Notes to Accounts of Apollo Micro Systems Ltd.

Mar 31, 2025

3.12 Provisions:

Provisions

A provision is recognized 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. If the effect of the time value of money
is material, provisions are determined by discounting
the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value
of money and the risks specific to the liability. Where
discounting is used, the increase in the provision due to
the passage of time is recognized as a finance cost.

Contingent liabilities and contingent assets:

A disclosure for a contingent liability is made when
there is a possible obligation or a present obligation
that may, but probably will not, require an outflow of
resources. Where 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.

Contingent assets are not recognised in the
financial statements.

A contingent asset is disclosed where an inflow of
economic benefits is probable. Contingent assets are
assessed continually and if it is virtually certain that
an inflow of economic benefits will arise, the asset
and related income are recognised in the period in
which the change occurs.

3.13 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

Initial recognition and measurement

All financial assets are recognised initially at fair value
plus, in the case of financial assets not recorded at fair
value through profit or loss, transaction costs that are
attributable to the acquisition of the financial asset.

Purchases or sales of financial assets that require
delivery of assets within a time frame established
by regulation or convention in the marketplace (e.g.,
regular way trades) are recognised on the trade date,
i.e., the date that the Company commits to purchase
or sell the asset.

Trade receivables generally do not contain any
significant financing component requiring separation
and are therefore recognized initially at the transaction
price determined as per Ind AS 115, "Revenue from
Contracts with Customers”.

Subsequent measurement

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

• Debt instruments at amortised cost

• Equity instruments

Debt instruments at amortised cost

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

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

b. 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 profit or loss. The
losses arising from impairment are recognised in
the profit or loss. This category generally applies to
trade receivables.

Equity investments

All equity investments in scope of Ind AS 109 are
measured at fair value. Equity instruments which
are held for trading and contingent consideration
recognised by an acquirer in a business combination

to which Ind AS103 applies are classified as at FVTPL.
For all other equity instruments, the Company may
make an irrevocable election to present in other
comprehensive income subsequent changes in
the fair value.

The Company makes such election on an instrument
by-instrument basis. The classification is made on
initial recognition and is irrevocable.

If the Company decides to classify an equity
instrument as at FVTOCI, then all fair value changes on
the instrument, excluding dividends, are recognized
in the OCI. There is no recycling of the amounts from
OCI to P&L, even on sale of investment. However,
the Company may transfer the cumulative gain or
loss within equity.

Equity instruments included within the FVTPL
category are measured at fair value with all changes
recognised in P & L.

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 balance sheet) when:

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

• 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 its 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 an 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.

Impairment of financial assets

The Company recognizes loss allowances using the
Expected Credit Loss (ECL) model for the financial
assets which are not fair valued through profit or 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 all other financial assets, expected credit losses
are measured at an amount equal to the 12-month
ECL, unless there has been a significant increase in
credit risk from initial recognition in which case those
are measured at lifetime ECL. The amount of expected
credit losses (or reversal) that is required to adjust the
loss allowance at the reporting date to the amount
that is required to be recognised is recognised as an
impairment gain or loss in profit or loss.

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 statement of profit and loss (P&L). This
amount is reflected under the head ''other expenses.

Financial liabilities

Initial recognition and measurement

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 including
bank over drafts.

Subsequent measurement

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

Loans and borrowings

This is the category most relevant to the Company.

Borrowings are initially recognized at fair value, net of
transaction costs incurred.

After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised
cost using the EIR method and, thereby, any
difference between the proceeds (net of transaction
costs) and the redemption amount is recognized in
the standalone statement of Profit and Loss over the
period of the borrowings.

Gains and losses are recognised in profit or loss when
the liabilities are derecognised as well as through the
EIR amortisation process.

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.

Financial liabilities at FVTPL

Financial liabilities at FVTPL include financial liabilities
held for trading and financial liabilities designated
upon initial recognition as at FVTPL. Financial liabilities
at FVTPL primarily comprise derivative financial
instruments entered into by the Company and not
designated as hedging instruments in a hedging
relationship as defined by Ind AS 109.

Gains or losses on such financial liabilities are
recognised in the standalone statement of
Profit and Loss.

The Company has not designated any financial
liability as FVTPL.

Derecognition

A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced
by another from the same lender on substantially
different terms, or the terms of an existing liability
are substantially modified, such an exchange or
modification is treated as the derecognition of the
original liability and the recognition of a new liability.
The difference in the respective carrying amounts is
recognised in the statement of profit or loss.

Cash and cash equivalents:

Cash and cash equivalents in the Balance Sheet
comprise cash at bank and in hand and short-term
deposits with banks that are readily convertible into
cash which are subject to insignificant risk of changes
in value and are held for the purpose of meeting
short-term cash commitments.For this

purpose, "short-term” means investments having
original maturities of three months or less from
the date of investment. Bank overdrafts which are
repayable on demand and form an integral part of
the Company''s cash management and are included
as a component of cash and cash equivalents for the
purpose of the standalone statement of cash flows.

Corporate Financial Guarantee:

The Company provides corporate financial guarantees
to banks and financial institutions on behalf of its
subsidiaries. These guarantees are accounted for in
accordance with the principles laid down in Ind AS 109
- Financial Instruments and Ind AS 110 - Consolidated
Financial Statements.

At initial recognition, the fair value of the guarantee
is determined based on the prevailing market fee
for such financial instruments. The difference
between the fair value of the guarantee and the
consideration charged to the subsidiary is considered
as an additional deemed investment in the subsidiary.
Subsequently, the financial guarantee contract
is measured at the higher of the amount of loss
allowance and the amount initially recognized less
cumulative income recognized.

3.14 Events after reporting date

Where events occurring after the balance sheet date
provide evidence of conditions that existed at the end
of the reporting statements. Otherwise, events after
the balance sheet date of material size or nature are
only disclosed.

3.15 Investments in subsidiaries

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

3.16 Finance cost

Finance costs consist of interest expense on loans
and borrowings. Borrowing costs are recognised in
the standalone statement of Profit and Loss using the
effective interest method unless capitalisation criteria
are met as per accounting policy on Property, plant and
equipment. The associated cash flows are classified
as financing activities in the statement of cash flows.

Foreign currency gains and losses are reported on a
net basis within other income and other expenses.
These primarily include: exchange differences arising
on the settlement or translation of monetary items.

3.17 Recent pronouncements:

Ministry of Corporate Affairs ("MCA”) notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards)
Rules as issued from time to time. MCA has notified
following amendments:

1) During the year ended March 31, 2025, MCA
has notified Ind AS 117 - Insurance Contracts
and amendments to Ind As 116 - Leases, relating
to sale and lease back transactions, applicable
from April 1, 2024. The Company has assessed
that there is no significant impact on its
financial statements.

2) Ind AS 21 The Effects of Changes in Foreign
Exchange Rates to specify how an entity should
assess whether a currency is exchangeable and
how it should determine a spot exchange rate
when exchangeability is lacking. The amendments
also require disclosure of information to enable
understand the impact on the entity''s financial
performance, financial position and cash flows.
The amendments are effective for annual
reporting periods beginning on or after April 01,
2025. When applying the amendments, an entity
cannot restate comparative information. The
Company has reviewed the new pronouncements
and based on its evaluation has determined that
it does not have any significant impact on its
financial statements

Note:

a) The Company''s pending litigations comprise claims against the Company and proceedings pending with Tax /
Statutory/ Government Authorities. After review of all its pending litigations and proceedings, the Company has
made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its
financial statements. The Company does not expect the outcome of these proceedings to have a material impact on
its financial position. Future cash outflows in respect of the above are determinable only on receipt of judgments/
decisions pending with various forums/authorities.

b) The Company has issued guarantees and counter-guarantees on behalf of its customers in favor of various banks to
support the customers'' obligations to such banks. These guarantees and counter-guarantees have been provided in
the normal course of business and are subject to the terms and conditions agreed with the respective banks.

As of 31 March 2025, the aggregate amount of such outstanding guarantees and counter-guarantees amounted
to Rs.2304.44, which represents the maximum potential exposure to the Company under these arrangements.
Management believes that the likelihood of any material obligation arising under these guarantees is remote, and
accordingly, no provision has been recognized in the financial statements.

These guarantees do not involve the Company in any commitments or contingencies other than those arising in the
ordinary course of business.

35 Segment information

The Company is engaged primarily in the business of manufacturing and sale of Electromechanical components and
systems and allied components and services, which constitutes a single reportable segment in accordance with the
requirements of Ind AS 108 - Operating Segments. The Chief Operating Decision Maker (CODM) monitors the operating
results of the Company as a whole for the purpose of making decisions about resource allocation and performance
assessment. Accordingly, no separate segment information is disclosed.

Disaggregation of Revenue

Although the Company operates as a single segment, revenue from contracts with customers is disaggregated by product
categories and geographical areas as follows:

38 Employee benefits

A) Defined contribution plan

Employees Contribution to provident fund and employees state insurance (ESI) are recognised as expenditure in
statement of profit and loss account, as they are incurred, there are no other obligation other than the contribution
payable to aforesaid respective Trust/Government Authorities.

B) Defined benefit plan

The Company''s obligation towards the Gratuity (LIC) is a defined benefit plan and is funded with Life Insurance
Corporation of India. The following table sets out the funded status of the defined benefit scheme and the amount
recognised in financial statements as per Actuarial Valuation.

(i) Regulatory Framework in which Plan operates:

The payment of Benefit is governed by the Provisions of Life Insurance Corporation. (Further details for
disclosure to be decided by the LIC)

(ii) Entity''s Responsibilities for Governance: All monetary amounts are in Indian Rupees (in lakhs) (INR), unless
mentioned otherwise

(iii) Risk exposures: Valuations are performed on certain basic set of pre-determined assumptions and other
regulatory framework which may vary over time. Thus, the Company is exposed to various risks in providing the
above benefit which are as follows:

(a) Interest Rate risk: The plan exposes the Company to the rise of fall in interest rates. A fall in interest rates
will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase
in the value of the liability (as shown in financial statements).

(b) Liquidity Risk: This is the risk that the Company is not able to meet the short-term Benefit payouts. This
may arise due to non availability of enough cash / cash equivalent to meet the liabilities or holding of illiquid
assets not being sold in time.

(c) Salary escalation Risk: The present value of the defined benefit plan is calculated with the assumption of
salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan
participants from the rate of increase in salary used to determine the present value of obligation will have
a bearing on the plan''s liability.

(d) Demographic Risk: The Company has used certain mortality and attrition assumptions in valuation of the
liability. The Company is exposed to the risk of actual experience turning out to be worse compared to
the assumption.

(e) Regulatory Risk: Benefit is paid in accordance with the Provisions of Gratuity Act 1972 (as may be amended
from time to time). There is a risk of change in provisions of Gratuity Act requiring higher Plan Benefit pay
outs (e.g. change in benefit formula).

(viii) Asset Liability Matching Reserves: The Company has Life Insurance Corporation (Group Gratuity Manager)
for administering the Plan liability. The funds of the Plan liability are invested by the Life Insurance Corporation,
(LIC), pay the benefits to members of the enterprise as per Rules of the LIC. So the LIC is exposed to the liquidity
risk of not being able to arrange for the benefit outgo due to cash liquidity problems and so the LIC faces a
liquidity risk.

(ix) Funding arrangements and Funding Policy: The Company has Life Insurance Corporation (Group Gratuity
Manager) for administering the Plan liability. The funds of the Plan liability are invested by the Life Insurance
Corporation. LIC pay the benefits to members of the enterprise as per Rules of the LIC. So the LIC is exposed to
the liquidity risk of not being able to arrange for the benefit outgo due to cash liquidity problems and so the LIC
faces a liquidity risk. If the LIC purchased a Group insurance policy from an Insurance Company, the insurance
Company, as part of the policy rules, makes payment of all the Plan Benefit.

Compensated absences:

The Company provides for accumulation of compensated absences by certain categories of its employees.
These employees can carry forward a portion of the recognised compensated absences and recognised them
in future periods or receive cash in lieu thereof as per the Company''s policy. The Company records a liability for
compensated absences in the period in which the employee renders the services that increases this entitlement.
The total liability recorded by the Company towards this obligation was 19.34 lakhs and ''2.90 lakhs as at 31
March 2025 and 31 March 2024, respectively.

39 Disclosure as required under section 22 of the Micro, Small and Medium Enterprises Act, 2006

The Company seeks information from suppliers whether they registered unit under MSME Act, 2006 based on the
information received from the creditors the following information as required are given as under

Short term leases:

As part of transition, under Ind AS 116 ''Leases'' during the Previous year, the Company had availed the practical expedient
of not to apply the recognition requirements of Ind AS 116 to short term leases and also applied materiality threshold for
recognition of assets and liabilities related to leases. The lease payments associated with these leases amount to ?18.29
(for the year ended 31 March 2024: ?27.31).

41 Earnings per share

The Company presents basic and diluted earnings per share ("EPS”) data for its ordinary shares. The basic earnings per
share is computed by dividing the net profit attributable to equity shareholders for the period by the weighted average
number of equity shares outstanding during the year.

Diluted earnings per share is computed by dividing the net profit attributable to equity shareholders for the year relating
to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic
earnings per share and the weighted average number of equities shares which could have been issued on the conversion
of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity
shares would decrease the net profit per share.

The Company''s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of
these financial liabilities is to finance and support Company''s operations. The Company''s principal financial assets include
trade and other receivables, cash and cash equivalents and refundable deposits that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the
management of these risks. The Board of Director reviews and agrees policies for managing each of these risks, which
are summarized below.

a) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of
changes in market prices. Market risk comprises two types of risk: interest rate risk and other price risk, such as
equity price risk and commodity/ real estate risk. Financial instruments affected by market risk include loans and
borrowings and refundable deposits. The sensitivity analysis in the following sections relate to the position as at 31
March 2025 and 31 March 2024. The sensitivity analyses have been prepared on the basis that the amount of net
debt and the ratio of fixed to floating interest rates of the debt.

The analysis excludes the impact of movements in market variables on: the carrying values of gratuity and other post
retirement obligations; provisions.

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This
is based on the financial assets and financial liabilities held at 31 March 2025 and 31 March 2024.

Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates
primarily to the Company''s long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and
borrowings. The Company does not enter into any interest rate swaps.

Interest rate sensitivity:

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of
loans and borrowings affected. With all other variables held constant, the Company''s profit before tax is affected
through the impact on floating rate borrowings, as follows:

Foreign currency risk:

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of
changes in foreign exchange rates. The Company exposure to the risk of changes in foreign exchange rates relates
primarily to the Company''s operating activities (when revenue or expense is denominated in a foreign currency).
Considering the countries and economic environment in which the Company operates, its operations are subject to
risks arising from fluctuations in exchange rates in those countries.

Any movement in the functional currency of the various operations of the Company against major foreign currencies
may impact the Company''s revenue in international business. The Company evaluates the impact of foreign exchange
rate fluctuations by assessing its exposure to exchange rate risks.

b) Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract,
leading to a financial loss. The credit risk arises principally from its operating activities (primarily trade receivables) and
from its investing activities, including deposits with banks and financial institutions and other financial instruments.

Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom
credit has been granted after obtaining necessary approvals for credit. The collection from the trade receivables are
monitored on a continuous basis by the receivables team.

The Company establishes an allowance for credit loss that represents its estimate of expected losses in respect of
trade and other receivables based on the past and the recent collection trend and based on the analysis has not
provided any provision for expected credit losses on trade receivables.

Credit risk on cash and cash equivalent is limited as the Company generally transacts with banks and financial
institutions with high credit ratings assigned by international and domestic credit rating agencies.

Trade and other receivables

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer.

The demographics of the customer, including the default risk of the industry and country in which the customer
operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals,
establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company
grants credit terms in the normal course of business.

For the purposes of the Company''s capital management, capital includes issued capital and all other equity reserves. The
primary objective of the Company''s capital management is to maximise shareholder value. The Company manages it''s
capital structure and makes adjustments in the light of changes in economic environment and the requirements of the
financial covenants.

For the purpose of debt to total equity ratio, debt considered is long-term and short-term borrowings. Total equity
comprise of issued share capital and all other equity reserves.

Performance obligation:

Sale of Products: The Performance obligations in respect of sale of goods is satisfied when control of the goods
is transferred to the customer, generally on delivery of goods and payment is generally due as per the terms of
contract with customers.

Sale of Service: The Performance obligations in respect of services is satisfied at point of time and acceptance of
the customers. In respect of these services, payment is generally due upon completion of the work and acceptance
of the customers.

46 Corporate Financial Guarantee

During the year, the Company has issued a corporate financial guarantee in favour of its subsidiary for a sanctioned loan
facility amounting to ?50 crores. Against this, the Company charged a commission of 0.5% of the guaranteed amount.
The fair value of the guarantee was assessed at 1.0% of the guaranteed amount, based on prevailing market rates.

Corporate financial guarantee has issued at the fag end of the accounting period and commission amount involved
is not material, the accounting of commission is not material and significant, hence, accounting of guarantee
commission is not consider for the period.

47 Additional regulatory information:

(1) The title deeds of the immovable property of the company are held in the name of the company.

(2) The property Plant and Equipment held with the company are not subjected to any revaluation during the year.

(3) The Intangible assets held with the company are not subjected to any revaluation during the year

(4) The Company has not granted any loans or Advances in the nature of Loans to Promoters, Directors, KMPs and other
related parties excluding Subsidiary company.

(5) The Company is not holding any Benami property and no proceeding has been initiated or pending against the
company for the year ended 31 March 2025.

(6) The Company has no transaction which is not recorded in the books of accounts that has been surrendered or
disclosed as income during the year in tax assessments under the Income Tax Act, 1961 (such as search or survey
or any relevant provisions of Income Tax Act, 1961)

(7) (A) The Company has not advanced or loaned or invested any funds in any other person(s) or entity(ies), including

foreign entities (intermediaries) with understanding that the intermediary shall be directly or indirectly lend or
invest in other person or entities on behalf of the company or provide any guarantee or security or the like to or
on behalf of the company.

(B) The Company has not received any funds from any person(s) or entity(ies), including foreign entities (funding
party) with the understanding that company shall lend or invest in other person or entity identified in any
manner by or on behalf of the funding party/ Ultimate beneficiary or provide any guarantee or security or the
like on behalf of the funding party/ Ultimate beneficiary.

(8) The Company has borrowings from Banks or Financial Institutions on the basis of security of Current Assets. Quarterly
returns or Statement of Current Assets filed by the company with Banks or Financial Institutions are in agreement
with the Books of Accounts.

(9) The Company is not declared as wilful defaulter by any Bank or Financial Institutions or RBI or other lenders.

(10) There are no charges or satisfaction of charges yet to be registered with Registrar of Companies beyond the
statutory period.

(11) The company has no transactions and no relationship with companies struck off under Section 248 of the Companies
Act, 2013 or Section 560 of Companies Act, 1956.

(12) There are no Schemes of Arrangements approved by the Competent Authority in terms of sections 230 to 237 of the
Companies Act, 2013.

(13) The Company has not invested or traded in Crypto currency or Virtual Currency during the financial year.

48 Subsequent events

Please refer to Notes 13 and 32 of these standalone financial statements for the details of subsequent events relating to
the Proposed Dividend and Contingencies.

49 Approval of Standalone Financial Statements

These Standalone Financial Statements were approved for issue by the Board of Directors in their meeting held
on 23 May 2025.

Signatures to Note 1 to 49

As per our report of even date For and on behalf of the Board of Directors of

for S.T.Mohite & Co Apollo Micro Systems Limited

Chartered Accountants

Firm Registration Number: 011410S

CA.Hima Bindu Sagala Karunakar Reddy Baddam Krishna Sai Kumar Addepalli

Partner Managing Director Director

Membership No.: 231056 DIN: 00790139 DIN: 03601692

Place: Hyderabad Sudarshan Chiluveru Rukhya Parveen

Date: 23 May 2025 Chief Financial Officer Company Secretary

UDIN: 25231056BMOVZK4696 Membership No: A65112

Place: Hyderabad
Date: 23 May 2025

---

Mar 31, 2024

3.14 Provisions

A provision is recognized 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. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

3.15 Contingent liabilities and contingent assets

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where 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.

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

3.16 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

Initial recognition and measurement

All financial assets are recognised initially at fair value

plus, in the case of financial assets not recorded at

fair value through profit or loss, transaction costs

that are attributable to the acquisition of the financial

asset.

Subsequent measurement

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

* Financial assets at amortised cost

* Equity instruments at fair value through other comprehensive income (FVTOCI)

Financial assets at amortised cost

''Financial asset'' is measured at the amortised cost if

both the following conditions are met:

a. The asset is held within a business model

whose objective is to hold assets for collecting contractual cash flows, and

b. 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 profit or loss. The losses arising from impairment are recognised in the profit or loss. This category generally applies to trade receivables.

Equity investments

All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS103 applies are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value.

The Company makes such election on an instrument by-instrument basis. The classification is made on initial recognition and is irrevocable.

If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity

Equity instruments included within the FVTPL categary are measured at fair value with all changes recognised in P & L.

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 balance sheet) when:

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

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 ''passthrough'' 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

Impairment of financial assets

The Company recognizes loss allowances using the Expected Credit Loss (ECL) model for the financial assets which are not fair valued through profit or 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 all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognised as an impairment gain or loss in profit or loss.

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 statement of profit and loss

(P&L). This amount is reflected under the head ''other expenses''.

Financial liabilities

Initial recognition and measurement

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 including bank over drafts.

Subsequent measurement

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

Loans and borrowings

This is the category most relevant to the Company. 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.

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.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

3.17 Recent pronouncements

The Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules,2014 as issued from time to time. On 31 March 2024, MCA has not notified any new standard or amendments to the existing standards applicable to the Company.

34 Segment information

Ind AS 108 "Operating Segment" ("Ind AS 108") establishes standards for the way that public business enterprises report information about operating and geographical segments and related disclosures about products and services, geographic areas, and major customers. Based on the "management approach" as defined in Ind AS 108, Operating segments and geographical segments are to be reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM).The CODM evaluates the Company''s performance and allocates resources on overall basis. The Company''s sole operating segment is therefore ''Electromechanical components and systems and allied components and services'' and the sole geographical segment is ''India". Accordingly, there are no additional disclosure to be provided under Ind AS 108, other than those already provided in the financial statements.

44 Financial risk management objectives and policies

The Company''s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance and support Company''s operations. The Company''s principal financial assets include inventory, trade and other receivables, cash and cash equivalents and refundable deposits that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Board of Director reviews and agrees policies for managing each of these risks, which are summarized below.

a) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: interest rate risk and other price risk, such as equity price risk and commodity/ real estate risk. Financial instruments affected by market risk include loans and borrowings and refundable deposits. The sensitivity analysis in the following sections relate to the position as at 31 March 2024 and 31 March 2023. The sensitivity analyses have been prepared on the basis that the amount of net debt and the ratio of fixed to floating interest rates of the debt.

The analysis excludes the impact of movements in market variables on: the carrying values of gratuity and other post retirement obligations; provisions.

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2024 and 31 March 2023.

Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Company does not enter into any interest rate swaps.

Interest rate sensitivity:

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows:

b) Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The credit risk arises principally from its operating activities (primarily trade receivables) and from its investing activities, including deposits with banks and financial institutions and other financial instruments.

Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom credit has been granted after obtaining necessary approvals for credit. The collection from the trade receivables are monitored on a continuous basis by the receivables team.

The Company establishes an allowance for credit loss that represents its estimate of expected losses in respect of trade and other receivables based on the past and the recent collection trend and based on the analysis has not provided any provision for expected credit losses on trade receivables.

Credit risk on cash and cash equivalent is limited as the Company generally transacts with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies.

c) Liquidity risk

The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank deposits and loans.

The table below summarises the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments:

Performance obligation:

Sale of Products: The Performance obligations in respect of sale of goods is satisfied when control of the goods is transferred to the customer, generally on delivery of goods and payment is generally due as per the terms of contract with customers.

Sale of Service: The Performance obligations in respect of services is satisfied at point of time and acceptance of the customers. In respect of these services, payment is generally due upon completion of the work and acceptance of the customers.

47 Additional regulatory information:

(1) The title deeds of the immovable property of the company are held in the name of the company.

(2) The property Plant and Equipment held with the company are not subjected to any revaluation during the year.

(3) The Intangible assets held with the company are not subjected to any revaluation during the year

(4) The Company has not granted any loans or Advances in the nature of Loans to Promoters, Directors, KMPs and other related parties excluding Subsidiary company.

(5) The Company is not holding any Benami property and no proceeding has been initiated or pending against the company for the year ended 31 March 2024.

(6) The Company has no transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in tax assessments under the Income Tax Act, 1961 (such as search or survey or any relevant provisions of Income Tax Act, 1961)

(7) (A) The Company has not advanced or loaned or invested any funds in any other person(s) or entity(ies), including

foreign entities (intermediaries) with understanding that the intermediary shall be directly or indirectly lend or invest in other person or entities on behalf of the company or provide any guarantee or security or the like to or on behalf of the company.

(B) The Company has not received any funds from any person(s) or entity(ies), including foreign entities (funding party) with the understanding that company shall lend or invest in other person or entity identified in any manner by or on behalf of the funding party/ Ultimate beneficiary or provide any guarantee or security or the like on behalf of the funding party/ Ultimate beneficiary.

(8) The Company has borrowings from Banks or Financial Institutions on the basis of security of Current Assets. Quarterly returns or Statement of Current Assets filed by the company with Banks or Financial Institutions are in agreement with the Books of Accounts.

(9) The Company is not declared as wilful defaulter by any Bank or Financial Institutions or RBI or other lenders.

(10) There are no charges or satisfaction of charges yet to be registered with Registrar of Companies beyond the statutory period.

(11) The company has no transactions and no relationship with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956.

(12) There are no Schemes of Arrangements approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013.

(13) The Company has not invested or traded in Crypto currency or Virtual Currency during the financial year.

48 Prior year comparatives

Figures have been rounded off to nearest lakhs and previous year figures have been regrouped wherever necessary, to correspond with the current period classification/disclosure and there is no impact on total income and net profit.

49 Approval of Standalone Financial Statements

These Standalone Financial Statements were approved for issue by the Board of Directors in their meeting held on 20 May 2024.

Signatures to Note 1 to 49

As per our report of even date attached For and on behalf of the Board of Directors of

Apollo Micro Systems Limited

for S.T.Mohite & co Karunakar Reddy Baddam Krishna Sai Kumar Addepalli

Chartered Accountants Managing Director Director

Firm Registration Number: 011410S DIN: 00790139 DIN: 03601692

cA.Hima Bindu S Sudarshan chiluveru Rukhya Parveen

Partner Chief Financial Officer Company Secretary

Membership No.: 231056 Membership No: A65112

Place: Hyderabad Place: Hyderabad

Date: 20 May 2024 Date: 20 May 2024

UDIN: 24231056BKFSMG7000

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Mar 31, 2023

Contingent liabilities and contingent assets

A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may,
but probably will not, require an outflow of resources.
Where 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.

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

3.16 Financial instruments

a. Recognition and initial recognition

The Company recognizes financial assets and
financial liabilities when it becomes a party to
the contractual provisions of the instrument.
All financial assets and liabilities are recognized
at fair value on initial recognition, except for
trade receivables which are initially measured
at transaction price. Transaction costs that are
directly attributable to the acquisition or issues
of financial assets and financial liabilities that are
not at fair value through profit or loss, are added
to the fair value on initial recognition.

A financial asset or financial liability is initially
measured at fair value plus, for an item not
at fair value through profit and loss (FVTPL),
transaction costs that are directly attributable to
its acquisition or issue.

b. Classification and Subsequent measurement
Financial assets

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

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.

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 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 policies 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 assets to
the duration of any related liabilities or expected
cash outflows or realising cash flows through the
sale of the assets;

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

- the risks 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 the 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

3.17 Financial instruments

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

In assessing whether the contractual cash flows are
solely payments of principal and interest, the Company
considers the 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
or timing of cash flows;

- terms that may adjust the contractual coupon
rate, including variable interest rate features;

- prepayment and extension features; and

- terms that limit the Company''s claim to cash
flows from 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
amounts of principal and interest on the principal
amount outstanding, which may include reasonable
additional compensation for early termination of the
contract. Additionally, for a financial asset acquired at

a significant discount or premium to its contractual par
amount, a feature that permits or requires 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 insignificant 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 amortised cost: These assets
are subsequently measured at amortised 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.

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 and loss statement.

3.18 Recent pronouncements

Ministry of Corporate Affairs ("MCA") notifies new
standard or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules
as issued from time to time. On 31 March 2023, MCA

amended the Companies (Indian Accounting Standards)
Amendment Rules, 2023, as below:

Ind AS 1- Presentation of financial statements: This
amendment required the entities to disclosure their
material accounting policies rather than thir significant
accounting policies. The effective date for adoption of
this amendment in annual periods beginning on or after
1 April 2023.

Ind AS 8- Accounting policies , changes in Accounting
Estimates and Errors: This amendment has introduced
a definition of "accounting estimates" and included
amendments to Ind As 8 to help entities distinguish
changes in accounting policies from changes in
accounting estimates. The effective date for adoption
of this amendment in annual periods beginning on or
after 1 April 2023.

Ind AS 12- Income taxes: The amendment has
narrowed the scope of the initial recognition exemption
so that it does not apply to transactions that give
rise to equal and offsetting temporary differences .
The effective date for adoption of this amendment its
annual periods beginning on or after 1 April 2023.

The Company evaluated the aforementioned
amendments and there is no impact on its standalone
financial statements.

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Mar 31, 2018

1 General Information

Apollo Micro Systems Private Limited (“AMS”) was incorporated on March 03, 1997. It got converted in to public limited company with effect from April 01, 2017. AMS is in to the supply of Electronics and Electro-mechanical systems and components including Design, Research & Development of systems which are used in Missile Programmes(weapon Systems Electronics), Underwater Missile programmes(weapon Systems Electronics), Avionic Systems, Ship Borne Systems, Submarine Systems, etc. The Company is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

2 Basis of preparation of financial statements

2.1 Statement of Compliance

The financial statements have been prepared in accordance of Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules 2015 notified under Section 133 of Companies Act 2013 (the ‘Act’) and other relevant provisions of the Act.

The Company’s financial statements up to and for the year ended March 31, 2016 were prepared in accordance with the Companies (Accounting Standards) Rules 2006, notified under Section 133 of Companies Act 2013 (the ‘Act’) and other relevant provisions of the Act.

As these are the first financial statements prepared in accordance with Indian Accounting Standards (Ind AS), Ind AS 101, First-time Adoption of Indian Accounting Standards has been applied. An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance of the Company is provided in Note 38.

The financial statements were authorised for issue by the Company’s Board of Directors on May 29, 2018.

Details of the accounting policies are included in Note 3.

2.2 Basis of measurement

These financial statements have been prepared on the historical cost convention and on an accrual basis, except for the following material items in the statement of financial position:

- certain financial assets and liabilities are measured at fair value;

- employee defined benefit assets/(liability) are recognized as the net total of the fair value of plan assets, plus actuarial losses, less actuarial gains and the present value of the defined benefit obligation;

- long term borrowings are measured at amortized cost using the effective interest rate method.

2.3 Functional currency

The financial statements are presented in Indian rupees, which is the functional currency of the Company. Functional currency of an entity is the currency of the primary economic environment in which the entity operates.

2.4 Operating cycle

All the 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.

Assets:

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

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

b) it is held primarily for the purpose of being traded;

c) it is expected to be realized within twelve months after the reporting date; or

d) 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.

Liabilities:

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

a) it is expected to be settled in the Company’s normal operating cycle;

b) it is held primarily for the purpose of being traded;

c) it is due to be settled within twelve months after the reporting date; or

d) 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 the issue of equity instruments do not affect its classification.

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

2.5 Critical accounting judgements and key sources of estimation uncertaintyOperating cycle

In the application of the Company’s accounting policies, which are described in note 3, the management of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

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.

The following are the areas of estimation uncertainty and critical judgements that the management has made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements:

Provision and contingent liability

On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss Contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain contingencies are not recognized until the contingency has been resolved and amounts are received or receivable.

Useful lives of depreciable assets

Management reviews the useful lives of depreciable assets at each reporting. As at March 31, 2017 management assessed that the useful lives represent the expected utility of the assets to the Company. Further, there is no significant change in the useful lives as compared to previous year.

2.6 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.

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.

(a) Terms / rights attached to the equity shares

Equity shares of the Company have a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

A. Term loans from banks and others consist of:

State Bank of India (Loan 1):- a) Repayment Terms: 20 Quarterly instalments of Rs. 88 Lakhs, commencing from December 2014 to December 2019. b) Rate of Interest: 12.35% p.a. c) Nature of Security: The term loan is secured by first charge over the fixed assets of the company both present and future and collateral security of equitable mortgage of specified properties along with personal guarantee of directors of the company and others.

State Bank of India (Loan 2):- a) Repayment Terms: 16 Quarterly instalments of Rs. 18.75 Lakhs , commencing from December 2015 to December 2019. b) Rate of Interest: 12.35% p.a c) Nature of Security: The term loan is secured by first charge over the fixed assets of the company both present and future and collateral security of equitable mortgage of specified properties along with personal guarantee of directors of the company and others.

Edelweiss Retail Finance Limited :- a) Repayment Term: Repayable in 33 monthly EMI’s after moratorium of 4 months (during which interest is payable), commencing from October 2016 to May 2019 b) Rate of Interest: 15.00% p.a c) Nature of Security: The loan is secured by hypothecation and creation of exclusive charge on the equipments financed by Edelweiss Retail Finance Limited until entire loan is repaid.

Reliance Capital Limited:- a) Repayment Term: Repayable in 45 monthly EMI’s after moratorium of 3 months (during which interest is payable), commencing from November 2016 to October 2020 b) Rate of Interest: 15.75% p.a. floating.

c) Nature of Security: The loan is secured by hypothecation of assets funded by Reliance Capital Limited until entire loan is repaid.

B. Vehicle loans :

The Company has the following vehicle loan:

1. Vehicle loan from HDFC Limited on July, 2017. The loan is repayable in 48 installments from Aug, 2017 to July, 2021. The loan carries an interest rate of 12.05%. This loan is secured by hypothecation of the vehicle for which the loan was taken.

C. Unsecured loans consist of :

The Company has 16 unsecured loans frm Banks and Financial Institutions. These loans carry an interest rate ranging from 15% to 19.05%.

D. Loans repayable on demand:

Overdraft from State Bank of India is repayable on demand and the loan carries an interest rate of 11.90%.

Overdraft from ICICI Bank is repayable on demand and the loan carries an interest rate of 11.75%.

Overdraft from RBL Bank is repayable on demand and the loan carries an interest rate of 11.05%.

Overdraft from Axis Bank is repayable on demand and the loan carries an interest rate of 10.50%.

The above loans repayable on demand Secured by hypothecation of Inventories, Assignment of Book Debts on pari passu basis to SBI, ICICI, RBL and AXIS Bank on proportionate basis to their exposure, E.M. of Land & Building and along with the personal guarantee given by the directors and with limited liability of individual property of the owners to an extent of value of property as on the date of equitable mortgage.

Raw Material Assistance from NSIC is extended against Bank Guarantee.

E. Loans from Managing Director:

Managing Director has provided, interest free unsecured loans repayable on demand.

* The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business including litigation before tax authorities and including matters mentioned above. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the claimants or the Company, as the case may be, and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes. The Management believes that it has a reasonable case in its defense of the proceedings and accordingly no further provision is required.

3 Related party disclosures

a) The following table provides the name of the related party and the nature of its relationship with the Company:

b) Details of all transactions with related parties during the year:

* Does not include insurance, which is paid for the Company as a whole and gratuity as this is provided in the books of accounts on the basis of actuarial valuation for the Company as a whole and hence individual amount cannot be determined.

c) Details of balances receivable from and payable to related parties are as follows:

d) Terms and conditions of transactions with related parties:

The transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions.

Outstanding balances at the year-end are unsecured and interest free.

4 Segment information

Ind AS 108 “Operating Segment” (“Ind AS 108”) establishes standards for the way that public business enterprises report information about operating and geographical segments and related disclosures about products and services, geographic areas, and major customers. Based on the “management approach” as defined in Ind AS 108, Operating segments and geographical segments are to be reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM).The CODM evaluates the Company’s performance and allocates resources on overall basis. The Company’s sole operating segment is therefore ‘Electromechanical components and systems and allied components and services’ and the sole geographical segment is ‘India”. Accordingly, there are no additional disclosure to be provided under Ind AS 108, other than those already provided in the financial statements.

5 Gratuity

The Company provides its employees with benefits under a defined benefit plan, referred to as the “Gratuity Plan”. The Gratuity Plan entitles an employee, who has rendered at least five years of continuous service, to receive 15 days salary for each year of completed service (service of six months and above is rounded off as one year) at the time of retirement/exit, restricted to a sum of Rs. 10,00,000.

The following tables summarize the components of net benefit expense recognised in the statement of profit or loss and the amounts recognised in the balance sheet for the plan:

Reconciliation of opening and closing balances of the present value of the defined benefit obligations:

6 Dues to Micro, small and medium enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2018 has been made in the financial statements based on information received and available with the Company. Further in view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (‘The MSMED Act’) is not expected to be material. The Company has not received any claim for interest from any supplier.

7 Leases

Where the Company is a lessee:

The Company has taken various office under operating leases. The leases typically run for a term ranging from one to three years, with an option to renew the lease after the term completion. The escalation clause in these arrangement ranges from 5% to 10%.

i) Future minimum lease payments under non-cancellable operating leases are as follows:

ii) Amounts recognised in statement of profit and loss:

8 Earnings per share

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity Shares.

9 Financial risk management objectives and policies

The Company’s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance and support Company’s operations. The Company’s principal financial assets include inventory, trade and other receivables, cash and cash equivalents and refundable deposits that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarized below.

a) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: interest rate risk and other price risk, such as equity price risk and commodity/ real estate risk. Financial instruments affected by market risk include loans and borrowings and refundable deposits. The sensitivity analysis in the following sections relate to the position as at March 31, 2018 and March 31, 2017. The sensitivity analyses have been prepared on the basis that the amount of net debt and the ratio of fixed to floating interest rates of the debt.

The analysis excludes the impact of movements in market variables on: the carrying values of gratuity and other post retirement obligations; provisions.

The below assumption has been made in calculating the sensitivity analysis:

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2018 and March 31, 2017.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Company does not enter into any interest rate swaps.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings, as follows:

b) Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The credit risk arises principally from its operating activities (primarily trade receivables) and from its investing activities, including deposits with banks and financial institutions and other financial instruments.

Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom credit has been granted after obtaining necessary approvals for credit. The collection from the trade receivables are monitored on a continuous basis by the receivables team.

The Company establishes an allowance for credit loss that represents its estimate of expected losses in respect of trade and other receivables based on the past and the recent collection trend and based on the analysis has not provided any provision for expected credit losses on trade receivables.

Credit risk on cash and cash equivalent is limited as the Company generally transacts with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies.

c) Liquidity risk

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank deposits and loans.

The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments:

10 Capital management

The Company’s policy is to maintain a stable capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors capital on the basis of return on capital employed as well as the debt to total equity ratio.

For the purpose of debt to total equity ratio, debt considered is long-term and short-term borrowings. Total equity comprise of issued share capital and all other equity reserves.

The capital structure as of March 31, 2018, March 31, 2017 and April 1, 2016 was as follows:

11 Explanation on transition to Ind AS

As stated in Note 2.1, these are the first financial statements prepared in accordance with Ind AS. For the year ended March 31, 2017, the Company had prepared its financial statements in accordance with Companies (Accounting Standards) Rules, 2006 notified under section 133 of the Act and other relevant provision of the Act (‘Previous GAAP’). For the purpose of transition from Previous GAAP to Ind AS, the Company has followed the guidance prescribed under Ind AS 101-first time adoption of Indian Accounting Standards (“Ind AS-101”), with effect from April 1, 2016 (‘transition date’).

The accounting policies set out in Note 3 have been applied in preparing these financial statements for the year ended March 31, 2018 including the comparative information for the year ended March 31, 2017 and the opening Ind AS balance sheet on the date of transition i.e. April 1, 2016

In preparing its Ind AS balance sheet as at April 1, 2016 and in presenting the comparative information for the year ended March 31, 2017, the Company has adjusted amounts reported previously in financial statement prepared in accordance with the Previous GAAP. This note explains how the transition from Previous GAAP to Ind AS has affected the Company’s financial position and financial performance.

A. Mandatory exceptions to retrospective application

The Company has applied the following exceptions to the retrospective application of Ind AS as mandatorily required under Ind AS 101 “First Time Adoption of Indian Accounting Standards”.:

1) Estimates: As per Ind AS 101, an entity’s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with the Previous GAAP unless there is objective evidence that those estimates were in error.

As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under Previous GAAP, those estimates should be made to reflect conditions that existed at the date of transition (for preparing opening Ind AS balance sheet) or at the end of the comparative period (for presenting comparative information as per Ind AS).

The Company’s estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the financial statements that were not required under the Previous GAAP are listed below:

- Impairment of financial assets based on the expected credit loss model.

- Determination of the discounted value for financial instruments carried at amortised cost.

2) Classification and measurement of financial assets: Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.

Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.

B. Optional exemptions from retrospective application

Ind AS 101 “First time Adoption of Indian Accounting Standards” permits Companies adopting Ind AS for the first time to take certain exemptions from the full retrospective application of Ind AS during the transition. The Company has accordingly on transition to Ind AS availed the following key exemptions:

1) Property, plant and equipment: The Company has elected to treat previous GAAP carrying values as deemed cost for all the items of its property, plant and equipment.

C. The following reconciliation provide the effect of transition to Ind AS from Previous GAAP in accordance with Ind AS 101:

(i) Reconciliation of total equity as at March 31, 2017 and April 1, 2016

(ii) Effect of Ind AS Adoption on the statement of profit and loss for the year ended March 31, 2017

12. Standards issued but not effective

The standards issued, but not effective up to the date of issuance of the financial statements is disclosed below:

Ind AS 115 - Revenue from contracts with customers

In March 2018, the Ministry of Corporate Affairs has notified Ind AS 115, ‘Revenue from Contracts with Customers’, which is effective for accounting periods beginning on or after 1 April 2018. This comprehensive new standard will supersede existing revenue recognition guidance, and requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple-element arrangements.

Ind AS 115 is effective for annual reporting periods beginning on or after April 1, 2018. The Company intends to adopt Ind AS 115 effective April 1, 2018, using the modified retrospective method. The adoption of Ind AS 115 is not expected to have a significant impact on the Company’s recognition of revenues.

Other amendments to Indian Accounting Standards

The Ministry of Corporate Affairs (MCA), on 28 March 2018, issued certain amendments to Ind AS. The amendments relate to the following standards:

Ind AS 21, The Effects of Changes in Foreign Exchange Rates - The amendment lays down the principle regarding advance payment or receipt of consideration denominated or priced in foreign currency and recognition of non-monetary prepayment asset or deferred income liability.

Ind AS 12, Income Taxes - The amendment explains that determining temporary differences and estimating probable future taxable profit against which deductible temporary differences are assessed for utilization are two separate steps and the carrying amount of an asset is relevant only to determining temporary differences.

Ind AS 28, Investments in Associates and Joint Ventures - The amendment clarifies when a venture capital, mutual fund, unit trust or similar entities elect to initially recognize the investments in associates and joint ventures.

Ind AS 112, Disclosure of Interests in Other Entities - The amendment clarifies that disclosure requirements for interests in other entities also apply to interests that are classified as Held for sale or discontinued operations in accordance with Ind AS 105.

Ind AS 40, Investment Property - The amendment clarifies when a property should be transferred to / from investment property.

The amendments are effective 1 April 2018. The Company believes that the aforementioned amendments will not materially impact the financial position, performance or the cash flows of the Company.

13 Prior year comparitives

The figures of the previous year have been regrouped/reclassified, where necessary, to conform with the current year’s classification.