrying amounts of assets or
liabilities in future periods.

The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised
if the revision affects only that period, or in the period of
the revision and future periods if the revision affects both
current and future periods.

b) Current versus non- current classification

The Company presents assets and liabilities in the financial
statement based on current/ non-current classification. An
asset is treated as current when it is:

i) Expected to be realised or intended to be sold or
consumed in normal operating cycle

ii) Held primarily for the purpose of trading

iii) It is expected to be realised within twelve months after
the reporting period, or

iv) 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:

i) It is expected to be settled in normal operating cycle

ii) Held primarily for the purpose of trading

iii) It is due to be settled within twelve months after the
reporting period, or

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

The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non¬
current assets and liabilities.

The operating cycle is the time between the acquisition of
assets for processing and their realisation in cash and cash
equivalents. The Company has identified twelve months as
its operating cycle.

c) Fair value measurement

The Company measures financial instruments at fair value at
each reporting date.

Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The
fair value measurement is based on the presumption that
the transaction to sell the asset or transfer the liability takes
place either:

i) in the principal market for the asset or liability, or

ii) in the absence of a principal market, in the most
advantageous market for the asset or liability

The principal or the most advantageous market must be
accessible by the Company.

The fair value of an asset or a liability is measured using
the assumptions that market participants would use
when pricing the asset or liability, assuming that market
participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into
account a market participant''s ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the
asset in its highest and best use.

The Company uses valuation techniques that are
appropriate in the circumstances and for which sufficient

data are available to measure fair value, maximising the use
of relevant observable inputs and minimising the use of
unobservable inputs.

All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based
on the lowest level input that is significant to the fair value
measurement as a whole:

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

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

iii) Level 3- Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is unobservable.

For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Company determines
whether transfers have occurred between levels in the
hierarchy by re-assessing categorisation (based on the lowest
level input that is significant to the fair value measurement
as a whole) at the end of each reporting period.

External valuers are involved for valuation of significant assets
and liabilities. Involvement of external valuers is decided on
the basis of nature of transaction and complexity involved.
Selection criteria include market knowledge, reputation,
independence and whether professional standards are
maintained.

At each reporting date, the finance team analyses the
movements in the values of assets and liabilities which
are required to be remeasured or re-assessed as per the
Company''s accounting policies. For this analysis, the team
verifies the major inputs applied in the latest valuation by
agreeing the information in the valuation computation to
contracts and other relevant documents. A change in fair
value of assets and liabilities is also compared with relevant
external sources to determine whether the change is
reasonable.

For the purpose of fair value disclosures, the Company has
determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and
the level of the fair value hierarchy as explained above.

d) Property, plant and equipment (''PPE'') and Capital work-
in-progress (''CWIP'')

Property, plant and equipment (''PPE'')

Property, plant and equipment ("PPE") are stated at cost, less
accumulated depreciation and accumulated impairment
loss, if any. Such cost includes the expenditure directly
attributable to bringing the asset to the location and
condition necessary for it to be capable of operating in the
manner intended by management.

Subsequent costs on a PPE are included in the asset''s carrying
amount only when it is probable that future economic
benefits associated with the item will flow to the Company
and the cost of the item can be measured reliably.

The carrying amount of any component accounted for as a
separate asset is derecognised when replaced. Rest of the
subsequent costs are charged to the statement of profit and
loss in the reporting period in which they are incurred.
Depreciation on all property plant and equipment are
provided on a written down value method based on the
estimated useful life of the asset. Depreciation on the assets
purchased during the year is provided on pro-rata basis from
the date of purchase of the assets.

An item of property, plant and equipment and any significant
part initially recognised is derecognised upon disposal or
when no future economic benefits are expected from its use
or disposal. Any gain or loss arising on derecognition of the
asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included
in the income statement when the asset is derecognised.

Capital work-in-progress (''CWIP'')

Cost incurred for property, plant and equipment that are
not ready for their intended use as on the reporting date, is
classified under 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 the borrowing costs attributable to the
acquisition or construction of qualifying asset.

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.

Cost plus contracts are accounted for on the basis of
statements of account received from the contractors.

Unsettled liabilities for price variation/exchange rate
variation in case of contracts are accounted for on estimated
basis as per terms of the contracts.

The Company periodically reviews its Capital work-in¬
progress and in case of abandoned works, provision for
unserviceable cost is provided for, as required, basis the
technical assessment. Further, provisions made are reviewed
at regular intervals and in case work has been subsequently
taken up, then provision earlier provided for is written back
to the extent the same is no longer required.

Net pre-commissioning income/expenditure is adjusted
directly in the cost of related assets and systems.

e) Earning per share

Basic earnings per share are calculated by dividing the
net profit and loss for the period attributable to equity
shareholders of the Company (after deducting preference
dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share,
the net profit and loss for the period attributable to equity
shareholders of the Company and the weighted average
number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.

f) Provisions and contingent liabilities
i) Provisions

Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of
the amount of the obligation. The expense relating to
a provision is presented in the Financial statement of
profit and loss net of any reimbursement.

If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, when appropriate, the risks specific to the
liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a
finance cost.

ii) Contingent liabilities

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

g) Financial instruments

A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.

Financial assets

All financial assets are recognised initially at fair value plus, in
the case of financial assets not recorded at fair value through
financial statement of profit and loss, transaction costs that
are attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery
of assets within a time frame established by regulation or
convention in the market place (regular way trades) are
recognised on the trade date, i.e., the date that the Company
commits to purchase or sell the asset.

Subsequent measurements

For purposes of subsequent measurement, financial assets
are classified in two categories:

i) Financial assets carried at amortised cost

ii) Financial assets at fair value through profit or loss
(FVTPL)

Financial assets at amortised cost

A financial asset'' is measured at the amortised cost if both
the following conditions are met:

i) The asset is held within a business model whose
objective is to hold assets for collecting contractual
cash flows, and

ii) Contractual terms of the asset give rise on specified
dates to cash flows that are solely payments of
principal and interest (SPPI) on the principal amount
outstanding.

After initial measurement, such financial assets are
subsequently measured at amortised cost using the effective
interest rate (EIR) method. Amortised cost is calculated by
taking into account any discount or premium on acquisition
and fees or costs that are an integral part of the EIR. The EIR
amortisation is included in finance income in the financial
statement of profit and loss.

Financial assets at FVTPL

FVTPL is a residual category for financial assets. Any financial
assets instrument, which does not meet the criteria for
categorization as at amortized cost or as FVTOCI, is classified
as at FVTPL.

Debt instruments included within the FVTPL category are
measured at fair value with all changes recognized in the
financial statement of profit and loss.

Equity Instruments other than Investment in Subsidiary

The Company subsequently measures all equity investments
in scope of Ind AS 109 at fair value, with net changes in fair
value recognised in the financial statement of profit and loss.

Derecognition

A financial asset (or, where applicable, a part of a financial
asset or part of a Company of similar financial assets) is
primarily derecognised (i.e. removed from the Company''s
Financial statements of assets and liabilities) when:

i) The rights to receive cash flows from the asset have
expired, or

ii) The Company has transferred its rights to receive cash
flows from the asset or has assumed an obligation to pay
the received cash flows in full without material delay to
a third party under a ''pass-through'' arrangement; and
either (a) the Company has transferred substantially all
the risks and rewards of the asset, or (b) the Company
has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred
control of the asset.

When the Company has transferred rights to receive cash
flows from an asset or has entered into a pass through
arrangement, it evaluates if and to what extent it has
retained the risks and rewards of ownership. When it has
neither transferred nor retained substantially all of the risks
and rewards of the asset, nor transferred control of the asset,
the Company continues to recognise the transferred asset to
the extent of the Company''s continuing involvement. In that
case, the Company also recognises associated liability. The
transferred asset and the associated liability are measured
on a basis that reflects the rights and obligations that the
Company has retained.

Continuing involvement that takes the form of a guarantee
over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum
amount of consideration that the Company could be
required to repay.

Impairment of financial assets (other than at fair value)

In accordance with Ind AS 109, the Company applies
expected credit loss (ECL) model for measurement and
recognition of impairment loss on the following financial
assets and credit risk exposure:

i) Financial assets that are debt instruments, and are
measured at amortised cost e.g., loans, debt securities,
deposits and bank balance

ii) Trade receivables or any contractual right to receive
cash or another financial asset that result from
transactions that are within the scope of Ind AS 115

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 recognizes
impairment loss allowance based on lifetime ECLs at each
reporting date, right from its initial recognition.

ECLs are recognised in two stages. For credit exposures for
which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses
that result from default events that are possible within the
next 12-months (a 12-month ECL) for those credit exposures.

For which there has been a significant increase in credit risk
since initial recognition, a loss allowance is required for credit
losses expected over the remaining life of the exposure,
irrespective of the timing of the default (a lifetime ECL).

ECL is the difference between all contractual cash flows that
are due to the Company in accordance with the contract
and all the cash flows that the entity expects to receive (i.e.,
all cash shortfalls), discounted at the original ElR. When
estimating the cash flows, an entity is required to consider:

i) All contractual terms of the financial instrument
(including prepayment, extension, call and similar
options) over the expected life of the financial
instrument. However, in rare cases when the expected
life of the financial instrument cannot be estimated
reliably, then the entity is required to use the remaining
contractual term of the financial instrument.

ii) Cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual
terms.

As a practical expedient, the Company uses a provision
matrix to determine impairment loss allowance on portfolio
of its trade receivables. The provision matrix is based on its
historically observed default rates over the expected life of
the trade receivables and is adjusted for forward-looking
estimates. At every reporting date, the historical observed
default rates are updated and changes in the forward¬
looking estimates are analysed.

ECL impairment loss allowance (or reversal) recognized
during the period is recognized as income/ expense in
the Financial statement of profit and loss. This amount is
reflected under the head ''other expenses'' in the Financial
statement of profit and loss.

The presentation of assets and liabilities for various financial
instruments in Financial statement is described below:
i. Financial assets which are measured as at amortised
cost, such as contractual revenue receivables: ECL
is presented as an allowance, i.e., as an integral part
of the measurement of those assets in the Financial
statements of assets and liabilities. The allowance
reduces the net carrying amount. Until the asset
meets write-off criteria, the Company does not reduce
impairment allowance from the gross carrying amount.
For assessing increase in credit risk and impairment loss,
the Company combines financial instruments on the basis
of shared credit risk characteristics with the objective of
facilitating an analysis that is designed to enable significant
increases in credit risk to be identified on a timely basis.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit and loss, loans
and borrowings, payables, as appropriate.

All financial liabilities are recognised initially at fair value and,
in the case of loans and borrowings and payables, net of
directly attributable transaction costs.

The Company''s financial liabilities include trade and other
payables, loans and borrowings.

Subsequent measurement

The measurement of financial liabilities depends on their
classification, as described below:

Financial liabilities at amortised cost (Loans and
borrowings)

After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised cost
using the EIR method. Gains and losses are recognised in
profit or loss when the liabilities are derecognised as well as
through the EIR amortisation process.

Effective interest method

The effective interest method is a method of calculating
the amortised cost of a debt instrument and of allocating
interest income over the relevant year. The effective interest
rate (EIR) is the rate that exactly discounts estimated
future cash receipts (including all fees and points paid or
received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts)
through the expected life of the debt instrument, or, where
appropriate, a shorter year, to the net carrying amount on
initial recognition.

Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortisation is
included as finance costs in the statement of profit and loss.
This category generally applies to borrowings.

Financial liabilities at fair value through profit and loss

Financial liabilities at fair value through profit or loss include
financial liabilities held for trading or financial liabilities
designated upon initial recognition as at fair value through
profit or loss.

Financial liabilities are classified as held for trading if they are
incurred for the purpose of repurchasing in the near term.
This category also includes derivative financial instruments
entered into by the Company that are not designated as
hedging instruments in hedge relationships as defined
by Ind AS 109. Separated embedded derivatives are also
classified as held for trading unless they are designated as
effective hedging instruments.

Gains or losses on liabilities held for trading are recognised
in the statement of profit and loss.

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Mar 31, 2024

1 Corporate Information

Alpex Solar Limited (''the Company'') [formerly known as Alpex Solar (P) Ltd.] was incorporated on Aug 27, 1993 and is primarily engaged in the business of manufacturing of solar modules and assembling of solar pumps in India.

Pursuant to special resolution passed by the Shareholders at their Extraordinary General Meeting held on August 16, 2023, company was converted from a Private Limited Company to Public Limited Company and consequently, the name of the Company was changed to Alpex Solar Limited and a Fresh Certificate of Incorporation consequent to Conversion was issued on September 01, 2023 by the Registrar of Companies, Delhi. The Corporate Identification Number of our Company is U51909DL1993PLC171352.

During the year ended March 31,2024, the Company has completed its Initial Public Offer (IPO) comprised of fresh issue of 64,80,000 equity shares aggregating to ?7452 lacs. Pursuant to IPO, the equity shares of the Company were listed on EMERGE platform National Stock Exchange of India Limited (NSE) for SMEs on Feb 15, 2024.

The audited standalone financial results as reviewed by the Audit Committee, have been approved by Board of Directors at its meeting held on May 27, 2024.

2 Significant accounting policies

2.1 Basis of accounting and preparation of financial statements

The financial statements have been prepared in accordance with the generally accepted Accounting Principles in India to comply with the Accounting Standards Specified under section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 (the Act), as applicable. The financial statements have been prepared on going concern basis under accrual basis of accounting and historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous years.

2.2 Use of estimates and judegements

The preparation of financial statements in conformity with Indian GAAP requires the management to make

judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

The estimated and underlying assumptions are reviewed on an on going basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

2.3 Inventories

Inventories are stated at the lower of cost and net realizable value. Cost includes all costs of purchase, and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on a weighted average basis. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and cost of necessary to make the sale.

2.4 Cash flow statement

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

2.5 Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized.

2.5.1 Sale of goods

- Revenue from sale of goods is recognized when all significant risks and rewards of their ownership

are transferred to the customer and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods and regarding its collection. The Company collects goods & service tax (GST) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, it is excluded from revenue.

- Revenues from ancillary activities e.g. Job work, freight charges recovered from the customers etc. are recognized upon rendering of services.

2.5.2Other income

- Dividends / Gains are recorded when the right to receive payment is established.

- Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

2.6 Property, Plant and Equipment and Intangible Assets

Property, Plant and Equipment are stated at cost less accumulated depreciation and impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to an item of property, plant and equipment is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing property, plant and equipment, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

Gains or losses arising from derecognition of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

2.6.1 Capital work-in-progress:

Projects under which property; plant and equipments are not yet ready for their intended use are carried at cost, comprising direct cost and related incidental expenses.

2.6.2 Intangible assets

Intangible assets acquired separately

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.

Internally generated intangibles

Internally generate intangibles, excluding capitalized development costs, are not capitalized and the related expenditure is reflected in profit and loss in the period in which the expenditure is incurred.

Derecognition of intangible assets

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognized in statement of profit and loss when the asset is derecognized.

Useful lives of intangible assets

Intangible assets with finite lives are amortised over the useful economic life on straight line basis and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.

2.7 Depreciation and amortisation on property, plant & equipment

- Depreciation is provided on the written down value method (WDV) over the estimated useful lives of the assets considering the nature, estimated usage, operating conditions, past history of replacement. Depreciation is provided based on useful life of the assets

as prescribed in Schedule II to the Companies Act, 2013.

- In respect of assets whose useful life has been revised, the unamortized depreciable amount has been charged over the revised remaining useful life

- Depreciation is not recorded on capital work-in-progress/intangible assets under development until construction and installation are complete and asset is ready for its intended use.

2.8 Impairment of property; plant & equipment and intangible assets

The company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required the company estimates the asset''s recoverable amount. An assets recoverable amount is the higher of an assets or cash-generating on its fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets.

When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimate future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

Impairment losses of tangible and intangible assets are recognized in the statement of profit and loss.

2.9 Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated at the exchange rate at the balance sheet date and resultant gain or loss is recognized in the statement of profit and loss. Any income

or expenses on account of exchange difference either on settlement or on translation of transaction is recognized in statement of profit and loss.

2.10 Investments

- Current Investment are carried at lower of cost and quoted/fair value, computed category wise. Noncurrent investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

- On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

- On disposal of investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

2.11 Employee Benefits

2.11.1 Short term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised as an expense during the period when the employees render the services. These benefits include performance incentive and compensated absences.

2.11.2 Post-employment benefits Defined contribution plans :-

Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead

to, for example, a reduction in future payment or a cash refund.

Defined benefit plans

The Company operates gratuity as a defined benefit plan plans for its employees. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year-end. Actuarial valuation is carried out using projected unit credit method. Actuarial gains and losses for defined benefit plan are recognized in full in the period in which they occur in the statement of profit and loss.

Employee Separation Costs :-

Compensation to employees who have opted for retirement under the voluntary retirement scheme of the Company is charged to the Statement of Profit and Loss in the year of exercise of option by the employee.

2.12 Borrowing Costs

- Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset, 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 those assets, until such time as the assets are substantially ready for their intended use or sale.

- Interest Income earned on the temporary investment of specific borrowings pending their expenditure on qualifying asset is deducted from the borrowing costs eligible or capitalization.

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

- Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.

2.13 Leasing arrangement

- The determination of whether an arrangement is (or contains) a lease, depends upon the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the

arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

- A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the company is classified as a financial lease.

- A lease asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

- Operating lease payments are recognized as an expense in the statement of profit and loss on a straight line basis over the lease term.

2.14 Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date.

2.15 Taxes on income

- Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized

directly in equity is recognized in equity and not in the statement of profit and loss.

- Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

- Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

- The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

2.16 Provisions and contingencies

The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognised in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an economic benefit will arise, the asset and the related income are recognized in the year in which the change occurs.

2.17 Material Events

Material events occurring after the Balance Sheet date are taken into cognizance.

2.18 Dividend distribution to equity shareholders of the Company

The Company recognizes a liability to make dividend distributions to its equity holders when the distribution is authorized and the distribution is no longer at its discretion. As per the Corporate Laws in India, a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity.

In case of interim dividend, the liability is recognized on its declaration by the Board of Directors.

2.19 Classification of current / non-current liabilities and assets

2.19.1 Liability

A liability has been classified as ''current'' when it satisfies any of 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 due to be settled within twelve months after reporting date; or

The company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by issue of equity instrument do not affect its classification.

All other liabilities are classified as non-current.

2.19.2 Asset

An asset has been classified as ''current'' when it satisfies

any of following criteria:

- It is expected to be realised in, or is intended for sale or consumption in the company''s normal operating cycle;

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

- It is expected to be realised within twelve months after 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 twelve months after the reporting date.

All other assets are classified as non-current.

2.20 Segment Reporting

- Identification of segments

The Company''s operating businesses are organized and

managed separately according to the nature of products

and services provided, with each segment representing a

strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

- Allocation of common costs

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

- Unallocated items

Unallocated items include general corporate income and expense items which are not allocated to any business segment.

- Segment accounting policies

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.