Accounting Policies of Ather Energy Ltd. Company

Mar 31, 2025

1.3 Summary of Material Accounting Policies

1.3.1 Current versus non- current classification

The Company presents assets and liabilities
in the financial statements based on current/
non-current classification.

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.

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 settlements 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.

All other assets and liabilities are classified
as non-current.

The Company has determined its operating
cycle as twelve months for the above purpose of
classification as current and non-current.

1.3.2 Fair Value Measurement

A number of Company’s accounting policies and
disclosures require the measurement of fair values,
for both financial and non-financial assets and
liabilities at each balance sheet 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:

a) In the principal market for the asset
or liability, or

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

c) 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 best
economic 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:

a) Level 1 — Quoted (unadjusted) market
prices in active markets for identical
assets or liabilities

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

c) 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 year.

For recurring and non-recurring fair value
measurements categorised within Level 3 of the
fair value hierarchy, mention a description of the
valuation processes used by the entity (including,
for example, how an entity decides its valuation
policies and procedures and analyses changes in
fair value measurements from period to period).

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.

1.3.3 Use of estimates and judgements

The preparation of financial statements in
conformity with Ind AS requires management to
make judgments, estimates and assumptions that
affect the application of accounting policies and
the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from
these estimates.

Estimates and underlying assumptions are
reviewed on a periodic basis. Revisions to
accounting estimates are recognized in the period
in which the estimates are revised and in any future
periods affected. Information about significant
areas of estimation, uncertainty and critical
judgments in applying accounting policies that
have the most significant effect on the amounts
recognized in the financial statements is included
in the following notes:

a. Intangible assets and intangible assets
under development

Capitalisation of cost in intangible assets
and intangible assets under development
is based on management’s judgement that
technological and economic feasibility is
confirmed and asset under development
will generate economic benefits in future.
Based on the impairment assessment
carried out, the Company’s management
has determined that these assets have not
suffered any impairment loss.

b. Defined benefit plans

The cost of the defined benefit plan and other
post-employment benefits and the present
value of such obligation are determined using
actuarial valuations. An actuarial valuation
involves making various assumptions that
may differ from actual developments in the
future. These include the determination of
the discount rate, future salary increases,
mortality rates and future pension increases.
Due to the complexities involved in the
valuation and its long-term nature, a defined
benefit obligation is sensitive to changes
in these assumptions. All assumptions are
reviewed at each reporting date.

c. Provisions 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 the
financial statements. Contingent loss 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.
Contingent gains are not recognized until
the contingency has been resolved and
amounts are received or receivable.

The Company is a party to certain tax and
other disputes with government authorities.
Due to the uncertainty associated with such
cases, it is possible that, on conclusion
of such matters at a future date, the final
outcome may differ significantly.

d. Useful lives of depreciable assets

Management reviews the useful lives of
depreciable assets at each reporting date.
As at 31 March 2025 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.

e. Provision for warranty

Provisions for warranty-related costs are
recognized when the products are sold by
the Company. Provision is estimated based
on historical experience and/or technical
estimates. Provisions are discounted, where
necessary, to its present value based on the
best estimate required to settle the obligation
at the balance sheet date. In certain cases,
the Company also has back-to-back
contractual arrangement with its suppliers
in the event that a vehicle fault is proven to
be a supplier’s fault. These are reviewed
at each reporting date and adjusted to
reflect the current best estimates (net of
recoveries from vendors).

f. Share based payment

Employees of the Company receive
remuneration in the form of Share-based
Payment transactions, whereby employees
render services as consideration for
equity instruments (equity-settled
transactions). In accordance with the Ind
AS 102 Share-based Payment, the cost of
equity-settled transactions is measured
using the fair value method. The cumulative
expense recognised for equity-settled
transactions at each reporting date until
the vesting date reflects the extent to
which the vesting year has expired and the
Company’s best estimate of the number
of equity instruments that will ultimately
vest. The expense or credit recognised in
the statement of profit and loss for a year
represents the movement in cumulative
expense recognised as at the beginning
and end of that period and is recognised in
employee benefits expense.

g. Inventories

The Company estimates the net realisable
value (NRV) of its inventories by taking
into account their estimated selling price,

estimated cost of completion, estimated
costs necessary to make the sale.
Management periodically reviews the
inventory listing to determine if any allowance
should be accounted for in the financial
statements for obsolete or slow-moving
items, and to compare the carrying value
of inventory items with their respective net
realizable value.

1.3.4 Property, Plant and Equipment (PPE)

Property, plant and equipment are stated at cost
less accumulated depreciation and impairment
losses, if any. Cost includes purchase price,
related taxes, duties, freight, insurance, etc.
attributable to the acquisition, installation of the
PPE and borrowing cost if capitalisation criteria
are met but excludes duties and taxes that are
recoverable from tax authorities.

Machinery spares which can be used only in
connection with an item of PPE and whose use
is expected to be irregular are capitalised and
depreciated over the useful life of the principal item
of the relevant assets. Subsequent expenditure
relating to PPE is capitalised only if it is probable
that future economic benefits associated with the
item will flow to the entity and the cost of the item
can be measured reliably.

Material replacement cost is capitalized provided
it is probable that future economic benefits
associated with the item will flow to the entity and
the cost of the item can be measured reliably.
When replacement cost is eligible for capitalization,
the carrying amount of those parts that are
replaced are derecognized. When significant
parts of plant and equipment are required to be
replaced at intervals, the Company depreciates
them separately based on their specific useful life.

Property, plant and equipment retired from active
use and held for sale are stated at the lower of
their net book value and net realisable value and
are disclosed separately in the Balance Sheet.

The Company identifies and determines cost of
each component/part of the asset separately, if
the component/part has a cost which is significant
to the total cost of the asset and has useful
life that is materially different from that of the
remaining asset.

Property, plant and equipment not ready for
the intended use, on the balance sheet date,

are disclosed as “Capital work-in progress” and
are carried at cost, comprising direct cost and
attributable interest.

Depreciation and Amortisation

Depreciation is provided on a pro rata basis
on straight line method to allocate the cost,
net of residual value over the estimated useful
lives of the assets.

Depreciation has been provided on the straight¬
line method based on the useful life as prescribed
in Schedule II to the Companies Act, 2013 except in
respect of the following categories of assets:

The Company, based on technical assessment
made by technical expert and Management
estimate, depreciates above items of property,
plant and equipment over estimated useful
lives which are different from the useful life
prescribed in Schedule II to the Companies
Act, 2013. The Management believes that these
estimated useful lives are realistic and reflect fair
approximation of the period over which the assets
are likely to be used.

The estimated useful lives, residual values and
depreciation method are reviewed at the end of
each reporting year, with the effect of any changes
in estimate accounted for on a prospective basis.

Right of use assets are depreciated over the
primary lease period as the right to use of these
assets ceases on expiry of the lease period.

Depreciation on additions is being provided on
pro rata basis from the month of such additions.

Depreciation on assets sold, discarded or
demolished during the year is being provided
up to the month in which such assets are sold,
discarded or demolished. Any gain or loss
arising on the disposal or retirement of an item of
property, plant and equipment is determined as
the difference between the sales proceeds and
the carrying amount of the asset and is recognised
in statement of profit and loss.

1.3.5 Intangible Assets

Intangible assets acquired separately:

Intangible assets with finite useful lives that are
acquired separately are carried at cost less
accumulated amortisation and accumulated
impairment losses, if any. Amortisation is
recognised on a straight-line basis over their
estimated useful lives. The estimated useful life
and amortisation method are reviewed at the
end of each reporting period, with the effect of
any changes in estimate being accounted for
on a prospective basis. Intangible assets with
indefinite useful lives that are acquired separately
are carried at cost less accumulated impairment
losses, if any.

Internally-generated intangible assets -
research and development expenditure:

Expenditure on research activities is recognised
as an expense in the statement of profit and loss in
the period in which it is incurred.

An internally generated intangible asset arising
from development (or from the development
phase of an internal project) is recognised if, and
only if, all the following have been demonstrated:

• The technical feasibility of completing the
intangible asset so that it will be available
for use / sale;

• The intention to complete the intangible
asset and use or sell it;

• The ability to use or sell the intangible asset;

• How the intangible asset will generate
probable future economic benefits;

• The availability of adequate technical,
financial and other resources to complete
the development and to use or sell the
intangible asset; and

• The ability to measure reliably the
expenditure attributable to the intangible
asset during its development.

The amount initially recognised for internally
generated intangible assets is the sum of the
expenditure incurred from the date when the
intangible asset first meets the recognition criteria
listed above. Where no internally generated
intangible asset can be recognised, development
expenditure is recognised in Statement of Profit
and Loss in the period in which it is incurred.

Subsequent to initial recognition, internally
generated intangible assets are reported at cost
less accumulated amortisation and accumulated
impairment losses, on the same basis as intangible
assets that are acquired separately.

An intangible asset is derecognised 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 recognised in statement of profit and loss
when the asset is derecognised.

Useful lives of other intangible assets:

Other intangible assets are amortised over their
respective individual estimated useful lives on
a straight-line basis, from the date that they are
available for use. The estimated useful life of an
identifiable intangible asset is based on a number
of factors including the effects of obsolescence,
demand, competition, and other economic
factors (such as the stability of the industry, and
known technological advances), and the level of
maintenance expenditures required to obtain the
expected future cash flows from the asset.

1.3.6 Impairment of tangible and intangible
assets

The Company assesses on annual basis whether
there is an indication that an asset may be
impaired. If any indication exists, the Company
estimates the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an
asset’s or cash-generating unit’s (CGU) net selling
price and its value in use. The 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
groups of assets. Where 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. Intangible assets with
indefinite useful lives and intangible assets not yet
available for use are tested for impairment at least
annually, and whenever there is an indication that
the asset may be impaired.

In assessing value in use, the estimated 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 net selling
price, recent market transactions are taken into
account, if available. If no such transactions can be
identified, an appropriate valuation model is used.

The Company bases its impairment calculation
on detailed budgets and forecast calculations
which are prepared separately for each of the
Company’s cash-generating units to which the
individual assets are allocated. These budgets
and forecast calculations are generally covering
a period of five years. For longer periods, a
long-term growth rate is calculated and applied to
project future cash flows after the fifth year.

An assessment is made on annual basis as to
whether there is any indication that previously
recognized impairment losses may no longer
exist or may have decreased. If such indication
exists, the Company estimates the asset’s or
cash-generating unit’s recoverable amount.
A previously recognized impairment loss is
reversed only if there has been a change in the
assumptions used to determine the asset’s
recoverable amount since the last impairment loss
was recognized. The reversal is limited so that the
carrying amount of the asset does not exceed

its recoverable amount, nor exceed the carrying
amount that would have been determined,
net of depreciation, had no impairment loss
been recognized for the asset in prior years.
Such reversal is recognized in the Statement of
Profit and Loss unless the asset is carried at a
revalued amount, in which case the reversal is
treated as a revaluation increase.

After impairment, depreciation is provided on
the revised carrying amount of the asset over its
remaining useful life.

1.3.7 Inventories

Raw materials, components and stores & spare
parts are valued at lower of cost determined
on weighted average basis and estimated net
realisable value. Cost includes purchase price,
freight, taxes and duties and is net of Goods
and Services Tax to the extent credit of the
tax is availed of.

Work-in-progress and finished goods are valued
at lower of cost and estimated net realisable value.
Cost includes all direct costs including material
procurement cost and appropriate proportion
of overheads to bring the goods to the present
location and condition.

Due allowance is made for slow/non-moving /
obsolete items. Materials and other items held
for use in the production of inventories are not
written down below cost if the finished products
in which they will be used are expected to be sold
at or above cost.

Net realizable value is the estimated selling price
in the ordinary course of business, less estimated
costs of completion and estimated costs
necessary to make the sale.

1.3.8 Revenue from contract with customers
and Other Income

Revenue from contract with customers

Revenue is recognised upon transfer of control of
promised products or services to customers for an
amount that reflects the consideration which the
Company expects to receive in exchange for those
products or services. Revenue excludes taxes or
duties collected on behalf of the Government.

• Sale of products

The Company recognises revenues
from sale of products measured at the
amount of transaction price (net of
variable consideration), when it satisfies its
performance obligation at a point in time
which is when products are delivered to
customers, which is when control including
risks and rewards and title of ownership
pass to the customer, and when there
is no longer any unfulfilled obligation.
The transaction price of goods sold is net
of variable consideration on account of
various discounts and schemes offered by
the Company as part of the contract.

The Company offers sales incentives in
the form of variable marketing expense to
customers, which vary depending on the
timing and customer of any subsequent
sale of the vehicle. This sales incentive is
accounted for as a revenue reduction and is
constrained to a level that is highly probable
not to reverse the amount of revenue
recognised when any associated uncertainty
is subsequently resolved. The Company
estimates the expected sales incentive
by market and considers uncertainties
including competitor pricing, ageing of
retailer stock and local market conditions.

Revenues are recognised when
collectability of the resulting receivable is
reasonably assured.

• Sale of services

Income from sale of services and extended
warranties are recognised as income
over the relevant period of service or
extended warranty.

When the Company sells bundled
service and extended period of warranty,
such services are treated as a separate
performance obligation only if the service
or warranty is having a different timing of
performance obligation. In such cases, the
transaction price allocated towards such
service or extended period of warranty
based on relative standalone selling price
and is recognised as a contract liability
until the service obligation has been met.
The price that is regularly charged for an item
when sold separately is the best evidence of
its standalone selling price. In the absence
of such evidence, the primary method
used to estimate standalone selling price

is the expected cost plus a margin, under
which the Company estimates the cost of
satisfying the performance obligation and
then adds an appropriate margin based on
similar services.

Sales of services include certain
performance obligations that are satisfied
over a period of time. Any amount received
in advance in respect of such performance
obligations that are satisfied over a period
of time is recorded as a contract liability
and recorded as revenue when service is
rendered to customers. Refund liabilities
comprise of obligation towards customers
to pay for discounts and sales incentives.

Revenue is measured based on the
transaction price, which is the consideration,
adjusted for variable consideration on
account of discounts and other incentives, if
any, offered by the Company as a part of the
contract with the customer. Revenue also
excludes taxes or other amounts collected
from customers. No element of financing
is deemed present as the sale of goods
/ services are primarily on a “Cash
and Carry” basis.

Contract balances
Trade receivables

A receivable is recognised by the Company
when the goods are delivered to the customer
as this represents the point in time at which the
right to consideration becomes unconditional,
as only the passage of time is required before
payment due. Refer to accounting policy on
Financial instruments - initial measurement and
subsequent measurement

Contract liabilities

A contract liability is the obligation to transfer goods
to a customer for which the Company has received
consideration from the customer. If a customer
pays consideration before the Company transfers
goods or services to the customer, a contract
liability is recognised when the payment is made.
Contract liabilities are recognised as revenue
when the Company performs under the contract.

Warranty obligation

The Company provides warranties for general
repairs of defects as per terms of the contract

with ultimate customers. These warranties are
considered as assurance type warranties and
are accounted for under Ind AS 37- Provisions,
Contingent Liabilities and Contingent Assets.
The provision for warranty is disclosed net of
supplier reimbursements.

Other Income

• Interest income is recognised on the accrual
basis. For all debt instruments measured
at amortised cost, interest income is
recognised on time proportion basis, taking
into account the amount outstanding and
effective interest rate.

• Dividend income is accounted for when the
right to receive it is established.

1.3.9 Government Grants

Government grants and subsidies are recognised
when there is reasonable assurance that the
Company will comply with the conditions attached
to them and the grants/subsidy will be received.

When the grant or subsidy from the Government
relates to an expense item, it is recognised as
income on a systematic basis in the Statement
of Profit and Loss over the period necessary to
match them with the related costs, which they are
intended to compensate.

When the Company receives grants of
non-monetary assets, the asset and the grant
are recorded at fair value amounts and released
to profit or loss over the expected useful life in
a pattern of consumption of the benefit of the
underlying asset, i.e. by equal annual instalments.
When loans or similar assistance are provided
by Governments or related institutions, with
an interest rate below the current applicable
market rate, the effect of this favourable interest
is regarded as a Government grant. The loan or
assistance is initially recognised and measured
at fair value of the proceeds received. The loan
is subsequently measured as per the accounting
policy applicable to financial liabilities.

1.3.10 Employee Benefits

I. Defined Contribution Plan

a. Provident Fund

Contributions in respect of
Employees Provident Fund are made

to the Regional Provident Fund.
These Contributions are recognised
as expense in the year in which the
services are rendered. The Company
has no obligation other than the
contribution payable to the Regional
Provident fund.

b. Employee State Insurance

Contributions to Employees State
Insurance Scheme are recognised
as expense in the year in which the
services are rendered.

II. Defined Benefit Plan

a. Gratuity

The Company accounts its liability
for future gratuity benefits based
on actuarial valuation done by an
independent actuary, as at the
balance sheet date, determined
every year using the Projected Unit
Credit method. Actuarial gains/
losses are immediately recognised
in retained earnings through Other
Comprehensive Income in the period
in which they occur. Re-measurements
are not re-classified to profit or loss
in subsequent periods. Past service
cost is recognised immediately to the
extent that the benefits are already
vested and otherwise is amortised on
a straight-line basis over the average
period until the benefits become
vested. Net interest is calculated
by applying a discount rate to the
net defined benefit liability or asset.
The defined benefit obligation
recognised in the balance sheet
represents the present value of the
Defined Benefit Obligation less the Fair
Value of Plan Assets out of which the
obligations are expected to be settled
and adjusted for unrecognised past
service cost, if any. Any asset arising
out of this calculation is recognised
limited to the past service cost plus the
present value of available refunds and
reduction in future contributions.

b. Compensated Absences

Accumulated leave (earned leave)
can be availed and encashed on

termination of employment, subject to
terms and conditions of the scheme,
the liability is recognised on the basis
of an independent actuarial valuation.
They are therefore measured as the
present value of expected future
payments to be made in respect of
services provided by employees up
to the end of the reporting period
using the projected unit credit method.
The benefits are discounted using
the market yields at the end of the
reporting period that have terms
approximating to the terms of the
related obligation. Re-measurements
as a result of experience adjustments
and changes in actuarial assumptions
are recognised in Statement of
Profit and Loss.

III. Short Term Employee Benefits

Liabilities for wages and salaries, including
non-monetary benefits that are expected to
be settled wholly within 12 months after the
end of the period in which the employees
render the related service are recognized
in respect of employees’ services upto
the end of the reporting period and are
measured at the amounts expected to
be paid when the liabilities are settled.
The liabilities are presented as current
employee benefit obligations in the balance
sheet. Short term employee benefits include
short term compensated absences which
is recognized based on the eligible leave at
credit on the balance sheet date, and the
estimated cost is based on the terms of the
employment contract.

1.3.11 Leases

The Company assesses, whether the contract
is, or contains, a lease. A contract is, or contains,
a lease if the contract involves- (a) the use of an
identified asset, (b) the right to obtain substantially
all the economic benefits from use of the identified
asset, and (c) the right to direct the use of the
identified asset.

As a lessee: The Company recognises a right-of-
use asset and a lease liability at the lease
commencement date. The right-of-use asset
is initially measured at cost, which comprises

the initial amount of the lease liability adjusted
for any lease payments made at or before the
commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle
and remove the underlying asset or to restore
the underlying asset or the site on which it is
located, less any lease incentives received.
Right-of-use assets are depreciated from the
commencement date on a straight-line basis over
the shorter of the lease term and useful life of the
underlying asset.

Right of use assets are evaluated for recoverability
whenever events or changes in circumstances
indicate that their carrying amounts may not
be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher
of the fair value less cost to sell and the value-in¬
use) is determined on an individual asset basis
unless the asset does not generate cash flows
that are largely independent of those from other
assets. In such cases, the recoverable amount is
determined for the Cash Generating Unit (CGU) to
which the asset belongs.

The lease liability is initially measured at the
present value of the future lease payments at
the commencement date, discounted using
the interest rate implicit in the lease or, if that
rate cannot be readily determined, company’s
incremental borrowing rate. Generally, the
company uses its incremental borrowing rate as
the discount rate. Lease liabilities are remeasured
with a corresponding adjustment to the related
right of use asset if the Company changes its
assessment if whether it will exercise an extension
or a termination option.

A lease contract is modified and the lease
modification is not accounted for as a separate
lease, in which case the lease liability is remeasured
based on the lease term of the modified lease by
discounting the revised lease payments using
a revised discount rate at the effective date of
the modification.

As a practical expedient, Ind AS 116 permits a
lessee not to separate non-lease components,
and instead account for any lease and associated
non-lease components as a single arrangement.
The Company has used this practical expedient.

Lease liabilities include the net present value of
the following lease payments:

• fixed payments, including in-substance
fixed payments;

• variable lease payments that depend on an
index or a rate, initially measured using the
index or rate as at the commencement date;

• amounts expected to be payable under a
residual value guarantee;

• the exercise price under a purchase option
that the Company is reasonably certain
to exercise; and

• lease payments in an optional renewal
period if the Company is reasonably certain
to exercise an extension option, and
penalties for early termination of a lease
unless the company is reasonably certain
not to terminate early.

The lease liability is measured at amortised
cost using the effective interest method.

Short-term leases and leases of low-value
assets: The Company has elected not to
recognise right-of-use assets and lease
liabilities for short-term leases that have
a lease term of 12 months. The Company
recognises the lease payments associated
with these leases as an expense on a
straight-line basis over the lease term.

1.3.12 Foreign Currency Transactions
Initial recognition

Transactions in foreign currencies entered by the
Company are accounted at the exchange rates
prevailing on the date of the transaction.

Measurement as at Balance Sheet date

Foreign currency monetary items of the Company
outstanding at the Balance Sheet date are restated
at reporting date exchange rates.

Non-monetary items carried at historical cost
are translated using the exchange rates at the
dates of initial transactions. Non-monetary items
measured at fair value in a foreign currency are
translated using the exchange rates at the date
when the fair value is determined. The gain or
loss arising on translation of non-monetary items
measured at fair value is treated in line with the
recognition of the gain or loss on the change in fair
value of the item.

Treatment of Exchange Differences

Exchange differences arising on settlement/
restatement of foreign currency monetary assets
and liabilities of the Company are recognised
as income or expense in the Statement of
Profit and Loss.

1.3.13 Taxes on Income

Income tax expense comprises current and
deferred taxes. Income tax expense is recognized
in the Statement of Profit and Loss except to the
extent it relates to items recognized directly in
equity, in which case it is recognized in equity.

Current Tax is the amount of tax payable on the
taxable income for the year and is determined in
accordance with the provisions of the Income
Tax Act, 1961. 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 recognised
outside profit or loss is recognised outside profit
or loss (either in other comprehensive income
or in equity). Current tax items are recognised in
correlation to the underlying transaction either in
OCI or directly in equity.

Minimum Alternate Tax (MAT) when paid in
accordance with the tax laws, which gives future
economic benefits in the form of adjustment to
future tax liability, is considered as an asset if there
is convincing evidence that the Company will pay
normal income tax. Accordingly, MAT is recognised
as an asset in the Balance Sheet when it is probable
that future economic benefit associated with it will
flow to the Company. The carrying amount of MAT
would be reviewed at each reporting date and the
asset is written down to the extent the Company
does not have convincing evidence that it will pay
normal income tax during the specified period.

Deferred tax is provided using the liability method
on temporary differences between the tax
bases of assets and liabilities and their carrying
amounts for financial reporting purposes at the
reporting date.

Deferred tax assets are recognised for all
deductible temporary differences, the carry
forward of unused tax credits and any unused tax
losses. Deferred tax assets are recognised to the
extent that it is probable that taxable profit will be
available against which the deductible temporary

differences, and the carry forward of unused tax
credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is
reviewed at each reporting date and written off
to the extent that it is no longer probable that
sufficient taxable profit will be available to allow
all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed
at each reporting date and are recognised to the
extent that it has become probable that future
taxable profits will allow the deferred tax asset
to be recovered.

Deferred tax assets and liabilities are measured
at the tax rates that are expected to apply in the
year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the
reporting date.

Deferred tax items are recognised in correlation
to the underlying transaction either in OCI or
directly in equity.

Deferred tax assets and deferred tax liabilities are
offset if a legally enforceable right exists to set
off current tax assets against current tax liabilities
and the deferred taxes relate to the same taxable
entity and the same taxation authority.

---

Mar 31, 2024

1. Notes to financial statements1.1 Corporate Information

Ather Energy Private Limited (‘the Company’) (CIN: U40100KA2013PTC093769) is a Private Limited Company incorporated and domiciled in India. The Company’s registered office of the Company is located at IBC Knowledge Park, Bannerghatta Road, Bangalore, Karnataka. The Company is in the business of manufacturing selling of electric scooters and related research & development. The Company has manufacturing plants located at Hosur in Tamil Nadu.

These financial statements for the year ended 31 March 2024 have been approved by the Board of Directors and authorised for issuance on 06 May 2024.

1.2 Basis of Preparation

These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (‘the Act’) read together with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time and other relevant provisions of the Act, on an accrual basis.

The financial statements have been prepared on a historical cost basis, except for certain financial instruments, defined benefit liabilities and share based payment arrangements that are measured at fair value at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

These financial statements are presented in Indian Rupees (INR), which is also the Company’s functional currency and all values are rounded to the nearest million, except when otherwise indicated. The number ‘0’ in financial statements denotes amount less than INR. 0.5 million.

Going Concern:

The Company has incurred a loss of INR 10,623 million for the year ended 31 March 2024 and has accumulated losses of INR 29,093 million as at 31 March 2024. In addition to meeting its current obligations, the Company also requires substantial amount of funds to continue its day-to-day operations and ongoing development activities. As at 31 March 2024, the Company has not been able to comply with the terms of loan agreement in two instance of maintenance of financial parameter. However, the lenders have taken cognizance of the credit history, broader economic scenarios that prevailed across the financial year and not levied penal charges on the Company. The Company also has adverse financial ratios (refer note 40 to the financial statements) primarily due to the losses.

Notwithstanding the above, the Company’s net current assets exceed its net current liabilities by INR 1,530 millions as at 31 March 2024. The Management has also prepared (as approved by the Board of Directors of the Company) cash flow forecasts for the next 12 months considering i) anticipated increase in sales due to the increase in demand for electric vehicles and ii) Implementation of cost control measures. Further, subsequent to the year end, the Company has borrowed funds through issue of Non-convertible debentures (NCD) aggregating INR 1,100 million to financial institutions and has also received sanction letters from two lenders for INR 2,000 million each.

Based on the above, the Management of the Company is confident of meeting its current financial commitments and those expected to arise in the next 12 months. Accordingly, the Company has prepared these financial statements on a going concern basis.

1.3.1 Current versus non- current classification

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.

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 settlements 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.

All other assets and liabilities are classified as non-current.

The Company has determined its operating cycle as twelve months for the above purpose of classification as current and non-current.

1.3.2 Fair Value Measurement

A number of Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities at each Balance sheet 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:

a) In the principal market for the asset or liability, or

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

c) 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 best economic 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:

a) Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

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

c) 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.

For recurring and non-recurring fair value measurements categorised within Level 3 of the fair value hierarchy, mention a description of the valuation processes used by the entity (including, for example, how an entity decides its valuation policies and procedures and analyses changes in fair value measurements from period to period).

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.

1.3.3 Use of estimates and judgements

The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is included in the following notes:

a. Intangible assets and intangible assets under development

Capitalisation of cost in intangible assets and intangible assets under development is based on management’s judgement that technological and economic feasibility is confirmed and asset under development will generate economic benefits in future. Based on the impairment assessment carried out, the Company’s management has determined that these assets have not suffered any impairment loss.

b. Defined benefit plans

The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

c. Provisions 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 the financial statements. Contingent loss 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. Contingent gains are not recognized until the contingency has been resolved and amounts are received or receivable.

The Company is a party to certain tax and other disputes with government authorities. Due to the uncertainty associated with such cases, it is possible that, on conclusion of such matters at a future date, the final outcome may differ significantly.

d. Useful lives of depreciable assets

Management reviews the useful lives of depreciable assets at each reporting date. As at 31 March 2024 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.

During the previous year, based on a detailed reassessment carried out by the technical team for amortisation of internally generated intangible assets, the Company has decided to use, the ‘useful life’ method for amortising such intangible assets as against the “unit of production” method. Useful life method better represents the usage pattern of the assets over their useful lives. Accordingly, internally generated intangible assets have been amortised on straight-line basis over their useful lives.

e. Provision for warranty

Provisions for warranty-related costs are recognized when the products are sold by the Company. Provision is estimated based on historical experience and/or technical estimates. Provisions are discounted, where necessary, to its present value based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

f. Share based payment

Employees of the Company receive remuneration in the form of Share-based Payment transactions, whereby employees render services as consideration for equity instruments (equity-settled transactions). In accordance with the Ind AS 102 Share-based Payment, the cost of equity-settled transactions is measured using the fair value method. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting year has expired and the Company’s best estimate of the number of equity instruments that will ultimately vest. The expense or credit recognised in the statement of profit and loss for a year represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.

g. Going concern

The Management has prepared cash flow forecasts for the next 12 months. The forecasts include assumption such as increase in gross margin due to cost control measures, timely raising funding to meet obligation as and when it falls due, realisation of subsidy amount under the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India ("FAME") Scheme - II and reduction of inventory holding.

h. Inventories

The Company estimates the net realisable value (NRV) of its inventories by taking into account their estimated selling price, estimated cost of completion, estimated costs necessary to make the sale. Management periodically reviews the inventory listing to determine if any allowance should be accounted for in the financial statements for obsolete or slow-moving items, and to compare the carrying value of inventory items with their respective net realizable value.

1.3.4 Property, Plant and Equipment (PPE)

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any. Cost includes purchase price, related taxes, duties, freight, insurance, etc. attributable to the acquisition, installation of the PPE and borrowing cost if capitalisation criteria are met but excludes duties and taxes that are recoverable from tax authorities.

Machinery spares which can be used only in connection with an item of PPE and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure relating to PPE is capitalised only if it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably.

Material replacement cost is capitalized provided it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. When replacement cost is eligible for capitalization, the carrying amount of those parts that are replaced are derecognized. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful life.

Property, plant and equipment retired from active use and held for sale are stated at the lower of their net book value and net realisable value and are disclosed separately in the Balance Sheet.

The Company identifies and determines cost of each component/part of the asset separately, if the component/part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset.

Property, plant and equipment not ready for the intended use, on the date of Balance sheet, are disclosed as "Capital work-in progress" and are carried at cost, comprising direct cost and attributable interest.

Depreciation and Amortisation

Depreciation is provided on a pro rata basis on straight line method to allocate the cost, net of residual value over the estimated useful lives of the assets.

Depreciation has been provided on the straight-line method based on the useful life as prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets:_

Description of Assets	Useful life and Basis of Depreciation/ Amortisation
a) Plant and Machinery - Laboratory Equipments	5 Years
b) Plant and Machinery - Moulds and Jigs	8 Years
c) Leasehold Improvements	Over the primary lease period or the life of the asset whichever is lower.
d) Internally built vehicles	3 years

Description of Assets	Useful life and Basis of Depreciation/ Amortisation
e) Electric installation	Over the primary lease period or 10 years whichever is lower.
f) Charging Infrastructure	3 years

The Company, based on technical assessment made by technical expert and Management estimate, depreciates above items of property, plant and equipment over estimated useful lives which are different from the useful life prescribed in Schedule II to the Companies Act, 2013. The Management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Right of use assets are depreciated over the primary lease period as the right to use of these assets ceases on expiry of the lease period.

Depreciation on additions is being provided on pro rata basis from the month of such additions.

Depreciation on assets sold, discarded or demolished during the year is being provided up to the month in which such assets are sold, discarded or demolished. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in statement of profit and loss.

1.3.5 Intangible Assets

Intangible assets acquired separately: Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses, if any.

Internally-generated intangible assets - research and development expenditure: Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all the following have been demonstrated:

• The technical feasibility of completing the intangible asset so that it will be available for use / sale;

• The intention to complete the intangible asset and use or sell it;

• The ability to use or sell the intangible asset;

• How the intangible asset will generate probable future economic benefits;

• The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

• The ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where

no internally generated intangible asset can be recognised, development expenditure is recognised in Statement of Profit and Loss in the period in which it is incurred.

Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

An intangible asset is derecognised 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 recognised in profit or loss when the asset is derecognised.

Useful lives of other intangible assets :

Other intangible assets are amortised over their respective individual estimated useful lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry, and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.

The management estimates the useful lives for its assets as follows:
Description of Assets	Useful life and Basis of Depreciation/ Amortisation
a) Software	5 years
b) Patent & other intellectual property rights	5 years
c) Website	3 years
d) Product development (internally generated intangible assets)	2-7 years

1.3.6 Impairment of tangible 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, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) net selling price and its value in use. The 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 groups of assets. Where 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. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

In assessing value in use, the estimated 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 net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.

The Company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Company’s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.

An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the Statement of Profit and Loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

1.3.7 Inventories

Raw materials, components and stores & spare parts are valued at lower of cost determined on weighted average basis and estimated net realisable value. Cost includes purchase price, freight, taxes and duties and is net of Goods and Services Tax to the extent credit of the tax is availed of.

Work-in-progress and finished goods are valued at lower of cost and estimated net realisable value. Cost includes all direct costs including material procurement cost and appropriate proportion of overheads to bring the goods to the present location and condition.

Due allowance is made for slow/non-moving / obsolete items. Materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be used are expected to be sold at or above cost.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

1.3.8 Revenue from contract with customers and Other Income Revenue from contract with customers

Revenue is recognised upon transfer of control of promised products or services to customers for an amount that reflects the consideration which the Company expects to receive in exchange for those products or services. Revenue excludes taxes or duties collected on behalf of the government.

• Sale of products

The Company recognises revenues from sale of products measured at the amount of transaction price (net of variable consideration), when it satisfies its performance obligation at a point in time which is when products are delivered to dealers, which is when control including risks and rewards and title of ownership pass to the customer, and when there are no longer any unfulfilled obligation. The transaction price of goods sold is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract.

The Company offers sales incentives in the form of variable marketing expense to customers, which vary depending on the timing and customer of any subsequent sale of the vehicle. This sales incentive is accounted for as a revenue reduction and is constrained to a level that is highly probable not to reverse the amount of revenue recognised when any associated uncertainty is subsequently resolved. The Company estimates the expected sales incentive by market and considers uncertainties including competitor pricing, ageing of retailer stock and local market conditions.

The consideration received in respect of transport arrangements for delivering of vehicles to the customers are recognised net of their costs within revenues in the income statement.

Revenues are recognised when collectability of the resulting receivable is reasonably assured.

• Sale of services

Income from sale of services and extended warranties are recognised as income over the relevant period of service or extended warranty.

When the Company sells bundled service and extended period of warranty, such services are treated as a separate performance obligation only if the service or warranty is having a different timing of performance obligation. In such cases, the transaction price allocated towards such service or extended period of warranty based on relative standalone selling price and is recognised as a contract liability until the service obligation has been met. The price that is regularly charged for an item when sold separately is the best evidence of its standalone selling price. In the absence of such evidence, the primary method used to estimate standalone selling price is the expected cost plus a margin, under which the Company estimates the cost of satisfying the performance obligation and then adds an appropriate margin based on similar services.

Sales of services include certain performance obligations that are satisfied over a period of time. Any amount received in advance in respect of such performance obligations that are satisfied over a period of time is recorded as a contract liability and recorded as revenue when service is rendered to customers. Refund liabilities comprise of obligation towards customers to pay for discounts and sales incentives.

Revenue is measured based on the transaction price, which is the consideration, adjusted for variable consideration on account of discounts and other incentives, if any, offered by the Company as a part of the contract with the customer. Revenue also excludes taxes or other amounts collected from customers. No element of financing is deemed present as the sale of goods / services are primarily on a "Cash and Carry" basis.

Contract balancesTrade receivables

A receivable is recognised by the Company when the goods are delivered to the customer as this represents the point in time at which the right to consideration becomes unconditional, as only the passage of time is required before payment due. Refer to accounting policy on Financial instruments -initial measurement and subsequent measurement

Contract liabilities

A contract liability is the obligation to transfer goods to a customer for which the Company has received consideration from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made. Contract liabilities are recognised as revenue when the Company performs under the contract.

Warranty obligation

The Company provides warranties for general repairs of defects as per terms of the contract with ultimate customers. These warranties are considered as assurance type warranties and are accounted for under Ind AS 37- Provisions, Contingent Liabilities and Contingent Assets.

Other Income

• Interest income is recognised on the accrual basis. For all debt instruments measured at amortised cost, interest income is recognised on time proportion basis, taking into account the amount outstanding and effective interest rate.

• Dividend income is accounted for when the right to receive it is established.

1.3.9 Government Grants

Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants/subsidy will be received.

When the grant or subsidy from the Government relates to an expense item, it is recognised as income on a systematic basis in the Statement of Profit and Loss over the period necessary to match them with the related costs, which they are intended to compensate.

When the Company receives grants of non-monetary assets, the grant are recognised as deferred income in the balance sheet and transferred to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset, i.e. by equal annual instalments. When loans or similar assistance are provided by governments or related institutions, with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as a government grant. The loan or assistance is initially recognised and measured at fair value of the proceeds received. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.

1.3.10 Employee BenefitsI. Defined Contribution Plana. Provident Fund

Contributions in respect of Employees Provident Fund are made to the Regional Provident Fund. These Contributions are recognised as expense in the year in which the services are rendered. The Company has no obligation other than the contribution payable to the Regional Provident fund.

b. Employee State Insurance

Contributions to Employees State Insurance Scheme are recognised as expense in the year in which the services are rendered.

II. Defined Benefit Plana. Gratuity

The Company accounts its liability for future gratuity benefits based on actuarial valuation done by an independent actuary, as at the Balance Sheet date, determined every year using the Projected Unit Credit method. Actuarial gains/losses are immediately recognised in retained earnings through Other Comprehensive Income in the period in which they occur. Re-measurements are not re-classified to profit or loss in subsequent periods. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. Net interest is calculated by applying a discount rate to the net defined benefit liability or asset. The defined benefit obligation recognised in the balance sheet represents the present value of the Defined Benefit Obligation less the Fair Value of Plan Assets out of which the obligations are expected to be settled and adjusted for unrecognised past service cost, if any. Any asset arising out of this calculation is recognised limited to the past service cost plus the present value of available refunds and reduction in future contributions.

b. Compensated Absences: Accumulated leave (earned leave) can be availed and encashed on termination of employment, subject to terms and conditions of the scheme, the liability

is recognised on the basis of an independent actuarial valuation. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in Statement of Profit and Loss.

III. Short Term Employee Benefits

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services upto the end of the reporting period and are measured at the amounts expected to be paid when the liabilities Eire settled. The liabilities are presented as current employee benefit obligations in the balance sheet. Short term employee benefits include short term compensated absences which is recognized based on the eligible leave at credit on the Balance Sheet date, and the estimated cost is based on the terms of the employment contract.

1.3.11 Leases

The Company assesses, whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract involves- (a) the use of an identified asset, (b) the right to obtain substantially all the economic benefits from use of the identified asset, and (c) the right to direct the use of the identified asset.

As a lessee : The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.

Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.

The lease liability is initially measured at the present value of the future lease payments at the commencement date, discounted using the interest rate implicit in the lease or company’s incremental borrowing rate, if interest rate implicit in the lease cannot be readily determined. Generally, the company uses its incremental borrowing rate as the discount rate. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.

A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by

discounting the revised lease payments using a revised discount rate at the effective date of the modification.

As a practical expedient, Ind AS 116 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Company has used this practical expedient.

Lease liabilities include the net present value of the following lease payments:

• fixed payments, including in-substance fixed payments;

• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• amounts expected to be payable under a residual value guarantee;

• the exercise price under a purchase option that the Company is reasonably certain to exercise; and

• lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the company is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method.

Short-term leases and leases of low-value assets The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

1.3.12 Foreign Currency Transactions Initial recognition

Transactions in foreign currencies entered by the Company are accounted at the exchange rates prevailing on the date of the transaction.

Measurement as at Balance Sheet date

Foreign currency monetary items of the Company outstanding at the Balance Sheet date are restated at reporting date exchange rates.

Non-monetary items carried at historical cost are translated using the exchange rates at the dates of initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item.

Treatment of Exchange Differences

Exchange differences arising on settlement/restatement of foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.

1.3.13 Taxes on Income

Income tax expense comprises current and deferred taxes. Income tax expense is recognized in the Statement of Profit and Loss except to the extent it relates to items recognized directly in equity, in which case it is recognized in equity.

Current Tax is the amount of tax payable on the taxable income for the year and is determined in accordance with the provisions of the Income Tax Act, 1961. 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 recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Minimum Alternate Tax (MAT) when paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company. The carrying amount of MAT would be reviewed at each reporting date and the asset is written down to the extent the Company does not have convincing evidence that it will pay normal income tax during the specified period.

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax assets are recognised for all deductible temporary differences, the cany forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and written off to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

1.3.14 Provisions and Contingencies

A provision is recognized when an enterprise has a present obligation (legal or constructive) as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on best estimate required to settle the obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

Provisions for warranty-related costs are recognized when the products are sold. Provision is estimated based on historical experience and/or technical estimates. The estimate of such warranty-related costs is reviewed annually.

Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.

Provisions for the costs to restore leased plant assets to their original condition, as required by the terms and conditions of the lease, are recognised when the obligation is incurred, either at the commencement date or as a consequence of having used the underlying asset during a particular period of the lease, at the directors’ best estimate of the expenditure that would be required to restore the assets. Estimates are regularly reviewed and adjusted as appropriate for new circumstances.

1.3.15 Borrowing Costs

Borrowing Costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the borrowing costs. Borrowing Costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date the asset is ready for its intended use is added to the cost of the assets. Capitalisation of Borrowing Costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted. All other borrowing costs are expensed in the period they occur.

1.3.16 Earnings Per Share

Basic Earnings Per Share is calculated by dividing the net profit or loss for the period attributable to equity shareholders the weighted average number of equity shares (including equivalent number of equity shares on conversion of compulsorily convertible preference shares) outstanding during the year.

The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

1.3.17 Employees Stock Option

Employees of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.

That cost is recognised, together with a corresponding increase in share-based payment (SBP) reserves in equity, over the year in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity settled transactions at each reporting date until the vesting date reflects the extent to which the vesting year has expired and the Company’s best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit and loss for a year represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Company’s best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.

No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

1.3.18 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.

A. Financial assets

i. 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.

Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price determined under Ind AS 115. Refer accounting policy on ‘Revenue from contracts with customers’.

ii. Subsequent measurement

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

a. Financial assets at amortised cost

b. Financial assets at fair value through other comprehensive income (OCI)

c. Financial assets at fair value through profit or loss

d. Equity instruments measured at Fair Value Through Other Comprehensive Income a. Financial assets at amortised cost

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

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

• 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 and other receivables.

b. Financial assets at fair value through other comprehensive income

A financial asset is subsequently measured at fair value through other comprehensive income if both the following conditions are met:

• The asset is held within a business where the objective is achieved by both collecting contractual cash flows and selling financial assets and

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

After the initial measurement, such financial assets are subsequently measured at fair value at each reporting date. Fair value movement are recognised in the other comprehensive income and impairment are recognised in statement of profit & loss. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

c. Financial assets at fair value through profit or loss

A financial assets which is not classified in any of the above categories are subsequently fair valued through profit or loss.

d. Equity instruments measured at Fair Value Through Other Comprehensive Income

All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at fair value through profit or loss. For all other equity instruments, the Company decides to classify the same either as at Fair value through other comprehensive income or fair value through profit or loss. 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 fair value through other comprehensive income, then all fair value changes on the instrument, excluding dividends, are recogn