Notes to Accounts of Cyient DLM Ltd.

Mar 31, 2025

2.11 Provisions and contingent liabilities

2.11.1 Provisions

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 measured at the present value of management''s
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 provision due to the passage of time is recognized as
an interest expense. Provisions are not recognized for future
operating losses.

Provisions for onerous contracts are recognized when the
expected benefits to be desired by the Company from a
contract are lower than unavoidable costs of meeting future
obligations under the contract and are measured at the
present value of lower-than-expected net cost of fulfilling the
contract and expected cost of terminating the contract.

2.11.2 Contingencies

Contingent liability is disclosed for all possible obligation
that arises from past events and whose existence will be
confirmed only by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control
of the company (or) present obligations arising from past
events where it is not probable that an outflow of resources
embodying economic benefits will be required to settle the
obligation or a sufficiently reliable estimate of the amount
of the obligation cannot be made. Contingent liabilities are
not recognized but disclose their existence in the Standalone
financial statements unless the probability of outflow of
resources is remote. A contingent asset is neither recognized
nor disclosed in the Standalone financial statements.

2.12 Revenue recognition

Revenue from contracts with customers is recognised, on
the basis of approved contracts, when control of the goods
or services is transferred to the customer at an amount that
reflects the consideration entitled in exchange for those
goods or services. The Company is the principal as it typically

controls the goods or services before transferring them to the
customer.

Revenue from sale of goods is recognised at the point in time
when control of the goods is transferred to the customer,
generally upon delivery of the goods. Revenue from rendering
of services is recognised over time by measuring the progress
towards complete satisfaction of performance obligations at
the reporting period.

Revenue towards satisfaction of a performance obligation is
measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation.
The arrangement with the customer specifies services to be
rendered which meet criteria of performance obligations.
For allocation, transaction price, the Company measures
the revenue in respect of each performance obligation of a
contract at its relative standalone selling price. The transaction
price of goods sold and services rendered is net of variable
consideration. Variable consideration includes incentives,
volume rebates, discounts etc., which is estimated at contract
inception considering the terms of various schemes with
customers and constrained until it is highly probable that
a significant revenue reversal in the amount of cumulative
revenue recognised will not occur when the associated
uncertainty with the variable consideration is subsequently
resolved. It is reassessed at end of each reporting period.

Trade receivables

A receivable is recognised if an amount of consideration that is
unconditional (i.e., only the passage of time is required before
payment of the consideration is due). Refer to accounting
policies of financial assets in section 2.17 Financial instruments
- initial recognition and subsequent measurement.

Contract liabilities

A contract liability is recognised if a payment is received
or a payment is due (whichever is earlier) from a customer
before the Company transfers the related goods or services.
Contract liabilities are recognised as revenue when the
Company performs under the contract (i.e., transfers control
of the related goods or services to the customer).

Generally, the Company receives advances from few of its
customers. If there is manufacturing lead time of more than
1 year after signing the contract and receipt of payment,
then there is a significant financing component for these
contracts considering the length of time between the
customers'' payment and the transfer of the goods. As such,
the transaction price for these contracts is discounted, using
the interest rate implicit in the contract (i.e., the interest rate
that discounts the cash selling price of the equipment to the
amount paid in advance). This rate is commensurate with the
rate that would be reflected in a separate financing transaction

between the Company and the customer at contract inception.
Using the practical expedient in Ind AS 115, the Company
does not adjust the promised amount of consideration for
the effects of a significant financing component if it expects,
at contract inception, that the period between the transfer of
the promised good or service to the customer and when the
customer pays for that good or service will be one year or less.

2.13 Interest Income

Interest income from a financial asset is recognized 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.

2.14 Employee benefit plans

Employee benefits include provided fund, employee''s state
insurance scheme, gratuity fund and compensated absences.

Post-employment obligations:

Defined contribution plans:

Contributions in respect of Employees'' Provident Fund
which are defined contribution schemes, are made to a
fund administered and managed by the Government of
India and are charged as an expense based on the amount
of contribution required to be made and when service are
rendered by the employees.

Defined benefit plans
Gratuity:

The Company accounts for its liability towards Gratuity based
on actuarial valuation made by an independent actuary as at
the balance sheet date using projected unit credit method.
The liability recognized in the balance sheet in respect of
the gratuity plan is the present value of the defined benefit
obligation at the end of the reporting period less the fair value
of the 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. The net interest cost is
calculated by applying the discount rate to the net balance
of the defined obligation and the fair value of plan assets.
This cost is included in the employee benefit expense in the
statement of profit and loss. Remeasurement gains and losses
arising from experience adjustments and changes 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 the statement of profit and loss as past service cost.

Compensated absences:

The employees of the Company are entitled to compensate
absences. The employees can carry-forward a portion of the
unutilized accrued compensated absence and utilize it in
future periods or receive cash compensation at retirement
or termination of employment for the unutilized accrued
compensated absence. The Company records an obligation for
compensated absences in the period in which the employee
renders the services that increase this entitlement. The Company
measures the expected cost of compensated absence based on
actuarial valuation made by an independent actuary as at the
balance sheet date on projected unit credit method.

Share based payments

The Company recognizes compensation expense relating
to share based payments in the statement of profit and loss,
using fair value in accordance with Ind AS 102, Share based
payments.

The Stock options are measured at the fair value of the equity
instruments at the grant date, based on option valuation model
(Black Scholes model). The fair value determined at the grant date
of the stock options is expensed on a straight-line basis over the
vesting period, based on the Company''s estimate of the equity
instruments that will eventually vest, with a corresponding
increase in share-based payments reserve in equity.

At the end of each reporting period, the Company revises its
estimate of the number of equity instruments expected to vest.
The impact of the original estimates, if any, is recognised in
statement of profit and loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment
to the share-based payments reserve in equity. The equity
settlement component is not remeasured at each reporting
date. The cash settlement component is remeasured at each
reporting date and at settlement date based on the fair value
of the liability with any changes in the fair value recognised in
the statement of profit and loss.

Other short-term employee benefits

Other short-term employee benefits and performance
incentives expected to be paid in exchange for the services
rendered by employees are recognized during the period
when the employee renders service.

2.15 Financial instruments

a) Initial recognition:

Financial assets and financial liabilities are recognized when a
Company entity becomes a party to the contractual provisions
of the instruments.

Financial assets and financial liabilities are initially measured
at fair value except trade receivable. Transaction costs that
are directly attributable to the acquisition or issue of financial

assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added
to or deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of
financial assets or financial liabilities at fair value through
profit or loss are recognized immediately in profit or loss.
Trade receivables that do not contain a significant financing
component or for which the Company has applied the practical
expedient are measured at the transaction price determined
under Ind AS 115. Refer to the accounting policies in section
2.12 Revenue recognition.

b) Subsequent Measurement:

(i) Financial assets

All regular way purchases or sales of financial assets are
recognized and derecognized on a trade date basis. Regular way
purchases or sales are purchases or sales of financial assets that
require delivery of assets within the time frame established by
regulation or convention in the marketplace.

All recognized financial assets are subsequently measured in
their entirety at either amortized cost or fair value, depending
on the classification of the financial assets.

Classification of financial assets:

Financial assets carried at amortized cost:

A financial asset is subsequently measured at amortized cost
if it is held within a business model whose objective is to hold
the asset in order 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.

Financial assets at fair value through other
comprehensive income:

A financial asset is subsequently measured at fair value
through other comprehensive income if it is held within a
business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets and the
contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding. The Company
has made an irrevocable election for its investments which
are classified as equity instruments to present the subsequent
changes in fair value in other comprehensive income based on
its business model.

Financial assets at fair value through profit or loss:

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

(ii) Financial liability:

All financial liabilities are subsequently measured at amortized
cost using the effective interest method. For trade and other
payables maturing within one year from the Balance Sheet
date, the carrying amounts approximate fair value due to the
short maturity of these instruments.

Financial Liability subsequently measured at
amortized cost

Financial liabilities that are not held-for-trading and are not
designated as at FVTPL are measured at amortized cost at the
end of subsequent accounting periods. The carrying amounts
of financial liabilities that are subsequently measured at
amortized cost are determined based on the effective interest
method. Interest expense that is not capitalized as part of costs
of an asset is included in the ''Finance costs'' line item.

c) Foreign exchange gains and losses:

For foreign currency denominated financial assets measured
at amortized cost and FVTPL, the exchange differences
are recognized in profit or loss except for those which are
designated as hedging instruments in a hedging relationship.

Changes in the carrying amount of investments in equity
instruments at FVTOCI relating to changes in foreign currency
rates are recognized in other comprehensive income.

For the purposes of recognizing foreign exchange gains and
losses, FVTOCI debt instruments are treated as financial assets
measured at amortized cost. Thus, the exchange differences
on the amortized cost are recognized in profit or loss and
other changes in the fair value of FVTOCI financial assets are
recognized in other comprehensive income.

For financial liabilities that are denominated in a foreign
currency and are measured at amortized cost at the end of
each reporting period, the foreign exchange gains and losses
are determined based on the amortized cost of the instruments
and are recognized in ''Other income''

The fair value of financial liabilities denominated in a foreign
currency is determined in that foreign currency and translated
at the spot rate at the end of the reporting period. For financial
liabilities that are measured as at FVTPL, the foreign exchange
component forms part of the fair value gains or losses and is
recognized in profit or loss.

d) De-recognition of financial assets and liabilities:
Financial assets

The Company derecognizes a financial asset when the
contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the
risks and rewards of ownership of the asset to another party.
If the Company retains substantially all the risk and rewards
of ownership of a transferred financial asset, the Company
continues to recognize the financial asset and also recognizes
a collateralized borrowing for the proceeds received.

On de-recognition of a financial asset in its entirety, the
difference between the asset''s carrying amount and the sum of
the consideration received and receivable and the cumulative
gain or loss that had been recognized in other comprehensive
income and accumulated in equity is recognized in profit or
loss if such gain or loss would have otherwise been recognized
in profit or loss on disposal of that financial asset.

Financial liabilities

The Company derecognizes financial liabilities when, and only
when, the Company''s obligations are discharged, cancelled or
have expired. The difference between the carrying amount of
the financial liability derecognized and the consideration paid
and payable is recognized in statement of profit and loss.

2.16 Determination of fair values

In determining the fair value of its financial instruments, the
Company uses a variety of methods and assumptions that
are based on market conditions and risks existing at each
reporting date. The methods used to determine fair value
include discounted cash flow analysis, available quoted market
prices and dealer quotes. All methods of assessing fair value
result in general approximation of value, and such value may
never actually be realized.

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, regardless of
whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of an
asset or a liability, the Company considers the characteristics of
asset or liability of market participants when pricing the asset
or liability at the measurement date.

Fair value for measurement and/or disclosure purposes in
these Standalone Financial statements is determined on such
a basis, except for share-based payment transactions that are
within the scope of Ind AS 102, leasing transactions that are
within the scope of Ind AS 116, and measurements that have
some similarities to fair value but are not fair value, such as net
realizable value in Ind AS 2 or value in use in Ind AS 36.

In addition, for financial reporting purposes, fair value
measurements are categorized into Level 1, 2, or 3 based on
the degree to which the inputs to the fair value measurements
are observable and the significance of the inputs to the fair
value measurement in its entirety, which are described as
follows:

• Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices
included within Level 1, that are observable for the asset
or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or
liability.

2.17 Impairment of assets
Financial assets

The Company recognizes loss allowances using the expected
credit loss (ECL) model for the financial assets which are not fair
valued through statement of profit and loss. Loss allowance for
trade receivables with no significant financing component is
measured at an amount equal to lifetime ECL. For all other
financial assets, expected credit losses are measured at an
amount equal to the 12-month ECL, unless there has been
a significant increase in credit risk from initial recognition in
which case those are measured at lifetime ECL. The amount
of expected credit losses (or reversal) that is required to adjust
the loss allowance at the reporting date to the amount that is
required to be recognised as an impairment gain or loss in the
statement of profit and loss.

For trade receivables, the Company applies the simplified
approach permitted by Ind AS 109 Financial Instruments,
which requires expected lifetime losses to be recognized from
initial recognition of the receivables. As a practical expedient,
the Company uses a provision matrix to determine impairment
loss of its trade receivables. The provision matrix is based on
its historically observed default rates over the expected life
of the trade receivable and is adjusted for forward looking
estimates. The ECL loss allowance (or reversal) during the year
is recognized in the statement of profit and loss.

Non-financial assets

Intangible assets, property, plant and equipment and ROU
assets are evaluated for recoverability whenever events or
changes in circumstances indicate that their carrying amounts
may not be recoverable. For the purpose of impairment testing,
the recoverable amount (i.e., the higher of the fair value less
cost to sell and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash flows that
are largely independent of those from other assets. In such
cases, the recoverable amount is determined for the CGU to
which the asset belongs. Intangible assets under development
are tested for impairment annually. The Company bases its
impairment calculation on detailed budgets and forecast
calculations, which are prepared separately for each of the
Company''s CGUs to which the individual assets are allocated.

If such assets are considered to be impaired, the impairment to
be recognized in the statement of profit and loss is measured by
the amount by which the carrying value of the assets exceeds
the estimated recoverable amount of the asset. An impairment
loss is reversed in the statement of profit and loss if there
has been a change in the estimates used to determine the
recoverable amount. The carrying amount of the asset is
increased to its revised recoverable amount, provided that
this amount does not exceed the carrying amount that would
have been determined (net of any accumulated amortization
or depreciation) had no impairment loss been recognized for
the asset in prior years.

2.18 Earnings per share:

The Company presents basic and diluted earnings per share
("EPS") data for its ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders
of the Company by the weighted average number of ordinary
shares outstanding during the year. Diluted EPS is determined
by adjusting the profit or loss attributable to ordinary
shareholders and the weighted average number of ordinary
shares outstanding for the effects of all dilutive potential
ordinary shares.

2.19 New and amended standards

The Company applied for the first time certain standards and
amendments, which are effective for annual periods beginning
on or after 1 April 2024. The Company has not early adopted
any standard, interpretation or amendment that has been
issued but is not yet effective.

(i) Ind AS 117 Insurance Contracts

The MCA notified Ind AS 117, Insurance Contracts, on
August 12, 2024, replacing Ind AS 104 and effective
from April 1, 2024. The standard has no impact on the
Group''s financial statements, as it has not entered into
any contracts in the nature of insurance contracts.

(ii) Amendments to Ind AS 116 Leases

The MCA amended Ind AS 116 via the Companies (Indian
Accounting Standards) Second Amendment Rules,
2024, to clarify lease liability measurement in sale and
leaseback transactions. The amendment has no material
impact on the Group''s financial statements.

2.20 Standards notified but not yet effective

There are no standards that are notified and not yet effective
as on the date.

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Mar 31, 2024

The Company does not face a significant liquidity risk with regard to its lease liabilities, as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.

The effective interest rate for lease liabilities is 10%, with maturity between 2024-2038.

*Represents Goodwill acquired on acquisition of Techno Tools, which is tested for impairment on an annual basis. The estimated value-in-use is based on future cash flows (discounted @ 14% post tax) for a forecast period of 5 years and terminal growth rate of 0.5%. An analysis of the sensitivity of the computation to a change in key parameters (operating margin, discount rates) are based on reasonably probable assumptions and we did not identify any probable scenario in which the recoverable amount of Goodwill would decrease below its carrying amount.

Note: Investments at fair value through OCI (fully paid) reflect investment in unquoted equity securities. These equity shares are designated as FVTOCI as they are not held for trading purpose and are not in similar line of business as the company. Thus, disclosing their fair value fluctuation in profit or loss will not reflect the purpose of holding.

During the year ended 31 March 2023, the Company had incurred share issue expenses in connection with proposed public offer of equity shares of which ?61.93 was accounted for various services received for Initial Public Offering (IPO) which was later adjusted with securities premium on issue of shares.

Expected Credit Loss (ECL):

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the company grants credit terms in the normal course of business. The average credit period is between 60-90 days. Before accepting any new customer, the Company uses an internal credit scoring system to assess the potential customer''s credit quality and defines credit limits for each customer. Limits and scoring attributed to customers are reviewed once a year.

As a practical expedient, the Company uses a provision matrix to determine impairment loss of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. Accordingly, the Company creates provision for past due receivables less than 270 days ranging between 1%-30% and 100% for the receivables due beyond 270 days. The ECL allowance (or reversal) during the year is recognised in the statement of profit and loss.

Note 1: No trade or other receivable are due from directors or other officers of the company either severally or jointly with any other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member.

*Deposits held as margin money is towards non-fund based limits sanctioned by the bank for establishment of bank guarantee and letter of credits.

**Represents money received from issue of shares through Initial Public Offering, which were not required for immediate utilization and invested in fixed deposits payable on demand.

Note:

Changes in liabilities arising from financing activities and non-cash financing and investing activities:

i. On June 6, 2023, the Company has undertaken a pre-IPO placement by way of private placement of 4,075,471 equity shares aggregating to ? 1,080 million at an issue price of ? 265 per equity share.

ii. The Company has completed an Initial Public Offer ("IPO") by way of fresh issue of 22,364,653 equity shares of face value of ? 10 each of the Company at an issue price of ? 265 per equity share aggregating to ? 5,920 million. The equity shares of the Company were listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on July 10, 2023.

iii. The Company has neither issued any shares with differential voting rights nor issued any sweat equity shares during the year ended March 31, 2024 and March 31, 2023.

(D) Rights, preferences and restrictions attached to equity shares:

The Company has only one class of equity shares having a par value of ?10 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company in proportion to their shareholding.

(E) Equity shares issued as bonus during the five years preceding March 31, 2024:

Pursuant to resolution passed by the Directors of the Company on December 13, 2022 and approved by the extraordinary general meeting held on December 14, 2022, the Company had allotted 49,929,000 fully paid-up equity shares of face value of ? 10 each by way of bonus issue to its shareholders bonus shares in the ratio of 1:17.

(F) Employee Share based expenses

(i) Cyient Limited ("Ultimate Holding Company") of the Company instituted Associate stock option plan 2015 (ASOP 2015) in July 2015 and earmarked 1,200,000 equity shares of ? 5 each for issue to the employees of the Holding Company and its subsidiaries. Under ASOP 2015, options will be issued to employees at an exercise price, which shall not be less than the market price of the Ultimate Holding Company on the date of grant. These options vest over a period ranging from one to three years from the date of grant, starting with 10% at the end of first year, 15% at the end of one and half years, 20% after two years, 25% at the end of two and half years and 30% at the end of third year. Share based expenses incurred by Ultimate Holding Company are recharged to respective group companies. In this regard, the Company has accounted for share based expenses in the statement of profit and loss and a corresponding liability towards amount payable to Ultimate Holding Company.

The fair value of options were priced using Black Scholes pricing model. Grant date share price - ? 455 - ? 678 Dividend yield (%) - 1.7 - 2.9, Expected volatility (%) - 29.8 - 41.60, Risk-free interest (%) - 4.49 - 7.9, Expected term (in years) - 3 - 4.

(ii) Cyient Limited ("Ultimate Holding Company") of the Company instituted the ARSU''s 2020 plan earmarking 1,050,000 shares of ? 5 each which provided for grant of RSUs to eligible associates of the Company and its subsidiaries. The Board of Directors recommended the establishment of the plan on January 16, 2020 and

the shareholders approved the recommendation of Board of Directors on March 5, 2020 through a postal ballot. The RSUs will vest over a period of three years from the date of grant. These options vest over a period ranging from one to three years from the date of grant, starting with 30% at the end of first year, 50 % after two years, 20% at the end of third year. Share based expenses incurred by Ultimate Holding Company are recharged to respective group companies. In this regard, the Company has accounted for share based expenses in the statement of profit and loss and a corresponding liability towards amount payable to Ultimate Holding Company.

The fair value of RSUs granted in the year was March 31, 2024 ? Nil, March 31, 2023 ? 726 to 745. The fair value of options were priced using Black Scholes pricing model. Grant date share price - ? 811 - ? 874 Dividend yield (%) - 2.6 - 2.9, Expected volatility (%) - 38.73 - 41.90, Risk-free interest (%) - 4.96 - 6.8, Expected term (in years) - 3.

(iii) Cyient Limited ("Ultimate Holding Company") of the Company has instituted the ASOP 2021 scheme and also incorporated ''Cyient Associate Stock Option Scheme 2021 Trust'' (Trust), whereunder shares were purchased from the stock exchanges through the Trust. KP Corporate Solutions Limited, Corporate Trustee, has been appointed as trustee for this Trust. Shareholders of the Ultimate Holding Company have approved the Scheme and the formation of Trust through postal ballot on February 23, 2021.

During the year ended March 31, 2022, Trust purchased 1,079,000 shares. The options will vest over 3 years from the grant date and the Leadership Nomination and Remuneration Committee will determine the vesting schedule. Vesting in any particular year will not exceed 50% of the total grant. Share based expenses incurred by Ultimate Holding Company are recharged to respective group companies. In this regard, the Company has accounted for share based expenses in the statement of profit and loss and a corresponding liability towards amount payable to Ultimate Holding Company.

The fair value of options were priced using Black Scholes pricing model. Grant date share price - ? 806 - ? 983. Dividend yield (%) - 2.6 - 2.9, Expected volatility (%) - 36 - 41.80, Risk-free interest (%) - 5.1 - 6.3, Expected term (in years) - 3 - 4.

(iv) Cyient DLM Limited instituted the restricted stock unit plan 2023 plan earmarking 7,33,800 shares of ? 10 each which provided for grant of RSUs to eligible associates of the Company and its subsidiaries. The Board of Directors recommended the establishment of the plan on July 21, 2023 and the shareholders approved the recommendation of Board of Directors on September 9, 2023 through a postal ballot. The RSUs will vest over a period of three years from the date of grant.

The fair value of RSUs granted in the year was March 31, 2024 - ? 444, March 31, 2023 - Nil. The fair value of options were priced using Black Scholes pricing model. Grant date share price - ? 634, Dividend yield (%) - 0.5, Expected volatility (%) - 35.60 - 40.40, Risk-free interest (%) - 7, Expected term (in years) - 5.

The total charge for the year relating to employee share based payment plans was March 31, 2024 - ? 54.49, March 31, 2023 - ? 5.42

Nature and Purpose :

a) General reserve:

The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.

b) Securities premium:

Amounts received on issue of shares in excess of the par value has been classified as securities premium. The

reserve is utilised in accordance with the provisions of the Companies Act, 2013.

(c) Retained earnings

(i) Retained earnings comprises of prior years'' undistributed earnings after taxes along with current year profit.

(ii) 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. These are presented within retained earnings.

(d) Share based payments reserve

The Share based payments reserve is used to record the value of equity-settled share based payment transactions with employees. The amounts recorded in this account are transferred to Equity upon exercise of stock options by employees.

(e) Equity Instruments through OCI

Represents the cumulative gains and losses arising on fair valuation of the equity instruments measured at fair value through OCI.

Details of the borrowings along with their terms and conditions

a. Term loan from related party

The Company has obtained term loan of ? 1,000.00 from Cyient Limited for capital expenditure purpose, which is availed in various tranches starting from February 2019 repayable in 16 quarterly instalments starting from the June 2023 for each tranche. During the previous year, the Company has renewed the term loan agreement with Cyient Limited. As per the renewal agreement, loan will be repaid in 16 quarterly instalments starting from June 2024 and accrued interest on term loan as at March 31, 2024 will be repaid proportionately along with the repayment of principal amount. Outstanding balance of the term loan as at March 31, 2024 was ? 995.63 (ROI -7.80% p.a), March 31, 2023 was ? 995.63 (ROI - 6.00% p.a). There is no default in the repayment of principal loan and interest amount.

b. Working capital loan from related party

The Company has availed working capital loan repayable on demand from Cyient Limited whose outstanding balance as at March 31, 2024 is ? 340.00 (ROI - 7.80% p.a.), March 31, 2023 is ? 540.00 (ROI - 6.00% p.a.). This loan is repayable on demand.

Note: The working capital loans from banks have been repaid out of the IPO proceeds during the year Security terms for working capital loans from banks:

i. First pari-passu charge on present and future current assets including inventory and trade receivables of the Company

ii. Second pari-passu charge on all existing and future movable fixed assets of the Company.

iii. Corporate guarantee from Cyient Limited.

iv. The quarterly returns or statements of current assets filed by the Company with banks are in agreement with the books of accounts.

The Company classifies the right to consideration in exchange for deliverables as trade receivable. A trade receivable is a right to consideration that is unconditional upon passage of time.

Contract Liabilities

Advance from customers represents the amounts received from customers, which are adjusted against the future supplies against each customer order upon delivery. Unearned revenues represents invoicing in excess of revenue.

The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognised as at the end of the reporting period and an explanation as to when the Company expects to recognise these amounts in revenue. Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts that have original expected duration of one year or less and there were no contract exceeding a period of one year.

i. Expenditure for Corporate Social Responsibility:

The Company contributes towards Corporate Social Responsibility (CSR) activities through Cyient Foundation and Cyient Urban Micro Skill Centre Foundation. The Company has formed CSR committee as per Section 135 of the Companies Act, 2013 to formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified by law. The areas for CSR activities are promoting education, adoption of schools, facilitating skill development, medical and other social projects. Expenses incurred on CSR activities through Cyient Foundation and contributions towards other charitable institutions are charged to the statement of profit and loss under ''Other Expenses'': April 2023 to March 2024 - ? 7.28, April 2022 to March 2023 - ? 4.47

The Company has assessed that it is only possible, but not probable, that outflow of economic resources will be required in respect of these matters.

29. Employee Benefits

The employee benefit schemes are as under:

1 Defined contribution plans i. Provident fund

The Company makes provident fund contributions which are defined contribution plans for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. These contributions are made to the Fund administered and managed by the Government of India. The Company''s monthly contributions are charged to the statement of profit and loss in the period they are incurred.

Total expense recognised during the year ended as follows:

i. Year ended March 2024 : ? 28.64

ii. Year ended March 2023 : ? 19.96

2 Defined Benefit Plans i. Gratuity

In accordance with the ''Payment of Gratuity Act, 1972'' of India, the Company provides for gratuity, a defined retirement benefit plan (the ''Gratuity Plan'') covering eligible employees. Liabilities with regard to such gratuity plan are determined by an independent actuarial valuation and are charged to the Statement of Profit and Loss in the period determined. The gratuity plan is administered by the Company''s own trust which has subscribed to the "Group Gratuity Scheme" of Life Insurance Corporation of India.

The present value of the defined benefit obligation (DBO), and the related current service cost and past service cost, were measured using the projected unit credit method.

The average rate of increase in compensation levels is determined by the Company, considering factors such as, the Company''s past compensation revision trends and management''s estimate of future salary increases.

Composition of plan assets

Plan assets comprise of 100% insurer managed funds. Fund is managed by Life Insurance Corporation of India as per Insurance Regulatory and Development Authority of India (IRDA) guidelines, category wise composition of the plan assets is not available.

Sensitivity Analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

The average duration of the defined benefit plan obligation at the end of the reporting period is 9.38 years (March 31, 2023: 9.48 years).

The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at year-end as per Company''s policy. The value of such leave balance eligible for carry forward, is determined by an independent actuarial valuation and charged to Statement of Profit and Loss in the period determined.

The average rate of increase in compensation levels is determined by the Company, considering factors such as, the Company''s past compensation revision trends and management''s estimate of future salary increases.

32. Financial Instruments 32.1 Capital management

The Company manages its capital to ensure that it maximises the return to stakeholders through the optimisation of the capital structure. The Company monitors the return on capital. In order to optimise the Company''s position with regards to its borrowings, interest income and interest expense, treasury team performs a comprehensive corporate interest risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.

* Includes current, non-current and current maturities of non-current borrowings. (refer note 14)

** Total equity includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders of the Company. (refer note 12 and 13)

*** For the year ended March 31, 2024, the cash and bank balances does not include money received from issue of shares through Initial Public Offering of ? 4,218.35

There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period. No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2024 & March 31, 2023.

The management assessed that fair value of cash and cash equivalents and other bank balances, trade receivables, other financial assets, Borrowings, trade payables, and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments, and hence these are carried at amortised cost. Carrying value of unquoted instruments represents fair value which is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Investments in other equity instruments (unquoted) are measured at fair value through initial designation in accordance with Ind-AS 109.

32.1.3 Fair value hierarchy Valuation technique and key inputs

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

Level 2 - Inputs other than quoted prices included within 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 assets or liabilities that are not based on observable market data (unobservable inputs)

The fair values of the unquoted equity instruments have been estimated using a DCF model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, and probabilities of the various estimates within the range used in management''s estimate of fair value for these unquoted equity investments.

There have been no transfers among Level 1, Level 2 and Level 3 during the year.

32.2 Financial risk management

Financial risk factors

The Company''s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company''s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk and interest rate risk. The Company''s exposure to credit risk is influenced mainly by the individual characteristic of each customer. The liquidity risk is measured by the Company''s inability to meet its financial obligations as they become due.

Foreign exchange risk

The Company operates internationally and a major portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales and services and purchases from overseas suppliers in various foreign currencies. The exchange rate between the rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Company''s operations are adversely affected as the rupee appreciates/ depreciates against these currencies. The Company monitors and manages its financial risks by analysing its foreign exchange exposures.

Sensitivity analysis:

Every 5% increase / decrease of the respective foreign currencies compared to functional currency of the Company would impact profit before tax by ? 18.17 for the year ended March 31, 2024 and ? 18.82 for the year ended March 31, 2023

Interest Risk

There is no material interest risk relating to the Company''s financial liabilities which are detailed in note 14.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of expected losses in respect of trade receivables.

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company''s reputation. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low.

The Company had unutilized credit limits from banks as at March 31, 2024 of ? 2,860.85 (? 579 - as at March 31, 2023)

The Company had working capital of ? 7,864.87 (? 948.23 - as at March 31, 2023) and cash and bank balance of ? 5,365.87 ( ? 1,676.01 - as at March 31, 2023)

The table below provides details regarding undiscounted contractual maturities of significant financial liabilities (excluding borrowings and lease liabilities) as at March 31, 2024:

The Company''s obligation towards payment of borrowings has been included in note 14.

The Company''s obligation towards payment of lease liabilities has been included in note 3B.

33. Segment Information

The Company''s operations fall within a single operating segment "Electronic Manufacturing Solutions" which is considered as the primary reportable business segment.

The reporting of geographical segments is based on the location of customers i.e., Domestic (Within India) and Overseas (Outside India).

36. Other Statutory Information

(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the company for holding any Benami property

(ii) The Company does not have any transactions with companies struck off.

(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

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

(v) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

(vi) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries); or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(vii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries other than Issue proceeds raised through Right''s Issue aggregating to ?888 Mn from Cyient Limited, Holding Company for acquiring Investment in STUAM Technologies Limited (Formerly known as Innovation Communications Systems Limited) (refer note 6) during the year ended March 2023.

(viii) The Company does not have any such transaction which is 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 (Such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.

37. The code of Social Security, 2020 (''Code'') relating to employee benefits during employment and postemployment received Presidential assent in September 2020 and its effective date is yet to be notified. The Company will assess and record the impact of the Code, once it is effective.

38. The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software except in respect of accounting software, audit trail feature is not enabled for direct changes to data when using certain access rights. Further, audit trail feature has not been tampered with in respect of other accounting software.