Notes to Accounts of Bharat Dynamics Ltd.

Mar 31, 2025

16. PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES

16.1 Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Provisions are not recognized for future operating losses.

16.2 Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined
by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect
to any one item included in the same class of obligations may be small.

16.3 Provisions are measured at the present value of the managementâs best estimate of the expenditure required to settle the
present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase
in the provisions due to the passage of time is recognized as interest expense.

16.4 Warranty: Warranty on goods sold, wherever applicable, commences once the sale is complete and accordingly provision
for such warranty is made. The period, terms and conditions of warranty as per the relevant contract are taken into
consideration while determining the provision for such sales.

16.5 Provision for Onerous Contract:A provision for onerous contracts is recognised when the expected benefits to be derived
by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The
provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected
net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on
the assets associated with that contract.

17. EMPLOYEE BENEFITS

17.1 Short-term obligations

Liabilities for wages and salaries, including other monetary and non-monetary benefits that are expected to be settled
wholly within 12 months after the end of the period in which the employees render the related service are recognized in
respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid
when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.

17.2 Other long term employee benefit obligations

The liability for vacation leave is not expected to be settled wholly within 12 months after the end of the period in which
the employees render the related service. They are therefore measured as the present value of expected future payments
to be made in respect of services provided by employees up to the end of the reporting period using the projected unit
credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms
approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes
in actuarial assumptions are recognised in profit or loss.

The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to
defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected
to occur.

17.3 Post-employment obligations

The Company operates the following post-employment schemes:

(a) Defined benefit plans such as Gratuity and contribution towards Provident Fund under the PF Act; and

(b) Defined contribution plans namely Retired Employee Medical Scheme (REMI)/Post Superannuation Medical Benefit
(PSMB), Death Relief Fund (DRF), Employee State Insurance Scheme (ESI) and Pension Scheme(s).

a) Defined benefit plans

The liability or assets recognized in the balance sheet in respect of defined benefit plans is the present value of
the defined benefit obligations at the end of the reporting period less the fair value of plan assets. The defined
benefit obligation is calculated annually by actuaries using the projected unit credit method.

The present value of the defined benefit obligation denominated in INR 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.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation
and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and
loss.

Re-measurement gains and losses arising from experience adjustments and change in actuarial assumptions are
recognized in the period in which they occur, directly in other comprehensive income.

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

b) Defined contribution plans

The Company pays contributions to trusts established as per local regulations and also to publicly administered
funds as per local regulations. The Company has no further payment obligations once the contributions have
been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized
as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent
that a cash refund or a reduction in the future payments is available.

The Companyâs contribution paid/ payable to Company approved Retired Employee Medical Scheme (REMI)/
Post superannuation Medical Benefit(PSMB), Death Relief Fund (DRF), Employee State Insurance Scheme (ESI)
and Pension Scheme are charged to revenue.

17.4 Termination Benefits

Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or
when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes termination
benefits at the earlier of the following dates: (a) when the Company can no longer withdraw the offer of those benefits;
and (b) when the entity recognizes costs for a restructuring that is within the scope of Ind AS 37 and involves the payment
of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefit are
measured based on the number of employees expected to accept the offer. Termination Benefits falling due more than 12
months after the end of the reporting period are discounted to present value.

Compensation paid to Employees under Voluntary Retirement Scheme (VRS) is charged to Statement of Profit and Loss in
the year of retirement.

18. CONTRIBUTED EQUITY

Equity shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from
the proceeds.

19. DIVIDENDS

Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the
entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

20. EARNINGS PER SHARE

20.1 Basic earnings per share

Basic earnings per share is calculated by dividing:

The profit attributable to owners of the Company by the weighted average number of equity shares outstanding during the
financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares

20.2 Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

â¢ The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

â¢ The weighted average number of additional equity shares that would have been outstanding assuming the conversion
of all dilutive potential equity shares.

Note 1 to 38 and Material Accounting Policies attached form part of accounts.

As per our report of even date,

For Tej Raj & Pal For and on behalf of the Board

Chartered Accountants
Firmâs Registration No. 304124E

CA Paluri Kali Sri Harsha G Gayatri Prasad Cmde A Madhavarao (Retd.)

Partner Director (Finance) & CFO Chairman and Managing Director

(M.No. 252420) DIN:10877803 DIN:09808949

N Nagaraja

Place: Hyderabad Company Secretary

Date: 27 May 2025 (M.No.A19015)

Mar 31, 2024

(ii) Contractual obligations

The Company has no contractual obligations to sell, construct or develop investment property or for its repairs, maintenance or enhancements.

(iii) Leasing arrangements

Land admeasuring 5 acres and 1 gunta at Kanchanbagh is leased to Indian Navy under long-term operating leases with rentals payable yearly. The lease rentals for such property is ^ 1 per annum per acre. Leasing arrangements are the same for year ended March 31, 2024 and March 31, 2023.

Significant judgement:

As the land given to Indian Navy is within the premises of the company and it would not be possible for the company to give the land to a third party, the Registration department value of the land is considered to be the fair value of the land. The fair value arrived is 7 0.122 lakh (7 0.122 lakh as at 31st March 2023) per square yard as per the Registration department.

(v) Impairment is tested as per the accounting policy 15. The company has assessed that there are no indicators of impairment.

(vi) Refer Note 38(21)A for Title deeds of immovable property not held in the name of the company

(vii) Refer Note 38(21)B with regard to disclosure relating to valuation by registered valuer as defined under rule 2 of Companies (Registered Valuers & Valuation) Rules, 2017

Leasehold Land :

(a) Land measuring 3 acres 25 guntas (March 31, 2023: 3 acres 25 guntas) at Visakhapatnam was taken on lease from Government of India at a rental of 7 1.00 per acre per annum.

(b) Leasehold land measuring 553 Acres 34 Guntas (as at March 31,2023: 553 Acres 34 Guntas ) at Amravati for which a premium of 7 3922.37 lakh was paid is taken on lease on 07/02/2014 with certain conditions attached to it. One of the main condition is, if the factory building and works are not completed within 60 months from the date of allotment, unless the time is extended, the lease agreement may be cancelled and the lessor may take possession of the leasehold land together with all the erections, if any, on the said land, without paying any compensation to the company. At present the period of investment has been extended upto 05.04.2019. The project for which the land has been taken on lease is under finalisation with Ministry of Defence (MoD), the Company is pursuing for further extension of period of investment. Pending receipt of extension of time period, the company has provided for impairment amounting to 7 3217.83 lakh during 2021-22.

(c) Leasehold land measuring 183 hectares in Defence Industrial Corridor at Jhansi District is taken on lease from UPEIDA for which an amount of 7 5071.84 lakh was paid and capitalized along with registration charges. The lease term is 30 years with two renewals of 30 years each aggregating to 90 years for an annual lease rent of 7 1.00 per annum.

Leasehold Building :

Corporate office building measuring 53,284 sq ft is taken on lease from APSFC from 01.06.2016 for a period of 10 years. Company recognised the building under right of use assets (RoU) asset at a value of 7 998.91 lakhs, a corresponding lease liability of 7 972.01 lakhs and a provision for an amount of 7 26.90 lakhs towards asset retirement obligation on 01.04.2019 as per Ind AS 116. Lease liability is recognised at the present value of lease payment discounted at the incremental borrowing rate of 8%.

- Impairment is tested as per the accounting policy 15. The company has assessed that there are no indicators of impairment.

- Refer Note 38(21)A for Title deeds of immovable property not held in the name of the company

Significant Judgement:

Deferred Debts:

Deferred debts are receivables from the Indian Army and Armoured Vehicles Nigam Limited (erstwhile Ordnance factory). The receivable is denominated in Indian Rupees (INR) and receivable in equal instalments over 45 years commencing from 01.04.1992. As per the agreement, the receivable is adjusted on the basis of rates of Special Drawing Rights (SDR), issued by the International Monetary Fund (IMF). As such the receivable does not satisfy the Solely Payment of Principal and Interest (SPPI) criteria as set out in Ind AS 109. Hence, the receivable is measured at fair value through profit and loss. Deferred debt is discounted at 8% to arrive at the fair value on initial recognition and the difference between the fair value and the total deferred debt is considered as deferred expense. Subsequently this is carried at fair value through profit and loss.

(i) In the case of a supplier, the company initiated legal action for recovery of advance amount of 7 17.14 Lakh together with interest etc., as the Contract was not executed. Though District Court issued a decree for an amount of 7 48.10 lakh together with interest etc., in favour of the company, the decretal amount has not been recognised as claims receivable/ income since the supplier was granted stay of operation of the decree by Honâble High Court and the matter is sub-judice as on date.

(ii) In the case of another supplier, the Company has initiated legal action for recovery of advance amount of 7 4.33 Lakhs with interest, being amount paid towards material purchases, which were subsequently rejected and taken back by the supplier but failed to supply the correct material. The case was decreed in favour of M/S BDL(ex-parte) and has to be executed.

Equity shares entitle the holder to participate in dividends, and to share in the proceeds of winding up the company in proportion to the number of and amounts paid on the shares held.

The Board of directors of the company at its meeting held on 21st March 2024, recommended the sub-division / split of one fully paid up equity share having a face value of ^ 10 each into 2 fully paid up equity shares having a face value of ^ 5 each by alteration of capital clause of the memorandum of association (MOA) subject to the approval of the members of the company. The members of the company approved the sub-division / split of one full paid up equity share of ^ 10 each into two fully paid up equity share of ^ 5 each through a postal ballot with a requisite majority and the voting results were declared on 29 April, 2024.

Further the record date for split / sub-division of equity shares is 24th May 2024. Consequent to this, the authorized share capital comprises of 40,00,00,000 equity shares having a face value of ^ 5 each aggregating to ^ 20,000.00 Lakhs and the paid up share capital comprises of 36,65,62,500 equity shares having a face value of ^ 5 each aggregating to ^ 18,328.12 lakhs.

Significantjudgements:

1) Deferred credit: Deferred credit represents the principal credit portion (at the base rate) of the 45 years (commencing from 01.04.1992) deferred credit provided by the Russian government. The deferred credit is a financial liability, therefore shall be recognised at fair value. The fair value is ascertained by discounting the future cash outflows at the rate of 8%. The company considers 8% to be the cost of capital.

2) Embedded derivative: The increase in liability due to movement in SDR rates is assessed to be an embedded derivative. The embedded derivative is accounted at the fair value on each reporting date through Profit and loss. The fair value is considered to be the adjusted rupee value of the SDR unit as on the reporting date according to the agreement.

Warranties:

Warranty estimates are established using historical information on the nature, frequency and average cost of warranty claims and also management estimates regarding possible future outflow on servicing the customers for any corrective action in respect of product failure which is generally expected to be settled within a period of 1 to 2 years from the date of supply. Onerous contract:

Provision for onerous contract represents the loss assessed by the company on its executory sale contracts. Such loss will be provided as and when the assessment is made, by the company during the course of execution / at the inception of such contracts. The provision is reviewed periodically.

Future charges:

Provision for future charges represents the estimated liability on account of revised ancillary/ packing material accepted to be delivered in lieu of ancillary/ packing material originally stipulated in the contract terms for the sales effected earlier and value of spares sent to forward location on user request for serviceability to avoid breakdown in emergency situations.

Note 38: General Notes:

Statement of Compliances:

The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) [as notified under the section 133 of Companies Act, 2013 (the âActâ) read with Rule 3 of Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

38(1) Recent accounting pronouncements:

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

MCA has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 dated 31 March 2023 to amend Ind AS 1 (Presentation of Financial Statements), Ind AS 8 (Accounting Policies, Changes in Accounting Estimates and Errors) and Ind AS 12 (Income Taxes) which are effective for annual periods beginning on or after 1 April 2023. These Changes are incorporated in the Financial Statements but does not have any impact on the measurement, recognition or presentation of any items in the Financial Statements.

38(3) Employment Benefit obligations (i) Post-employment obligations- Gratuity

The company provides for gratuity for employees in India as per the payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 dayâs salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to a separate trust. The company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

The above sensitivity analysis are based on a change in an assumptionwhile holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit methodattheendofthereportingperiod)hasbeenappliedasandwhencalculatingthedefinedbenefitliabilityrecognisedinthebalancesheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

Defined benefit liability and employer contributions

The Gratuity Trust has purchased insurance policy to provide for payment of gratuity to the employees. Every year, the insurance company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company. The company considers that the contribution rate set at the last valuation date is sufficient to eliminate the deficit over the agreed period and that regular contributions, which are based on service costs will not increase significantly.

Risk exposure

Through its defined benefit plans, the company is exposed to a number of risks, the most significant of which are detailed below: Interest Rate Risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

III LdM i;

Salary Inflation risk : Higher than expected increases in salary will increase the defined benefit obligation.

Demographic Risk: This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

(ii) Provident Fund

Provident Fund Trust of the Company has to declare interest on Provident Fund at a rate not less than that declared by the Employeesâ Provident Fund Organisation. In case the Trust is not able to meet the interest liability, Company has to make good the shortfall. This is a defined benefit plan and the Company has got the same acturially valued.

Company has provided an amount of Nil (Nil during 2022-23) towards interest shortfall of the provident fund trust for the current year which has been recognised in Statement of Profit and Loss.

In view of the uncertainties regarding recoverability of certain instruments made by the PF Trust, during the year 2023-24 an amount of ^ 81.63 lakhs (^ 163.03 lakhs during 2022-23) has been reversed due to realisation of higher amounts than the provision made earlier.

38(4) Construction contracts:

Following disclosures are made relating to Revenue Recognition of Construction Contracts.

Methods of recognising contract revenue:

Percentage of completion method is used to determine the contract revenue recognised in the period.

Method used to determine stage of completion of contract:

Proportion of contract costs incurred for work performed to the estimated total cost of contracts is used to determine the stage of completion.

38(6) Contingent Liabilities & Contractual Commitments:		(7 in Lakh)
Contingent Liabilities Not Provided for:	March 31, 2023	March 31, 2022
Outstanding Letters of Credit and Guarantees:
(i) Letters of Credit	25.74	239.81
(ii) Guarantees and Counter Guarantees	5,964.30	9,643.19
Total	5,990.04	9,883.00
Claims / Demands against the Company not acknowledged as Debt:
(i) PSUs	-	-
(ii) Sales Tax	21,310.03	21,310.03
(iii) Service Tax	1,883.80	1,883.80
(iv) Income Tax	4,752.26	1,737.48
(v) Excise Duty	5,306.33	5,306.33
(vi) Others	1,659.42	1,353.32
Total	34,911.84	31,590.96
Contractual Commitments: (A) Estimated amount of contracts remaining to be executed on Capital Account and not provided for, is
(i) Property, Plant & Equipment	20,888.49	4,200.02
(ii) Investment Property	-	-
(iii) Intangible Assets	-	-
(B) Contractual Commitment towards LD for the deliverables due at the end of the	7,961.93	15,060.96
year will be accounted as and when corresponding revenue is recognised.
Total	28,850.42	19,260.98

38(7) Details of short closed projects:

Out of the advances of 7 36234.42 Lakh (as at March 31,2023 7 36234.42 Lakh) received from the customers, in respect of five contracts/ indents and one LOI which are short closed, the Company has made payments to suppliers for procurement of Special Tools and Equipment and Inventory. Against these payments, Special Tools and Equipment (Note 1) include an amount of 7 114.05 Lakh (as at March 31,2023 7 114.05 Lakh), Current Assets (Note 10-16) comprises an amount of 7 11041.65 Lakh (as at March 31,2023 7 11041.65Lakh) in Advances to vendors and 7 8338.85 Lakh (as at March 31,2023 7 8350.75 Lakh) in Inventories, total amounting to 7 19489.55 Lakh (as at March 31,2023 7 19506.45 Lakh). As these assets had been acquired/expenditure had been incurred by the company based on firm orders/ LOI and out of the funds provided by the customer, no loss devolves on the company on account of long outstanding advances and non-moving Special Tools and Inventory. Hence, no provision is considered necessary. Further, in respect of these short closed Indents/contracts/LOI, the company approached the customers for compensation of 7 1593.88 lakh (as at March 31,2023 7 1908.11 lakh) being the net amount of expenditure after adjustment of the available advance. Hence, for want of finalisation of the amount from the Government/ Customers, no claim/ impact on profit has been accounted in the books.

Events occurring after the reporting period:

Refer above note for the final dividend recommended by the directors which is subject to the approval of shareholders in the ensuing annual general meeting.

38(10) Confirmation of Balances:

Letters requesting Confirmation of Balances have been sent in respect of Debtors, Creditors, Claims Receivable, Materials with Contractors / Sub-Contractors, Advances, Deposits and others. Based on the replies wherever received, reconciliations / provisions / adjustments are made as considered necessary.

38(11) Retention Sales:

The value of the retention sales (i.e., goods retained with the company at the customersâ request and at their risk) included in gross turnover during the year is 7 42,809.15 lakh (7 90,485.78 lakh during the year 2022-23). Out of which Nil (7 57,547.95 lakh during 2022-23) pertains to contracts on FOR-Destination basis where, the contract provides for retention of goods in certain circumstances mentioned therein. In respect of 7 42,809.15 lakh (7 32,937.83 lakh during 2022-23), though the contracts are on FOR-destination basis, the customer has allowed the company to recognise a sale and hold the material.

38(12) Charges registered:

Company has registered floating charge with State Bank of India and Union Bank of India to the extent of 7 61,500.00 lakh (as at March 31,2023 7 60,000.00 lakh) on current assets.

38(13) Operating Cycle:

As per the requirement of Schedule III to the Companies Act, 2013, the operating cycle has been determined at the product level as applicable.

Fair value hierarchy:

Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:

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

Level 2: Inputs other than quoted price including within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case with listed instruments where market is not liquid and for unlisted instruments.

Valuation technique used to determine fair value:

Specific valuation techniques used to value financial instruments include:

â¢ The fair value of unquoted equity instrument are determined with respect to the net worth of the company.

â¢ During the year 2021-22, APGPCL i.e., the company in which BDL had invested in equity, received an adverse arbitration award. The implementation of which is likely to erode the networth of APGPCL. Accordingly Fair value of the investment is considered as âNilâ.

â¢ The fair value of 45 years deferred credit and receivables is determined using foreign exchange rates as per the contract.

38(16) Financial Risk Management:

The Companyâs activities expose it to market risk, liquidity risk and credit risk. The analysis of each risk is as follows:

A) Credit risk

Credit risk arises from cash and cash equivalents, instruments carried at amortised cost and deposits with banks, as well as credit exposures to customers including outstanding receivables.

(i) Credit risk management

A. Credit risk on cash and cash equivalents is limited as the Company generally invest in deposits with banks with high credit ratings assigned by external agencies.

B. Credit risk on claims/refunds receivables, trade receivables and unbilled revenues are evaluated as follows:

(iv) Significant estimates and judgements:

Impairment of financial assets:

The impairment provisions for financial assets disclosed above are based on assumptions about risk of default and expected loss rates. The company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the companyâs past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

B) Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding to meet obligations when due and to close out market positions. Companyâs treasury maintains flexibility in funding by maintaining availability under deposits in banks.

Management monitors cash and cash equivalents on the basis of expected cash flows.

C) Market risk

(i) Foreign currency risk

The company operates in a business that exposes it to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD, Euro, GBP, CHF and SEK. Foreign exchange risk arises from future commercial transactions and recognised liabilities denominated in a currency that is not the companyâs functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The company is eligible for exchange rate variation upon settlement of foreign exchange liabilities for most of the sales contracts. Hence, the company is protected against the foreign currency risk.

38(19) Grant for Solar Plant:

The Company has implemented two Solar Plants of 5 MW each under Jawahar Lal Nehru National Solar Mission (JNNSM) scheme. Viability Gap Fund (VGF) is accounted based on project cost as per the contracts. An amount of ^ 1545.89 Lakhs is accounted as VGF and disclosed under Deferred Revenue (Note No. 22) in the books of the Company. Deferred Revenue @4% p.a amounting ^ 61.83 Lakhs is recognized as from Solar Plant.

38(20) Disclosures under Ind AS 115: Revenue from contracts with customers A Satisfaction of performance obligation

i. In majority of the contract performance obligation is satisfied âat a point in timeâ which is primarily determined on customer obtaining control of the asset. Performance obligation in respect of contract involving supply , Installation and commissioning of complex system is recognised âover a period of timeâ

ii. Under âBill and holdâ arrangement performance obligation is satisfied on unconditional appropriation of the goods to the contract on acceptance by the customer.

iii. Companyâs Contract normally do not contain significant financial component and any advance payment received and /or amount retained by customer is with intention of protecting either parties to the contract.

iv. Variable consideration primarily consist of amount receivable/reimbursable against foreign exchange variation clause and liquidated damages. The amount of revenue recognised in respect of the same is determined based on the methodology specified in the contract . The amount is recognised as revenue based on contractual terms.

v. The companyâs turnover mainly includes supply of missiles and allied defence equipments.

vi. Warranties provided are primarily in the nature of performance warranty.

vii. The company normally uses the input method to recognise revenue is respect of contracts in which performance obligation are satisfied over a period of time. For arriving at the quantum of revenue to be recognised the percentage of completion method is adopted where in the percentage of actual cost incurred to total estimated cost is applied to the contract price for arriving at the quantum of revenue to be recognised. The companyâs contract (other than AMC) in respect of which revenue is recognised over a period of time typically involves multiple activities of different nature like construction of building, supply and installation of equipments etc. Due to this it is not possible to quantify in physical terms the quantum of work done (i.e., output) reliably . Where as, under input method , the cost incurred in respect of these varied activities can be captured and compared to the total estimated cost to be incurred (which can be estimated reliably) , for arriving at the percentage of completion. In case of AMC contracts, output method is used to recognise revenue where passage of time is the criteria for satisfaction of performance obligation.

viii. For revenue recognition in respect of performance obligation satisfied at a âpoint in timeâ the following criteria is used for determining whether customer has obtained âControl on asset"

â¢ Terms of delivery as per the contract

â¢ Customer has legal title to the asset

â¢ The entity has transferred physical possession of the asset

â¢ Customer has accepted the asset

â¢ Entity has the present right to payment for the asset

ix. Transaction price is typically determined based on contract entered into with customer. Allocation of transaction price in respect to multiple obligations is based on relative standalone selling price which is arrived at based on the latest contract available for similar item sold.

Advance received from customer are classified as contract liability and Progressively adjusted on completion of performance obligation .Balance amount receivable after adjusting advance is classified as Trade Receivable.

Compensation accrued to the company upon satisfaction of the performance performance obligation but is not due as payment milestones are not acheived is recognised as âContract Assetâ. Such balances are transferred to Trade receivable, when payment milestones are achieved.

B The fair value of investment property is not based on the valuation by a registered valuer as defined under rule 2 of Companies

(Registered Valuers and Valuation) Rules, 2017. However, the same is being calculated as per the records of Registration Department of State Government.

C Company has not revalued any of its Property, Plant and Equipment or Intangible Assets during the current reporting period.

D Company has not granted any Loans or Advances in the nature of loans to any of its promoters, directors, KMPs and the related

parties (as defined under Companies Act, 2013), either severally or jointly with any other person.

Note - A: Increase is mainly due to (a) change in product mix and (b) higher interest income and refund received from customer during the year.

Note - B: Reduction is mainly due to increase in payables as at 31st March, 2024 which are not yet due.

G There are no proceedings initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made there under.

H Company has no borrowings from banks or financial institutions on the basis of security of current assets. Company is not declared wilful defaulter by any bank or financial Institution or other lender.

I Company has no transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.

J Company has no charges or satisfaction yet to be registered with ROC beyond the statutory period.

38(22) There are no transaction which are not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

38(24) Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

38(25) Impact of war:

The on going Russia-Ukraine war and conflicts in Middle-East region affected the supply chain of the company which have impacted the performance for the year ended 31 March 2024.

38(26) Code on Social Security,2020:

The Code on Social Security , 2020 (Code) relating to employee benefits during employment and post employment benefits received Presidential assent in September 2020. The Code has been published in the Official Gazette of Government Of India. However, the date on which the Code will come into effect has not been notified. The Company will evaluate the impact and will give appropriate impact in the financial statements in the period in which, the Code becomes effective.

38(27) These financial statements are presented in Indian Rupees (rounded off to lakhs), except when otherwise indicated. Previous year figures have been regrouped or rearranged wherever necessary. Negative figures are indicated in parenthesis.

Material accounting policy information and accompanying notes form an integral part of the Financial Statements

Mar 31, 2023

Warranties:

Future charges:

Note 38: General Notes:

Statement of Compliances:

38(1) Impairment Loss - Exceptional Items

The Company tests for impairment at least annually and more frequently when there is an indication of impairment. An impairment loss is recognized if the recoverable amount is lower than the carrying value.

The company has acquired 553 Acres 34 Guntas at Amravati on lease basis for one of its projects. One of the main condition is, if the factory building and works are not completed within 60 months from the date of allotment, unless the time is extended, the lease agreement may be cancelled and the lessor may take possession of the leasehold land together with all the erections, if any, on the said land, without paying any compensation to the company. The period of extension last extended was upto 5^th April, 2019. As the project for which the lease was obtained has not been confirmed by Ministry of Defence (MoD), the company could not commence / complete the activities envisaged in the lease agreement leading to non compliance of the agreement. In the meantime, the company received a notice seeking reply as to why the action provided in the lease agreeemnt should not be taken. Explaining the force majeure condition the company represented to the state government for condonation of delay and extension of time. Pending receipt of extension of time period, the company has provided for impairment amounting to 7 3358.57 lakh during 2021-22 in respect of the leasehold land and the infrastructure created therein as detailed below.

38(3) Employment Benefit obligations (i) Post-employment obligations- Gratuity

The company provides for gratuity for employees in India as per the payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 day''s salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to a separate trust. The company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as and when calculating the defined benefit liability recognised in the balance sheet.

Defined benefit liability and employer contributions

Risk exposure

Through its defined benefit plans, the company is exposed to a number of risks, the most significant of which are detailed below:

Interest Rate Risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

Salary Inflation risk : Higher than expected increases in salary will increase the defined benefit obligation.

(ii) Provident Fund

Company has provided an amount of Nil (^ 845.10 lakhs during 2021-22) towards interest shortfall of the provident fund trust for the current year which has been recognised in Statement of Profit and Loss.

38(7) Details of short closed projects:

Out of the advances of 7 36234.42 Lakh (as at March 31,2022 7 36234.42 Lakh) received from the customers, in respect of five contracts/ indents and one LOI which are short closed, the Company has made payments to suppliers for procurement of Special Tools and Equipment and Inventory. Against these payments, Special Tools and Equipment (Note 1) include an amount of 7 114.05 Lakh (as at March 31,2022 7114.05 Lakh), Current Assets (Note 10-16) comprises an amount of 7 11041.65 Lakh (as at March 31,2022 7 11041.65Lakh) in Advances to vendors and 7 8350.75 Lakh (as at March 31,2022 7 9446.00 Lakh) in Inventories, total amounting to 7 19506.45 Lakh (as at March 31,2022 7 20601.70 Lakh). As these assets had been acquired/expenditure had been incurred by the company based on firm orders/ LOI and out of the funds provided by the customer, no loss devolves on the company on account of long outstanding advances and non-moving Special Tools and Inventory. Hence, no provision is considered necessary. Further, in respect of these short closed Indents/contracts/LOI, the company approached the customers for compensation of 7 1908.11 lakh (as at March 31,2022 7 1908.11 lakh) being the net amount of expenditure after adjustment of the available advance. Hence, for want of finalisation of the amount from the Government/ Customers, no claim/ impact on profit has been accounted in the books.

38(11) Retention Sales:

The value of the retention sales (i.e., goods retained with the company at the customersâ request and at their risk) included in gross turnover during the year is 7 90,485.78 lakh (7 90,187.51 lakh during the year 2021-22). Out of which 7 57,547.95 lakh (7 59653.86 lakh during 2021-22) pertains to contracts on FOR-Destination basis. The contract provides for retention of goods in certain circumstances mentioned therein. In respect of 7 32937.83 lakh, though the contracts are on FOR-destination basis, the customer has allowed the company to recognise a sale and hold the material.

38(12) Charges registered:

Company has registered floating charge with State Bank of India and Union Bank of India to the extent of 7 60,000.00 lakh (as at March 31,2022 7 41,010.00 lakh) on current assets.

38(13) Operating Cycle:

As per the requirement of Schedule III to the Companies Act, 2013, the operating cycle has been determined at the product level as applicable.

Fair value hierarchy:

Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:

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

Valuation technique used to determine fair value:

Specific valuation techniques used to value financial instruments include:

â¢ The fair value of unquoted equity instrument are determined with respect to the net worth of the company.

â¢ The fair value of 45 years deferred credit and receivables is determined using foreign exchange rates as per the contract.

38(16) Financial Risk Management:

The Companyâs activities expose it to market risk, liquidity risk and credit risk. The analysis of each risk is as follows:

A) Credit risk

Credit risk arises from cash and cash equivalents, instruments carried at amortised cost and deposits with banks, as well as credit exposures to customers including outstanding receivables.

(i) Credit risk management

A. Credit risk on cash and cash equivalents is limited as the Company generally invest in deposits with banks with high credit ratings assigned by external agencies.

B. Credit risk on claims/refunds receivables, trade receivables and unbilled revenues are evaluated as follows:

(iv) Significant estimates and judgements:

Impairment of financial assets:

B) Liquidity Risk

Management monitors cash and cash equivalents on the basis of expected cash flows.

38(17) Segment information:

As the Company is engaged in defence production, exemption was granted from applicability of Accounting standard on Segment reporting under Sec 129 of Companies Act 2013 vide Notification dated 23rd February 2018 of Ministry of Corporate Affairs.

38(19) Grant for Solar Plant:

38(20) Disclosures under Ind AS 115: Revenue from contracts with customers A Satisfaction of performance obligation

ii. Under âBill and holdâ arrangement performance obligation is satisfied on unconditional appropriation of the goods to the contract on acceptance by the customer.

v. The companyâs turnover mainly includes supply of missiles and allied defence equipments.

vi. Warranties provided are primarily in the nature of performance warranty.

viii. For revenue recognition in respect of performance obligation satisfied at a âpoint in timeâ the following criteria is used for determining whether customer has obtained âControl on assetâ