Accounting Policies of Azad Engineering Ltd. Company

Mar 31, 2025

2 Material accounting policies

2.1 Basis of preparation and measurement

(i) Statement of compliance & Basis for preparation

These standalone financial statements are prepared in accordance with Indian Accounting Standard (Ind
AS) under the historical cost convention on accrual basis except for certain financial instruments which are
measured at fair values, the provisions of the Companies Act, 2013 (the ''''Act''''). The Ind AS are prescribed
under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015, as
amended and relevant amendment rules issued thereafter.

The Company has prepared the standalone financial statements on a going concern basis. The accounting
policies are applied consistently to all the periods presented in the financial statements except where a newly
issued accounting standard is initially adopted or a revision to an existing accounting standard requires change
in accounting policy hitherto in use.

(ii) Functional and presentation currency

These Standalone Financial Statements are presented in Indian Rupees ?., which is also the Company''s
functional currency. Standalone Financial Statements presented in Indian rupees have been rounded-off to
two decimal places to the nearest Millions except share data or as otherwise stated.

(iii) Basis of measurement

The Standalone Financial Statements have been prepared on the historical cost basis except for the following
items:

- Certain financial assets and liabilities : Measured at fair value

- Borrowings : Amortised cost using effective interest rate method

- Net defined benefit (asset)/ liability : Present value of defined benefit obligations

(iv) Use of estimates and judgements

The preparation of the Standalone financial statements in conformity with the recognition and measurement
principles of Ind AS requires management to make estimates, judgements and assumptions that affects the
reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities at the date of
financial statements and reported amounts of revenue and expenses during the period. Accounting estimates
could change from period to period. Actual results could differ from those estimates. Estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimates are revised and future periods are affected.

Assumptions and estimation uncertainties

The Company uses critical accounting judgements, estimates and assumptions in preparation of its standalone
financial statements, for the following areas:

- Determining an asset''s expected useful life and the expected residual value at the end of its life.

- Impairment of non financial assets and financial assets;

- Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and
magnitude of an outflow of resources;

- Measurement of defined benefit obligations: key actuarial assumptions;

- Recognition of deferred tax assets: availability of future taxable profit against which tax losses carried
forward can be used

(v) Measurement of fair values

Accounting polices and disclosures require measurement of fair value for financial assets and financial liabilities

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:

- In the principal market for the asset or liability or

- In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Company. The fair value of an asset
or a liability is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming that market participants act in their economic best interest.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient
data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use
of unobservable inputs

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 recognizes transfers between levels of the fair value hierarchy at the end of the reporting period
during which the change has occurred.

(vi) Operating Cycle

Operating cycle is the time between the acquisition of assets for processing and realisation in cash or cash
equivalents. The Company has ascertained its operating cycle as twelve (12) months.

2.2 Summary of material accounting policies

A. Revenue recognition

Revenue from contracts with customer is recognised when control of the goods or services are transferred
to the customer. The Company has concluded that it is the principal in its revenue arrangements because it
typically controls the goods or services before transferring them to the customer.

Revenue is measured at the value of the consideration received or receivable. Amount disclosed as revenue
are net of returns, trade allowances, rebates. Amounts collected on behalf of third parties such as Goods and
service Tax (GST) are excluded from revenue.

The specific recognition criteria described below must also be met before revenue is recognised.

i) Sale of products:

Revenue from sale of goods is recognised at a point in time when control of the goods is transferred to the
customer, generally on delivery of the goods and there are no unfulfilled obligations. No significant element
of financing is deemed present for the sales made with a credit term, which is consistent with market
practice. The contracts that Company enters into relate to sales order containing single performance
obligations for the delivery of goods as per Ind AS 115.

ii) Sale of services:

The Company renders job work services that are provided separately. The Company recognizes revenue
from sale of services at a point in time, when products are sent to the customer after completion.

iii) Export benefits:

Export benefits are recognised where there is reasonable assurance that the benefit will be received and
all attached conditions will be complied with. Export benefits on account of export promotion schemes are
accrued and accounted in the period of export and are included in other operating revenue.

iv) Interest income:

Interest income is recognised when it is probable that the economic benefits will flow to the Company and
the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference
to the principal outstanding and at the effective interest rate applicable, which is the rate that discounts
estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying
amount on initial recognition. Interest income is included under the head ''other income'' in the statement of
profit and loss.

B. Borrowing cost

General and specific borrowing costs that are attributable to the acquisition, construction or production of a
qualifying asset are capitalised as part of the cost of such asset till such time the asset is ready for its intended
use and borrowing costs are being incurred. A qualifying asset is an asset that necessarily takes a substantial
period of time to get ready for its intended use. All other borrowing costs are recognised as an expense in the
period in which they are incurred.

Borrowing cost includes interest expense, amortization of discounts, hedge related cost incurred in connection
with foreign currency borrowings, ancillary costs incurred in connection with borrowing of funds and exchange
difference arising from foreign currency borrowings to the extent they are regarded as an adjustment to the
Interest cost.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.

C Investment in subsidiaries:

The Company''s investment in its subsidiaries are carried at cost.

D Financial instruments

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

Financial assets

i) Initial Recognition and measurement

Financial assets and financial liabilities are initially recognised when the Company becomes a party to the
contractual provisions of the instrument. 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.

ii) Classification and subsequent measurement

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

a) at amortized cost; or

b) at fair value through other comprehensive income; or

c) at fair value through profit or loss.

The classification depends on the entity''s business model for managing the financial assets and the
contractual terms of the cash flows.

Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest are measured at amortized cost. Interest income from
these financial assets is included in finance income using the effective interest rate method (EIR).

Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual
cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of
principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements
in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses,
interest revenue and foreign exchange gains and losses which are recognized in Statement of Profit and
Loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI
is reclassified from equity to Statement of Profit and Loss and recognized in other gains/ (losses). Interest
income from these financial assets is included in other income using the effective interest rate method.

Fair value through profit or loss (FVTPL): Assets that do not meet the criteria for amortized cost or FVOCI
are measured at fair value through profit or loss. Interest income from these financial assets is included in
other income.

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 and measured at amortised cost or FVOCI 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 or at FVOCI as at FVTPL if doing so
eliminates or significantly reduces an accounting mismatch that would otherwise arise.

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.

Equity investments at FVOCI: These assets are subsequently measured at fair value. Dividends are
recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost
of the investment. Other net gains and losses are recognised in OCI and are not reclassified to profit or
loss.

iii) Impairment of financial assets

In accordance with Ind AS 109, Financial Instruments, the Company applies expected credit loss (ECL)
model for measurement and recognition of impairment loss on financial assets that are measured at
amortized cost and FVOCI.

For recognition of impairment loss on financial assets and risk exposure, the Company determines that
whether there has been a significant increase in the credit risk since initial recognition. If credit risk has
not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk
has increased significantly, lifetime ECL is used. If in subsequent years, credit quality of the instrument
improves such that there is no longer a significant increase in credit risk since initial recognition, then the
entity reverts to recognizing impairment loss allowance based on twelve (12) month ECL.

Life time ECLs are the expected credit losses resulting from all possible default events over the expected
life of a financial instrument. The twelve (12) month ECL is a portion of the lifetime ECL which results from
default events that are possible within twelve (12) months after the year end.

ECL is the difference between all contractual cash flows that are due to the Company in accordance
with the contract and all the cash flows that the entity expects to receive (i.e. all shortfalls), discounted
at the original EIR. When estimating the cash flows, an entity is required to consider all contractual terms
of the financial instrument (including prepayment, extension etc.) over the expected life of the financial
instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated
reliably, then the entity is required to use the remaining contractual term of the financial instrument.

In general, it is presumed that credit risk has significantly increased if the payment is over due.

ECL impairment loss allowance (or reversal) recognized during the year is recognized as income/expense
in the statement of profit and loss. In balance sheet ECL for financial assets measured at amortized cost is
presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet.
The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does
not reduce impairment allowance from the gross carrying amount.

iv) Derecognition of financial assets

A financial asset is primarily derecognised when the right 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:

i) Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or
loss and at amortized cost, as appropriate. All financial liabilities are recognized initially at fair value and, in
the case of borrowings and payables, net of directly attributable transaction costs.

ii) Subsequent measurement

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

This is the category most relevant to the Company. After initial recognition, interest-bearing 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.

iii) Derecognition

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled,
or expired.

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 or loss.

Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there
is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net
basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be
contingent on future events and must be enforceable in the normal course of business and in the event of
default, insolvency or bankruptcy of the Company or the counterparty.

Written - off

The gross carrying amount of a financial asset is written off (either partially or in full) when there is
information indicating that the debtor is in severe financial difficulty and there is no realistic prospect
of recovery. This is generally the case when the Company determines that the debtor does not have
assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the
write-off. However, financial assets that are written off could still be subject to enforcement activities in
order to comply with the Company''s procedures for recovery of amounts due.

E Property, plant and equipment

i) Recognition and measurement

Freehold land is carried at cost, net of tax / duty credit availed, net of accumulated impairment, if any. All
other items of property, plant and equipment (''PPE'') are stated at cost, net of tax / duty credit availed,
less accumulated depreciation and accumulated impairment losses, if any. Cost of an item of property,
plant and equipment comprises its purchase price, including import duties and non-refundable taxes, after
deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working
condition for its intended use and estimated costs of dismantling and removing the item and restoring
the site on which it located. Such cost includes the cost of replacing part of the plant and equipment and
borrowing costs for long-term construction projects if the recognition criteria are met. When significant
parts of plant and equipment are required to be replaced at intervals, the Company depreciates them
separately based on their specific useful lives. Subsequent costs are included in the asset''s carrying
amount or recognized as a separate asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Company and the cost of the item can be measured
reliably. All other repairs and maintenance cost are charged to the Statement of Profit and Loss during the
period in which they were incurred.

Any gain or loss on disposal of an item of property, plant and equipment is recognised in the Statement of
Profit and Loss.

ii) Depreciation

Depreciation is the systematic allocation of the depreciable amount of PPE over its useful life and is
provided on a straight-line basis over the useful lives as prescribed in Schedule II to the Act or as per
technical assessment. Freehold land is measured at cost and not depreciated. All other items of property
plant and equipment are stated at cost less accumulated depreciation and impairment loss if any.

Depreciable amount for PPE is the cost of PPE less its estimated residual value. The useful life of PPE is
the period over which it is expected to be available for use by the Company, or the number of production
or similar units expected to be obtained from the asset by the Company.

Depreciation on addition to property plant and equipment is provided on pro-rata basis from the date of
acquisition.

Depreciation on sale/deduction from property plant and equipment is provided up to the date preceding
the date of sale, deduction as the case may be. Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in the Statement of Profit and Loss.

Based on the technical assessment of useful life, Plant and machinery is being depreciated over useful
lives different from the prescribed useful lives under Schedule II to the Act. Management believes that
such estimated useful lives are realistic and reflect fair approximation of the period over which the assets
are likely to be used. The useful lives of the assets adopted by the company based on technical evaluation
are given below:

An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying
amount is greater than its estimated recoverable amount. Gains or losses arising from disposal of property,
plant and equipment which are carried at cost are recognised in the statement of profit and loss. Useful
lives and residual values are reviewed at each period end and adjusted if appropriate.

iii) Expenditure during construction period:

Capital work-in-progress (CWIP) includes cost of PPE under installation/ under development, net of
accumulated impairment loss, if any, as at the balance sheet date. Expenditure/ income during construction
period (including financing cost related to borrowed funds for construction or acquisition of qualifying
PPE) is included under Capital Work-in-Progress, and the same is allocated to the respective PPE on the
completion of their construction.

Depreciation is not recorded on capital work-in-progress until construction and installation is complete
and the asset is ready for its intended use.

Advances given towards acquisition or construction of PPE outstanding at each reporting date are
disclosed as Capital advances under “Other non-current Assets".

F Inventories

Inventories are stated at the lower of cost and net realizable value. Cost of inventories comprises all cost of
purchase, cost of conversion and other costs incurred in bringing the inventories to their present location
and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and costs to be incurred in marketing, selling and distribution.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

a) Raw materials:

Cost includes purchase price, (excluding those subsequently recoverable by the Company from the
concerned revenue authorities), freight inwards and other expenditure incurred in bringing such inventories
to their present location and condition. Cost is determined on weighted average basis.

Raw Materials are valued at lower of cost and net realisable value (NRV). However, these items are
considered to be realisable at cost, if the finished products, in which they will be used, are expected to
be sold at or above cost. These items are considered to be realizable at replacement cost if the finished
goods, in which they will be used, are expected to be sold below cost.

b Finished goods and work in progress (WIP):

Cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on
the normal operating capacity but excludes borrowing costs.

It is valued at lower of cost and NRV. Cost of finished goods and WIP includes cost of raw materials, cost
of conversion and other costs incurred in bringing the inventories to their present location and condition.
Cost of inventories is computed on weighted average basis.

c) Provision for inventory

Provision of obsolescence on inventories is considered basis the management''s estimate, based on
demand and market of the inventories.

d) Scrap inventory

Scrap is valued at net realisable value.

e) Tools

Tools used for manufacture of components are depreciated based on quantity of components manufactured
and the life of tools, subject to a maximum of 5 years.

G Impairment of non-financial assets

The Company''s non-financial assets, other than inventories and deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then
the asset''s recoverable amount is estimated.

For impairment testing, assets that do not generate independent cash inflows are grouped together into cash¬
generating units (CGUs). Each CGU represents the smallest Company of assets that generates cash inflows
that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less
costs to sell. Value in use is based on the estimated future cash flows, 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 CGU (or the asset).

The Company''s corporate assets (e.g., central office building for providing support to various CGUs) do not
generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is
determined for the CGUs to which the corporate asset belongs.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount,
the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount.
Impairment losses are recognised in the statement of profit and loss.

In respect of assets for which impairment loss has been recognised in prior periods, the Company reviews
at each reporting date whether there is any indication that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. Such a reversal is made only to the extent that the asset''s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss
has been recognised.

H Employee benefits

(a) Short-term employee benefits

A liability is recognised for benefits accruing to employees in respect of 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 recognised in respect of employees'' services up to the
end of the reporting period and are measured on an undiscounted basis 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.

(b) Other long-term employee benefit obligations

Liabilities recognised in respect of other long-term employee benefits are measured at the present value of
the estimated future cash outflows expected to be made by the Company in respect of services provided
by employees up to the reporting date.

(i) Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed
contributions into a separate entity and will have no legal or constructive obligation to pay further amounts.
The Company makes specified monthly contributions towards Government administered provident fund
scheme and other funds. Obligations for contributions to defined contribution plans are recognised as an
employee benefit expense in statement of profit and loss in the periods during which the related services
are rendered by employees.

(ii) Defined benefit plans

For defined benefit plans, the cost of providing benefits is actuarially valued using the projected unit
credit method, at the end of each annual reporting period. Re-measurement, comprising actuarial gains
and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets
(excluding net interest), is reflected immediately in the Balance Sheet with a charge or credit recognised in
Other Comprehensive Income (OCI) in the period in which they occur. Re-measurement recognised in OCI
is reflected immediately in retained earnings and will not be reclassified to Statement of Profit and Loss.
Past service cost is recognised in the Statement of Profit and Loss in the period of a plan amendment. Net
interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit
liability or asset.

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The
liability or asset recognised in the balance sheet in respect of defined benefit plans is the present value of
the defined benefit obligation at the end of the reporting period less the fair value of plan assets.

The present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows by reference to market yields at the end of the reporting period on government bonds that have
terms approximating to the terms of the related obligation.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial
assumptions are recognised in the period in which they occur, directly in other comprehensive income.
They are included in retained earnings in the statement of changes in equity and in the balance sheet.

A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw
the offer of the termination benefit and when the entity recognises any related restructuring costs.

Changes in the present value of the defined benefit obligation resulting from plan amendments or
curtailments are recognised immediately in profit or loss as past service cost.

(iii) Compensated Absences:

Compensated Absences: Accumulated compensated absences, which are expected to be availed or
encashed within 12 months from the end of the year are treated as short term employee benefits. The
obligation towards the same is measured at the expected cost of accumulating compensated absences as
the additional amount expected to be paid as a result of the unused entitlement as at the year end.

I Leases

The Company assesses whether a contract contains a lease, at the inception of the contract. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. To assess whether a contract conveys the right to control the use of an identified
asset, the Company assesses whether

(i) the contract involves the use of identified asset;

(ii) the Company has substantially all of the economic benefits from the use of the asset through the period
of lease and;

(iii) the Company has the right to direct the use of the asset.

Company as a Lessee:

The Company recognizes a right-of-use asset ("ROU") and a lease liability at the lease commencement
date. The ROU 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. Certain lease arrangements include the option
to extend or terminate the lease before the end of the lease term. The right-of-use assets and lease liabilities
include these options when it is reasonably certain that the option will be exercised. The ROU is subsequently
depreciated using the straight-line method from the commencement date to the end of the lease term.

The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the company''s incremental borrowing rate. Generally, the company uses its incremental borrowing
rate as the discount rate. Lease payments included in the measurement of the lease liability comprises fixed
payments, including in-substance fixed payments, amounts expected to be payable under a residual value
guarantee and the exercise price under a purchase option that the Company is reasonably certain to exercise,
lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension
option.

The lease liability is subsequently measured at amortised cost using the effective interest method, except
those which are payable in other than functional currency which is measured at fair value through profit or
loss. It is remeasured when there is a change in future lease payments arising from a change in an index or
rate, if there is a change in the company''s estimate of the amount expected to be payable under a residual
value guarantee, or if company changes its assessment of whether it will exercise a purchase, extension or
termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount
of the ROU, or is recorded in Statement of Profit or Loss if the carrying amount of the ROU has been reduced
to zero.

Lease Liabilities have been presented in ''Financial Liabilities'' and the ''ROU'' have been presented separately
in the Balance Sheet. Lease payments have been classified as financing activities in the Statement of Cash
Flows.

Short-term leases and leases of low-value assets

The Company has elected not to recognise ROU and lease liabilities for short term leases that have a lease
term of 12 months or lower and leases of low value assets. The Company recognises the lease payments
associated with these leases as an expense over the lease term.

J Taxation

Income-tax comprises current and deferred tax. It is recognised in profit or loss except to the extent that it
relates to an item recognised directly in equity or in other comprehensive income.

(i) Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as
reported in profit or loss because it excludes items of income or expense that are taxable or deductible in
other years and it further excludes items that are never taxable or deductible. The Company''s liability for
current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the
reporting period.

A provision is recognised for those matters for which the tax determination is uncertain but it is considered
probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the
best estimate of the amount expected to become payable. The assessment is based on the judgement of
tax professionals within the Company supported by previous experience in respect of such activities and
in certain cases based on independent tax specialist advice.

Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off
the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or
simultaneously.

(ii) Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amounts of assets and liabilities in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities
are generally recognised for all taxable temporary differences and deferred tax assets are recognised
to the extent that it is probable that taxable profits will be available against which deductible temporary
differences can be utilised.

Deferred tax is not recognised for:

- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not
a business combination and that affects neither accounting nor taxable profit or loss at the time of the
transaction; and

- temporary differences related to investments in subsidiaries to the extent that the Company is able
to control the timing of the reversal of the temporary differences and it is probable that they will not
reverse in the foreseeable future;

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
settled or the asset is realised based on tax laws and rates that have been enacted or substantively
enacted at the reporting date.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow
from the manner in which the Company expects, at the end of the reporting period, to recover or settle the
carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current
tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation
authority and the Company intends to settle its current tax assets and liabilities on a net basis.

(iii) Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax for
the year. The deferred tax asset is recognised for MAT credit available only to the extent that it is probable
that the entity will pay normal income tax during the specified period, i.e., the period for which MAT credit
is allowed to be carried forward. In the year in which the entity recognises MAT credit as an asset, it is

created by way of credit to the statement of profit and loss and shown as part of deferred tax asset. The
entity reviews the “MAT credit entitlement" asset at each reporting date and writes down the asset to the
extent that it is no longer probable that it will pay normal tax during the specified period."

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Mar 31, 2024

2 Material accounting policies

2.1 Basis of preparation and measurement

(i) Statement of compliance & Basis for preparation

These standalone financial statements are prepared in accordance with Indian Accounting Standard (Ind AS) under the historical cost convention on accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 (the ''''Act''''). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015, as amended and relevant amendment rules issued thereafter.

The company has prepared the standalone financial statements on a going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires change in accounting policy hitherto in use.

These standalone financial statements were approved by board of directors and authorised for issue on May 21, 2024

(ii) Functional and presentation currency

These Standalone Financial Statements are presented in Indian Rupees ''., which is also

the Company''s functional currency. Standalone Financial Statements presented in Indian rupees have been rounded-off to two decimal places to the nearest Millions except share data or as otherwise stated.

(iii) Basis of measurement

The Standalone Financial Statements have been prepared on the historical cost basis except for the following items:

- Certain financial assets and liabilities : Measured at fair value

- Borrowings : Amortised cost using effective interest rate method

- Net defined benefit (asset)/ liability :

Present value of defined benefit obligations

(iv) Use of estimates and judgements

The preparation of the Standalone financial statements in conformity with the recognition and measurement principles of Ind AS requires management to make estimates, judgements and assumptions that affects the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities at the date of financial statements and reported amounts of revenue and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.

Assumptions and estimation uncertainties

The Company uses critical accounting judgements, estimates and assumptions in preparation of its standalone financial statements, for the following areas:

- Determining an asset''s expected useful life and the expected residual value at the end of its life.

- Impairment of non financial assets and financial assets;

- Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources;

- Measurement of defined benefit obligations: key actuarial assumptions;

- Recognition of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used

(v) Measurement of fair values

Accounting polices and disclosures require measurement of fair value for financial assets and financial liabilities

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:

- In the principal market for the asset or liability or

- In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs

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 recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

(vi) Operating Cycle

Operating cycle is the time between the acquisition of assets for processing and realisation in cash or cash equivalents. The Company has ascertained its operating cycle as twelve (12) months.

2.2 Summary of material accounting policies

A. Revenue recognition

Revenue from contracts with customer is recognised when control of the goods or services are transferred to the customer. The Company has concluded that it is the principal in its revenue arrangements because it typically controls the goods or services before transferring them to the customer.

Revenue is measured at the value of the consideration received or receivable. Amount disclosed as revenue are net of returns, trade allowances, rebates. Amounts collected on behalf of third parties such as Goods and service Tax (GST) are excluded from revenue.

The specific recognition criteria described below must also be met before revenue is recognised.

i) Sale of products:

Revenue from sale of goods is recognised at a point in time when control of the goods is transferred to the customer, generally on delivery of the goods and there are no unfulfilled obligations. No significant element of financing is deemed present for the sales made with a credit term, which is consistent with market practice. The contracts that Company enters into relate to sales order containing single performance obligations for the delivery of goods as per Ind AS 115.

ii) Sale of services:

The Company renders job work services that are provided separately. The Company recognizes revenue from sale of services at a point in time, when products are sent to the customer after completion.

iii) Export benefits:

Export benefits are recognised where there is reasonable assurance that the benefit will be received and all attached conditions will be complied with. Export benefits on account of export promotion schemes are accrued and accounted in the period of export and are included in other operating revenue.

iv) Interest income:

Interest income is recognised when it is probable that the economic benefits will flow to the Company and the amount of income

can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition. Interest income is included under the head ''other income'' in the statement of profit and loss.

B. Borrowing cost

General and specific borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of such asset till such time the asset is ready for its intended use and borrowing costs are being incurred. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

Borrowing cost includes interest expense, amortization of discounts, hedge related cost incurred in connection with foreign currency borrowings, ancillary costs incurred in connection with borrowing of funds and exchange difference arising from foreign currency borrowings to the extent they are regarded as an adjustment to the Interest cost.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

C Investment in subsidiaries:

The Company''s investment in its subsidiaries are carried at cost.

D Financial instruments

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

Financial assets

i) Initial Recognition and measurement

Financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument. 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.

ii) Classification and subsequent measurement

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

a) at amortized cost; or

b) at fair value through other comprehensive income; or

c) at fair value through profit or loss.

The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.

Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in finance income using the effective interest rate method (EIR).

Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in Statement of Profit and Loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to Statement of Profit and Loss and recognized in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.

Fair value through profit or loss (FVTPL):

Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. Interest income from these financial assets is included in other income.

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 contractualterms 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 and measured at amortised cost or FVOCI 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 or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

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.

Equity investments at FVOCI: These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are not reclassified to profit or loss.

iii) Impairment of financial assets

In accordance with Ind AS 109, Financial Instruments, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on financial assets that are measured at amortized cost and FVOCI.

For recognition of impairment loss on financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If in subsequent years, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on twelve (12) month ECL.

Life time ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The twelve (12) month ECL is a portion of the lifetime ECL which results from default events that are possible within twelve (12) months after the year end.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider all contractual terms of the financial instrument (including prepayment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.

In general, it is presumed that credit risk has significantly increased if the payment is over due.

ECL impairment loss allowance (or reversal) recognized during the year is recognized as income/expense in the statement of profit and loss. In balance sheet ECL for financial assets measured at amortized cost is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount.

iv) Derecognition of financial assets

A financial asset is primarily derecognised when the right 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:

i) Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss and at amortized cost, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs.

ii) Subsequent measurement

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

This is the category most relevant to the Company. After initial recognition, interestbearing 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.

iii) Derecognition

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expired.

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 or loss.Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

Written - off

The gross carrying amount of a financial asset is written off (either partially or in full) when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company''s procedures for recovery of amounts due.

E Property, plant and equipment

i) Recognition and measurement

Freehold land is carried at cost, net of tax / duty credit availed, net of accumulated impairment, if any. All other items of property, plant and equipment (''PPE'') are stated at cost, net of tax / duty credit availed, less accumulated depreciation and accumulated impairment losses, if any. Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it located. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for longterm construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance cost are charged to the Statement of Profit and Loss during the period in which they were incurred.

Any gain or loss on disposal of an item of property, plant and equipment is recognised in the Statement of Profit and Loss.

ii) Depreciation

Depreciation is the systematic allocation of the depreciable amount of PPE over its useful life and is provided on a straight-line basis over the useful lives as prescribed in Schedule II to the Act or as per technical assessment. Freehold land is measured at cost and not depreciated. All other items of property plant and equipment are stated at cost less accumulated depreciation and impairment loss if any.

Depreciable amount for PPE is the cost of PPE less its estimated residual value. The useful life of PPE is the period over which it is expected to be available for use by the Company, or the number of production or similar units expected to be obtained from the asset by the Company.

Depreciation on addition to property plant and equipment is provided on pro-rata basis from the date of acquisition.

Depreciation on sale/deduction from property plant and equipment is provided up to the date preceding the date of sale, deduction as the case may be. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Profit and Loss.

Based on the technical assessment of useful life, Plant and machinery is being depreciated over useful lives different from the prescribed useful lives under Schedule II to the Act. Management believes that such estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used. The useful lives of the assets adopted by the company based on technical evaluation are given below:

An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is greater than its estimated recoverable amount. Gains or losses arising from disposal of property, plant and equipment which are carried at cost are recognised in the statement of profit and loss. Useful lives and residual values are reviewed at each period end and adjusted if appropriate.

iii) Expenditure during construction period:

Capital work-in-progress (CWIP) includes cost of PPE under installation/ under development, net of accumulated impairment loss, if any, as at the balance sheet date. Expenditure/ income during construction period (including financing cost related to borrowed funds for construction or acquisition of qualifying PPE) is included under Capital Work-in-Progress, and the same is allocated to the respective PPE on the completion of their construction.

Depreciation is not recorded on capital work-in-progress until construction and installation is complete and the asset is ready for its intended use.

Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital advances under "Other non-current Assets".

F Inventories

Inventories are stated at the lower of cost and net realizable value. Cost of inventories comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and costs to be incurred in marketing, selling and distribution.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

a) Raw materials:

Cost includes purchase price, (excluding those subsequently recoverable by the Company from the concerned revenue authorities), freight inwards and other expenditure incurred in bringing such inventories to their present location and condition. Cost is determined on weighted average basis.

Raw Materials are valued at lower of cost and net realisable value (NRV). However, these items are considered to be realisable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost. These items are considered to be realizable at replacement cost if the finished goods, in which they will be used, are expected to be sold below cost.

b) Finished goods and work in progress (WIP):

Cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity but excludes borrowing costs.

It is valued at lower of cost and NRV. Cost of finished goods and WIP includes cost of raw materials, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of inventories is computed on weighted average basis.

c) Provision for inventory

Provision of obsolescence on inventories is considered basis the management''s estimate, based on demand and market of the inventories.

d) Scrap inventory

Scrap is valued at net realisable value.

e) Tools

Tools used for manufacture of components are depreciated based on quantity of components manufactured and the life of tools, subject to a maximum of 5 years.

G Impairment of non-financial assets

The Company''s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.

For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest Company of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, 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 CGU (or the asset).

The Company''s corporate assets (e.g., central office building for providing support to various CGUs) do not generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is determined for the CGUs to which the corporate asset belongs.

If the recoverable amount of an asset (or cashgenerating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit and loss.

In respect of assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss has been recognised.

H Employee benefits

(a) Short-term employee benefits

A liability is recognised for benefits accruing to employees in respect of 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 recognised in respect of employees'' services up to the end of the reporting period and are measured on an undiscounted basis 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.

(b) Other long-term employee benefit obligations

Liabilities recognised in respect of other longterm employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.

(i) Defined contribution plans

A defined contribution plan is a postemployment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions towards Government administered provident fund scheme and other funds. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in statement of profit and loss in the periods during which the related services are rendered by employees.

(ii) Defined benefit plans

For defined benefit plans, the cost of providing benefits is actuarially valued using the projected unit credit method, at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the Balance Sheet with a charge or credit recognised in Other Comprehensive Income (OCI) in the period in which they occur. Re-measurement recognised in OCI is reflected immediately in retained earnings and will not be reclassified to Statement of Profit and Loss. Past service cost is recognised in the Statement of Profit and Loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.

A defined benefit plan is a postemployment benefit plan other than a defined contribution plan. The liability or asset recognised in the balance sheet

in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.

A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.

(iii) Compensated Absences:

Compensated Absences: Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end.

I Leases

The Company assesses whether a contract contains a lease, at the inception of the contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether

(i) the contract involves the use of identified asset;

(ii) the Company has substantially all of the economic benefits from the use of the asset through the period of lease and;

(iii) the Company has the right to direct the use of the asset.

Company as a Lessee:

The Company recognizes a right-of-use asset ("ROU") and a lease liability at the lease commencement date. The ROU 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. Certain lease arrangements include the option to extend or terminate the lease before the end of the lease term. The right-of-use assets and lease liabilities include these options when it is reasonably certain that the option will be exercised. The ROU is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company''s incremental borrowing rate. Generally, the company uses its incremental borrowing rate as the discount rate. Lease payments included in the measurement of the lease liability comprises fixed payments, including in-substance fixed payments, amounts expected to be payable under a residual value guarantee and the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option.

The lease liability is subsequently measured at amortised cost using the effective interest method, except those which are payable in other than functional currency which is measured at fair value through profit or loss. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the company''s estimate of the amount expected to be payable under a residual value guarantee, or if company changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the ROU, or is recorded in Statement of Profit or Loss if the carrying amount of the ROU has been reduced to zero.

Lease Liabilities have been presented in ''Financial Liabilities'' and the ''ROU'' have been presented separately in the Balance Sheet. Lease payments have been classified as financing activities in the Statement of Cash Flows.

Short-term leases and leases of low-value assets

The Company has elected not to recognise ROU and lease liabilities for short term leases that have a lease term of 12 months or lower and leases of low value assets. The Company recognises the lease payments associated with these leases as an expense over the lease term.

J Taxation

Income-tax comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to an item recognised directly in equity or in other comprehensive income.

(i) Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company''s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment is based on the judgement of tax professionals within the Company supported by previous experience in respect of such activities and in certain cases based on independent tax specialist advice.

Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.

(ii) Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Deferred tax is not recognised for:

- temporary differences arising on the initial recognition of assets or liabilities

in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of the transaction; and

- temporary differences related to investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future;

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the reporting date.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

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Mar 31, 2023

1    Corporate Information

A/ad Engineering Limited (Formerly known as A/ad Engineering Private Limited) ('the Company' ' \/ad') is one of the only Indian manufacturers of highly engineered, complex, mission and life critical high precision components Our products include *1) rotating airfoil portions of turbine engines and other critical products for combustion, hydraulics, flight-controls. propulsion and actuation which power defence and civil aircrafts, spaceships, defence missiles, nuclear power, hydrogen, gas power, oil and thermal power

The Company was incorporated on September 14. 1983, under the provisions of the Companies Act. 1956. then applicable in India and is having its registered office at 90/C.9CVO, Phase I I D A. Jccdmietla. Hyderabad, rdangana - 500055

I he Company has converted itself from Private Limited to Public I united, pursuant to a special resolution passed in the extraordinary general meeting of the shareholders of the Company held on 14 July 2023 and consequently the name of the Company has elumged to "A/ad Engineering limited" pursuant to a fresh certificate of incorporation issued by ROC on 05 September 2023

2    Significant Accounting Policies

These notes provides a list of the significant accounting policies adopted in the preparation of these Standalone Financial Statements These policies have been consistently applied to all the years presented, unless otherwise stated

2.1 Basis of preparation and measurement

(i)    Statement of compliance & Basis for preparation

The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of Companies Act. 2013 (the 'Act'), the Companies (Indian Accounting Standards) Rules. 2015 and other relevant provisions of the Act

Flic standalone financial statements have been prepared on a going concern basis The accounting policies are applied consistently to all the periods presented in the financial statements except wliere a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires change m accounting policy hitherto in use

The financial statements up to and for the year ended March 31. 2023 were prepared in accordance with accounting standards referred to in paragraph 7 the Companies (Accounts) Rules. 2014 (Previous GAAP) notified under section 133 of the Act and other relevant provisions of the Act these are the Company's first financial statements prepared in accordance with Indian Accounting Standards (Ind AS). Ind AS 101. First-lime Adoption Indian Accounting Standards has been applied An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance is provided in Note 43

The standalone financial statements were approved by board of directors and authorised for issue on 22 September 2023

(ii)    Functional and presentation currency

These Standalone Financial Statements are presented in Indian Rupees Rs, which is also the Company's functional currency Standalone Financial Statements presented in Indian rupees have been rounded-off to two decimal places to the nearest Millions except share data or as otherwise stated

(iii)    Basis of measurement

The Standalone Financial Statements have been prepared on the historical cost basis except for the following items

-    Certain financial assets and liabilities    Measured at fair value

-    Borrowings    Amortised cost using effective interest rate method

-    Net defined benefit (asset)/ liability    Present value of defined benefit obligations less fair value of plan assets

(iv)    l^!se of estimates and judgements

The preparation of the Standalone financial statements in conformity with Ind AS requires management to make estimates, judgements and assumptions that affects the repotted amounts of the assets and liabilities, the disclosure of contingent assets and liabilities at the date of financial statements and reported amounts of revenue and expenses during the period Accounting estimates could change from period to period Actual results could differ from those estimates Appropriate changes in the estimates arc made as and when management becomes aware of changes in circumstances surrounding the estimates Changes in the estimates arc reflected in the Standalone Financial Statements in the period in which the changes are made and. if material, such effects are disclosed in the notes to Standalone Financial Statements

. Issumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes

-Note 3 and 4- determining an asset 's expected useful life and the expected residual value at the end of its life -Note 9- Impairment of non financial assets and financial assets.

-Note 29- recognition and measurement of provisions and contingencies key assumptions about the likelihood and magnitude of an outflow of resources.

-Note 34- measurement of defined benefit obligations, key actuarial assumptions.

-Note 37- recognition of deferred lax assets availability of future taxable profit against which tux losses carried forward can he used

(v) Measurement of fair values

Accounting polices and disclosures require measurement of fair value for financial assets and financial liabilities

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

-    In the principal market for the asset or liability or

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

The principal or the most advantageous market must be accessible by the Company The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest

The Company uses,valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs

Fair values are categorised into different levels in a Ian value hierarchy based on the inputs used in the valuation techniques as follows Level I Quoted prices (unadjusted) in active markets for identical assets or liabilities

l evel 2 Inputs other than quoted prices included in Level I 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 ol 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

I he Company recogm/es transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred

Further information about the assumptions made in the measuring fail values is included in the following notes

-    Note 35 - Financial instruments

(vi) Current and non-current classification:

file Schedule III to the Act requires assets and liabilities to be classified as either current or non-current The Company presents assets and liabilities in the balance sheet based on current/ non-current classification

Assets

An asset is classified as a current when it is

-    it is expected to be realised til. or is intended for sale or consumption in. the Company s normal operating cycle.

-    it is expected to be realised within twelve months from the reporting date;

-    it is held primarily for the purposes of being traded, or

-    is ensh or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date All oilier assets are classified as non current

Liabilities

A liability is classified as a current when

-    it is expected to be realised in. or is intended for sale or consumption in. the Company's normal operating cycle.

-    it is due to be settled within twelve months from the reporting date.

-    it is held primarily for the purposes of being traded.

-    Deferred lax assets.liabilities are classified as non-current

• the Company docs not have an unconditional right to defer settlement of liability for at least twelve months from the reporting date All other liabilities arc classified as non-current

Operating Cycle

Operating cycle is the time between the acquisition of assets for processing and realisation in cash or cash equivalents The Company has ascertained its operating cycle as 12 months 2.2 Summary of significant accounting policies A. Revenue recognition

Revenue from contracts with customer is recognised when control of the goods or services are transferred to the customer The Company has concluded that it is the principal in its revenue arrangements because n typically controls the goods or serv ices before transferring them to the customer

Revenue is measured at the value of the consideration received or receivable Amount disclosed ns revenue arc net of returns, trade allowances, rebates Amounts collected on behalf of third parties such as Goods and service Tax (GST) are excluded from revenue

The specific recognition criteria described below must also be met before revenue is recognised

i)    Sale of products:

Revenue from sale of goods is recognised at a point in time when control of the goods is transferred to the customer, generally on delivery of the goods and there are no unfulfilled obligations No significant element of financing is deemed present for the sales made with a credit term, which is consistent with market practice The contracts that Company enters into relate to sales order containing single performance obligations for the delivery of goods ns per Ind AS II5

ii)    Sale of services:

The Company renders |ob work services that are provided separately The Company recogm/es revenue from sale of services at a point in time, when products are sent to the customer after completion

Hi) Export benefits:

Export benefits arc recognised where there is reasonable assurance that the benefit will be received and all attached conditions will be complied with Export benefits on account of export promotion schemes arc accrued and accounted in the period of export and arc included m other operating revenue

iv) Interest income:

Interest income is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition Interest income is included under the head other income' in the statement of profit and loss

v) Contract Balances:

('onirucl l.iabihiy:

A contract liability ts the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer If a customer pays consideration before the Company transfers goods or services to the custonici. a contract liability is recognised when the payment is made or the payment is due (whichever is earlier) Contract liabilities arc recognised as revenue when the Company performs under the contract (i e . transfers control of the related goods or services to the customer)

Tnuie Hccemiblc

A trade receivable is recognised if an amount of consideration that is unconditional (i.c . only the passage of time is required before payment of the consideration is due) Refer to accounting policies of financial assets in section (D) Financial instruments - initial recognition and subsequent measurement    _ -    _

II. Borrow mg cost

General and specific borrowing costs that urc atti ibutablc to the acc|UiSition. construction or production of a quality me asset arc capitalised as part of the cost ot such asset till such time the asset is ready for its intended use and borrowing costs are being incurred A qualifying asset is an asset that necessarily takes a substantial period ol time to yet ready lor its intended use All other borrowing costs are recognised as an expense in the period m which they arc incurred

Borrowing cost includes interest expense, amortization of discounts, hedge related cost incurred in connection with foreign currency borrowings, ancillary costs incurred in connection with borrowing of funds and exchange difference arising from foreign currency borrowings to the extent they are regarded as an adjustment to the Interest cost

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

(' Investment in Subsidiaries:

'I he Company's iinestmcni in its Subsidiaries are carried at cost

O Financial instruments

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

i)    Initial Recognition anil measurement

Financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument A financial asset or financial liability is initially measured at lair value plus, for an item not at fair value through profit and loss (FVTPL). transaction costs that arc directly attributable to its acquisition or issue

ii)    Classification anil subsequent measurement

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

a)    at amortized cost, or

b)    at lair value through other comprehensive income, or

c)    at fair value through profit or loss

The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows

Amortized cost Assets that are held for collection of contractual cash Hows where those cash flows represent solely payments of principal and interest are measured at amortized cost Interest income from these financial assets is included in finance income using the effective interest rate method (FIR)

Fair value through other comprehensive income (FVOCI) Assets that arc held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, arc measured at lair value through otlicr comprehensive income (FVOCI) Movements in the carrying amount are taken through OC1, except for the recognition of impairment gams or losses, interest revenue and foreign exchange gains and losses which arc recognized in Statement of Profit and Loss When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to Statement of Profit and Loss and recognized in other gains/ (losses) Interest income from these financial nssels is included in other income using the effective interest rate method

Fair value through profit or loss (FVTPL) Assets that do not meet the criteria for amortized cost or FVOCI arc measured at fair value through profit or loss. Interest income from these financial assets is included in other income

Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Compnnv 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 ussels not classified and measured at amortised cost or FVCX'I as described above are measured at FVTPL On initial recognition, the Company may irrevocably designate a financial asset that otlierwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise

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 unionised 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 m profit or loss

Equity investments at FVOCI These assets arc subsequently measured at lair value Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment Other net gains and losses arc recognised in OCI and are not reclassified to profit or loss

iii)    Impairment of Financial assets

In accordance with Ind AS 109, Financial Instruments, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on financial assets that are measured at amortized cost and FVOCI

For recognition of impairment loss on financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition If credit risk has not increased significantly. 12-month ECL is used to provide for impairment loss However, if credit risk has increased significantly, lifetime ECL is used If in subsequent years, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12 month ECL

Life time ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument The 12 month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the year end

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i e all shortfalls), discounted at the original EIR When estimating the cash flows, an entity is required to consider all contractual terms of the financial instrument (including prepayment, extension etc ) over the expected life of the financial instrument However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument

In general, it is presumed that credit risk has significantly increased if the payment is over due

ECL impairment loss allowance (or reversal) recognized during the year is recognized as incomc/cxpcnsc in the statement of profit and loss In hnlancc sheet ECL for financial assets measured at amortized cost is presented as an allowance, i.e as an integral part of the measurement of those assets in the balance sheet The allowance reduces the net carrying amount Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount    rr

A Financial asset is primarily derecognised when the right 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 m which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and docs 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:

i)    Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss and at amortized cost, as appropriate All financial liabilities are recognized initially at fair value and. in the case of borrowings and payables, net of directly attributable transaction costs

ii)    Subsequent measurement

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

This is the category most relevant to the Company After initial recognition, interest-bearing borrowings are subsequently measured at amortised cost using the EIR method Gams 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

Hi) Derecognition

The Company derecognises a financial liability when its contractual obligations are discluirged or cancelled, or expired

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 or loss

Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable nglil to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously The legally enforceable right must not be contingent on future events and must lie enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty

Written - off

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery This is generally the case when the Company determines that the debtor does not have assets or soiuees of income that could generate sufficient cash flows to repay the amounts subject to the write-off However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company's procedures for recovciy of amounts due

K Property, plant and equipment

i)    Recognition and measurement

Freehold land is carried at cost, net of tax / duty credit availed, net of accumulated impairment, if any All other items of property, plant and equipment are stated at cost, net of tax ' duty credit availed, less accumulated depreciation and accumulated impairment losses, if any Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimuted costs of dismantling and removing the item and restoring the site on which it located Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term constmction projects if the recognition criteria are met. When significant pails of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives Subsequent costs are included m the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably All other repairs and maintenance cost arc charged to the Statement of Profit and Loss during the period m which they were incurred

Any gam or loss on disposal of an item of property, plant and equipment is recognised in the Statement of Profit and Loss

ii)    Depreciation

Depreciation is the systematic allocation of the depreciable amount of PPE over its useful life and is provided on a straight-line basis over the useful lives as prescribed in Schedule II to the Act or as per technical assessment Freehold land is measured at cost and not depreciated All other items of property plant and equipment are stated at cost less accumulated depreciation and impairment loss if any

Depreciable amount for PPE is the cost of PPE less its estimated lesiduul value The useful life of PPE is the period ovei which PPE is expected to be available foi use by the Company, or the number of production or similar units expected to lie obtained from the asset by the Company

Useful life table
Category of asset	Useful lives estimated by the management	Useful lives as per Schedule II of Com panics Act, 201J
Computer & Data processing units	3	3
Electrical Fittings	10	10
Furniture & fixtures	10	10
Servers & Networks	6	6
Plant & Machinery	15	15
Factory Buildings	30	30
Office equipment	5	5
Motor Vehicles	8	8

An asset's carrying amount is written down immediately to ns recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount Gains or losses arising from disposal of property, plant and equipment which are earned ut cost are recognised in the statement of profit and loss Depreciation method, useful lives and residual values are reviewed at each period end and adjusted if appropriate

iii) Hxpenditure during construction period:

Capital work-in-progress (CWIP) includes cost of property, plant and cqiiipincnl under installation under development, net of accumulated impairment loss, if any, as at the balance sheet date Expenditure^ Income during construction period (including financing cost related to borrowed funds for construction or acquisition of qualifying PPE) is included under Capital Work-in-Progress, and the same is allocated to the respective PPE on the completion of their construction

Depreciation is not recorded on capital work-in-progress until construction and installation is complete and the asset is ready for its intended use

Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital Advances under Other non-current Assets"

F Inventories

Inventories are valued at the lower of cost and net realizable value Cost of inventories comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale

Costs incurred in bringing each product to its present location and condition are accounted for ns follows

a)    Raw materials:

Cost includes purchase price, (excluding those subsequently recoverable by the enterprise from the concerned revenue authorities), freight inwards and other expenditure incurred in bringing such inventories to their present location and condition Cost is determined on weighted average basis

Raw Materials arc valued at lower of cost and net realisable value (NRV) However, these items are considered to be realisable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost These items are considered to be realizable at replacement cost if the finished goods, in which they will be used, are expected to be sold below cost

b) Finished Goods and Work in progress:

Cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity but excluding borrowing costs

Valued at lower of cost and NRV Cost of Finished goods and WIP includes cost of raw materials, cost of conversion and other costs incurred in bringing the inventories to their

present location and condition C'ost of inventories is computed on weighted average basis

c)    Provision for inventory

Provision of obsolescence on inventories is considered on the basis of management's estimate based on demand and market of the inventories

d)    Tools

Tools used for manufacture of components are depreciated based on quantity of components manufactured and the life of tools, subject to a maximum of 5 years G Impairment of non-financial assets

The Company's non-financial assets, other than inventories and deferred tax assets, arc reviewed at each reporting date to determine whether there is any indication of impairment If any such indication exists, then the asset's recoverable amount is estimated

For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGI's) Each CGI¹Â represents the smallest Company of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs

The recoverable amount of a CGU (or an individual asset) is the lughei of Us value in use and its lair value less costs to sell Value m use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current mnrket assessments of the time value of money and the risks specific to the CGU (or the asset)

The Company's corporate assets (eg. central office building for providing support to various CGI's) do not generate independent cash inflows To determine impairment of a corporate asset, recoverable amount is determined foi the CGUs to winch the corporate asset belongs.

If the recoverable amount of an usset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the

asset (or cash-generating unit) is reduced to its recoverable amount An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount Impairment losses are recognised in the statement of profit and loss

In respect of assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount Such a reversal is made only to the extent that the asset's carrying amount docs not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss has been recognised

II Employee benefits (a) Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits that arc expected to be settled wholly within 12 months after the end of the period in which the employees render the related service urc recognised in respect of employees' services up to the cud of the reporting period and are measured on an undiscounted hasis at the amounts expected to be paid when the liabilities arc settled The liabilities are presented as current employee benefit obligations in the balance sheet

(h)    Other ion/•-term employee benefit obligations

Liabilities recognised m respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.

(i)    Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts The Company makes specified monthly contributions towards Government administered provident fund scheme aiKl other funds Obligations for contributions to defined contribution plans arc recognised as an employee benefit expense in statement of profit and loss in the periods during which the related services are rendered by employees The Company is liable for any shortfall in the fund assets based on the Government specified rate of return Such shortfall, if any. is recognised in the Statement of Profit and Loss as an expense in the year of incurring the same Having regard to the assets of the fund and the return on the investments, the Company does not expect any deficiency as at the year end

(ii) Defined benefit plans

F or defined benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the Balance Sheet with a charge or credit recognised in Other Comprehensive Income (OC'I) in the period in which they occur Re-measurement recognised in OCI is reflected immediately in retained eanungs and will not be reclassified to Statement of Profit and Loss Past service cost is recognised in the Statement of Profit and Loss in the period of a plan amendment Net interest is calculated by applying the discount rate at the beginning of live period to the net defined benefit liability or asset

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan The liability or asset recognised in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets

I he present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation

Remeasurement gams and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income They are included in retained earnings in the statement of changes in equity and m the balance sheet

A liability for a termination benefit is recognised at the earlier of when the entity cun no longer withdraw the olTcr of the termination benefit and when the entity recognises any related restructuring costs

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost (Hi) Compensated Absences:

The Compensated absences policy provides employees to convert their unused accrued leave days into monetary compensation It covers eligibility, types of leave eligible for encashment (earned'annual leave, privilege leave, and other applicable leave), and tlic maximum encashment limit

The approval process ensures compliance with the policy, and the payout is calculated bused on the employee's basic salary

It also addresses taxation and deductions, stating that applicable tax laws will be followed, and the company will deduct appropriate taxes at source. The policy reserves the right for the company to amend or revise any part of it at its discretion, and any queries or clarifications regarding the policy's implementation can be addressed to the HR depanmeut Employees acknowledge their agreement to adhere to the provisions of the policy by availing of compensated absences

I Leases

Hie Company assesses whether a contract contains a lease, at the inception of the contract. A contract is. or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether

(i) the contract involves the use of identified asset.

( ii ) the Company has substantially all of the economic benefits from the use of the asset through the period of lease and.

(in) the Company has the right to direct the use of the asset

Short-term leases and lenses of low-value assets

The Company has elected not to recognise ROIJ and lease liabilities for short term leases that have a lease term of 12 months or lower and leases of low value assets The Company recognises the lease payments associated with these leases as an expense over the lease term The related cash Hows arc classified as Operating activities in the Statement of Cash Flows.

.1 Income-tax

Income-tax comprises current and deferred tax It is recognised in profit or loss except to the extent that it relates to an item recognised directly in equity or in other comprehensive income

(i) Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any. related to income taxes It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting dale

Current lax assets and current tax liabilities are offset only if there is a legally enforceable light to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously

(ii) Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting piuposes and the corresponding amounts used for taxation purposes Deferred tax is not recognised for

-    temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of the transaction, and

-    temporaiy differences related to investments in subsidiaries to the extent that the Company is able to rnntrnl the tuning of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used The existence of unused tax losses is strong evidence that future taxable profit may not be available Therefore, in case of a history of recent losses, the Company recognises a deferred tax asset only to the extent that it has sufficient taxnble temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realised

Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date

The measurement of deferred lax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities

Deterred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which gives future economic benefits in the form of availability of set-off against future income lax liability Accordingly. MAT is recognized as a deferred tax asset in the Balance Sheet when the asset can be measured reliably and it is probable that the future economic benefits associated with it will be realised    _____

K Provision, contingent liabilities and contingent assets

\ provision is recognised 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 Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date I at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability The unwinding of the discount is recognised under finance costs Expected future operating losses are not provided for Provision in respect of loss contingencies relating to claims, litigations, assessments, fines and penalties are recognised when it is probable that a liability has been incurred and the amount can be estimated reliably

Contingent liabilities and contingent assets:

A contingent liability exists when there is a possible but not probable obligation, or a present obligation that may. but probably w ill not. require an outflow of resources, or a present obligation whose amount cannot be estimated reliably Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote

Contingent assets are not recognised m Standalone Financial Statements since this may result m the recognition of income that may never he realised However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognised

I. Earnings per share

Basic Eamings Per Share ( ‘EPS’) is computed by dividing the net profit attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year

Diluted eamings per share is computed by dividing the net profit by the weighted average number of equitv shares considered for deriving basic eamings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares Dilutive potential equity shares are deemed converted as of the beginning of the year, unless issued at a later date In computing diluted eamings per share, only potential equity shares that are dilutive and that either reduces earnings per share or increases loss per share are included The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented lor the share splits

M Cash flow statement

Cash flows are reported using the indirect method, whereby net profit/ (loss) before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments and item of income or expenses associated with investing or financing cash flows The cash flows from regular revenue generating (operating activities), investing and financing activities of the Company are segregated

N Cash and cash equivalents

Cash and cash equivalents in the Balance Sheet comprise cash at bank and in hand and short-term deposits with hanks 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

() Foreign currency transactions and halnnccs

In preparing the Standalone Financial Statements of the Company, transactions in currencies other than the Company’s functional currency (i.e. foreign currencies) are recognised at the rates of exchange prevailing at the dales of the transactions At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at that date

Monetary assets and liabilities denominated in foreign currencies are translated at INK spot rates of exchange at the reporting date Exchange differences arising on settlement or translation of monetary items arc recognised in the statement of profit and loss

Net loss relating to translation or settlement of borrowings denominated in foreign currency are reported within finance costs Non-monctarv items that are measured in terms of historical cost in a foreign currency arc translated using the exchange rates at the dates of the initial transactions. Non-monetarv items measured at lair value in a foreign currency arc translated using the exchange rales at the date when the fair value is determined The gain or loss arising on translation of non-monctary items measured at fair value is treated in line with the recognition of the gain or loss on the cluinge in fair vulue of the item (i c . translation differences on items whose fair value gam or loss is recognised in OCI or profit or loss arc also recognised in OCI or profit or loss, respectively)

In determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monctary asset or non-monctary liability relating to advance consideration, the date of the transaction is the date on which the Company initially recognises the nonmonetary asset or non-monctary liability arising from the advance consideration If there are multiple payments or receipts in advance, the Company determines the transaction date for each payment or receipt of advance consideration

P Financial liabilities and equity instruments:

Classification as debt or equity:

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument

Equity instruments:

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities Equity instruments issued by a Company are recognised at the proceeds received

D Events after reporting date

Where events occurring after the balance sheet date provide evidence of conditions that existed ut the end of the reporting period, the impact of such events is adjusted within the Standalone Financial Statements Otherwise, events after the balance sheet date of material size or nature are only disclosed

K Recent accounting pronouncements:

Hie Ministry of Corporate Affairs (“MCA"} has notified Companies (Indian Accounting Standard) Amendment Rules. 2023 dated March 31. 2023 to amend certain Ind ASs which

are effective from 01 April 2023

Below is a summary of such amendments

(i) Disclosure of Accounting Policies - Amendment to Ind AS I Presentation of financial statements

The MCA issued amendments to Ind AS I. providing guidance to help entities meet the accounting policy disclosure requirements The amendments aim to make accounting policy disclosures more informative by replacing the requirement to disclose significant accounting policies' with material accounting policy information The amendments also provide guidance under what circumstance, tlie accounting policy information is likclv to lx* considered material and therefore requiring disclosure

The amendments are effective for annual reporting periods beginning on or after 01 April 2023 The Company is currently revisiting their accounting policy information disclosures to ensure consistency with the amended requirements

( ii) Definition of Accounting Estimates - Amendments to Ind AS 8 Accounting policies, changes in accounting estimates and errors

The amendment to Ind AS 8. which added the definition of accounting estimates, clarifies that the effects of a change in an input or measurement technique arc changes in accounting estimates, unless resulting from the correction of prior period errors These amendments clarify how entities make the distinction between changes in accounting estimate, changes m accounting policy and prior period errors The distinction is important, because changes in accounting estimates are applied prospectively to future transactions and other future events, but changes in accounting policies are generally applied retrospectively to past transactions and other past events as well as the current period

The amendments arc effective for annual reporting periods beginning on or after 01 April 2023 The amendments are not expected to have a material impact on the Company financial statements

(lii) Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to Ind AS 12 Income taxes

The amendment to Ind AS 12. requires entities to recognise deferred tax on transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences They will typically apply to transactions such as leases of lessees and decommissioning obligations and will require the recognition of additional deferred tax assets and liabilities

The amendment should be applied to transactions that occur on or alter the beginning of the earliest comparative period presented In addition, entities should recognise deferred tax assets (to the extent that it is probable that they can be utilised) and deferred tax liabilities at the beginning of the earliest comparative period for all deductible and taxable temporary differences associated with

•    right-of-use assets and lease liabilities, and

•    decommissioning, restoration and similar liabilities, and the corresponding amounts recognised as part of the cost of the related assets

The cumulative effect of recognising these adjustments is recognised in retained earnings, or another component of equity, as appropriate Ind AS 12 did not previously address how to account for the tax effects of on-balance sheet leases and similar transactions and various approaches were considered acceptable Some entities may have already accounted for such transactions consistent with the new requirements These entities will not be affected by the amendments

iv) The other amendments to Ind AS notified by these rules arc primarily in the nature of clarifications