Accounting Policies of Paras Defence and Space Technologies Ltd. Company

Mar 31, 2025

1.3 Material Accounting policies

(A) Property, Plant and Equipment :

Property, plant and equipment are carried at its cost,
net of recoverable taxes, trade discounts and rebate less
accumulated depreciation and impairment losses, if any. Cost
includes purchase price, borrowing cost, non refundable taxes
or levies and directly attributable cost of bringing the asset
to its working condition for its intended use. Expenditure
related to plans, designs and drawings of buildings or plant
and machinery is capitalized under relevant heads of property,
plant and equipment if the recognition criteria are met.
Subsequent costs are included in the assetâs carrying amount
or recognised as a separate asset, as appropriate, only when

it is probable that future economic benefits associated with
the item will flow to the entity and the cost can be measured
reliably. In case of Property, Plant and Equipment, the
Company has availed the fair value as deemed cost on the date
of transition i.e. April 01, 2016.

Property, Plant and Equipment not ready for the intended use
on the date of Balance Sheet are disclosed as âCapital Work-inÂ¬
Progressâ and expenses incurred relating to it, net of income
earned during the development stage, are disclosed as preÂ¬
operative expenses under âCapital Work-in-Progressâ.

Property, Plant and Equipment are eliminated from Standalone
Financial Statements, either on disposal or when retired from
active use. Gains / losses arising in the case of retirement/
disposal of Property, Plant and Equipment are recognised in
the statement of profit and loss in the year of occurrence.

Capital work in progress and Capital advances:

Cost of assets not ready for intended use, as on the Balance
Sheet date, is shown as capital work in progress. Advances
given towards acquisition of property, plant and equipment
outstanding at each Balance Sheet date are disclosed as Other
Non-Current Assets.

Depreciation:

Depreciation on property, plant and equipment is provided
on straight line method for the year for which the assets have
been used as under:

(a) Depreciation on assets is provided over the useful life of
assets as prescribed under schedule II of Companies Act,
2013 except Mobile phones where 3 years have been taken

(b) Leasehold land is amortised over the period of lease.

The asset''s residual values, useful lives and method of
depreciation are reviewed at each financial year end and are
adjusted prospectively, if appropriate.

(B) Intangible Assets and Amortisation:

Intangible Assets are stated at cost, net of accumulated
amortization and impairment losses, if any. Intangible assets
are amortised on a straight line basis over their estimated useful
lives. The amortisation period and the amortisation method
are reviewed at least at each financial year end. If the expected
useful life of the asset is significantly different from previous
estimates, the amortisation period is changed accordingly.
Gain or losses arising from the retirement or disposal of an
intangible asset are determined as the difference between the
net disposal proceeds and the carrying amount of the asset
and recognized as income or expense in the Statement of
Profit and Loss. In case of Intangible Assets, the Company has
availed the fair value as deemed cost on the date of transition
i.e. April 01, 2016.The period of amortisation is as under :

(C) Investment Property:

Investment property is held for long term rental income
and/or for capital appreciation. Investment properties are
measured initially at cost, including transaction costs and net
of recoverable taxes, trade discounts and rebates. Subsequent
to initial recognition, investment properties are stated at cost
less accumulated depreciation and impairment losses, if any.

Depreciation on investment properties is provided using
straight line method over the estimated useful lives as
specified in Schedule II to the Companies Act, 2013. Residual
values, useful lives and method of depreciation of investment
properties are reviewed at each financial year end and are
adjusted prospectively, if appropriate. The effects of any
revision are included in the statement of profit and loss when
the changes arises.

Though the Company measures investment properties using
cost based measurement, the fair value of investment property
is disclosed in the notes.

Investment properties are derecognised either when they have
been disposed off or when they are permanently withdrawn
from use and no future economic benefit is expected from
their disposal. The difference between the net disposal
proceeds and the carrying amount of the asset is recognised in
statement of profit and loss in the period of de-recognition.

(D) Impairment of Non-Financial Assets - Property, Plant
and Equipment & Intangible Assets:

The Company assesses at each reporting date as to whether
there is any indication that any property, plant and equipment
and intangible assets or group of assets, called cash generating
units (CGU) may be impaired. If any such indication exists the
recoverable amount of an asset or CGU is estimated to determine
the extent of impairment, if any. When it is not possible to
estimate the recoverable amount of an individual asset, the
Company estimates the recoverable amount of the CGU to
which the asset belongs. An impairment loss is recognised in
the Statement of Profit and Loss to the extent, assetâs carrying
amount exceeds its recoverable amount. The impairment loss
recognised in prior accounting period is reversed if there has
been a change in the estimate of recoverable amount. The
recoverable amount is higher of an assetâs fair value less cost of
disposal and value in use. Value in use is based on the estimated
future cash flows, discounted to their present value using preÂ¬
tax discount rate that reflects current market assessments of the
time value of money and risk specific to the assets.

(E) Taxes on Income:

Tax expense represents the sum of current tax (including
income tax for earlier years) and deferred tax. Tax is recognised
in the statement of profit and loss, except to the extent that
it relates to items recognised directly in equity or other
comprehensive income, in such cases the tax is also recognised
directly in equity or in other comprehensive income. Any
subsequent change in direct tax on items initially recognised
in equity or other comprehensive income is also recognised in
equity or other comprehensive income.

Current tax provision is computed for Income calculated after
considering allowances and exemptions under the provisions
of the applicable Income Tax Laws. Current tax assets and
current tax liabilities are off set, and presented as net.

Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the Balance sheet and the
corresponding tax bases used in the computation of taxable
profit. Deferred tax liabilities are generally recognised for all
taxable temporary differences, and deferred tax assets are
generally recognised for all deductible temporary differences,
carry forward tax losses and allowances to the extent that it
is probable that future taxable profits will be available against
which those deductible temporary differences, carry forward
tax losses and allowances can be utilised. Deferred tax assets
and liabilities are measured at the applicable tax rates. The
carrying amount of deferred tax assets is reviewed at each
Balance Sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available
against which the temporary differences can be utilised.

(F) Inventories:

Inventories are measured at lower of cost and net realisable value
(NRV) after providing for obsolescence , if any. NRV is the estimate
selling price in the ordinary course of business, less estimated
costs of completion and estimate cost necessary to make the
sale. Cost of Inventories comprises of cost of purchase, cost of
conversion and other costs incurred in bringing them to their
respective present location and condition. Cost of raw materials,
stores & spares, packing materials are determined on weighted
average basis. The Cost of Work in Progress and Finished Goods is
determined on absorption costing methods.

(G) Financial Instruments:

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

Financial Assets -Initial recognition and measurement

initial recognition. Financial assets are classified, at initial
recognition, as financial assets measured at fair value or as
financial assets measured at amortised cost. Purchase and sale
of financial assets are recognized using trade date accounting.
However, trade receivables that do not contain a significant
financing component are measured at transaction price.

Financial assets - Subsequent measurement

For the purpose of subsequent measurement financial assets
are classified in two broad categories:-

a) Financial assets at fair value

b) Financial assets at amortised cost

Where assets are measured at fair value, gains and losses
are either recognised entirely in the statement of profit and
loss (i.e. fair value through profit and loss), or recognised in
other comprehensive income (i.e. fair value through other
comprehensive income).

A financial asset that meets the following two conditions
is measured at amortised cost (net of any write down for
impairment) unless the asset is designated at fair value
through profit or loss under the fair value option.

a) Business model test: The objective of the Company''s
business model is to hold the financial asset to collect
the contractual cash flow.

b) Cash flow characteristics test: The contractual terms of
the financial asset give rise on specified dates to cash
flow that are solely payments of principal and interest on
the principal amount outstanding.

A financial asset that meets the following two conditions is
measured at fair value through other comprehensive income
unless the asset is designated at fair value through profit or
loss under the fair value option.

a) Business model test: The financial asset is held within
a business model whose objective is achieved by
both collecting contractual cash flow and selling
financial assets.

All other financial asset is measured at fair value through
profit or loss.

Financial assets - Derecognition

A financial assets (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is primarily

derecognised (i.e. removed from the Company''s statement of
financial position) when:

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

b) The Company has transferred its rights to receive cash
flow from the asset.

Impairment of Financial Assets

In accordance with Ind AS 109, the Company uses âExpected
Credit Lossâ (ECL) model, for evaluating impairment of financial
assets other than those measured at fair value through profit
and loss (FVTPL).

Expected credit losses are measured through a loss allowance
at an amount equal to:

a) The 12-months expected credit losses (expected
credit losses that result from those default events on
the financial instrument that are possible within 12
months after the reporting date); or

b) Full lifetime expected credit losses (expected credit
losses that result from all possible default events over
the life of the financial instrument)

For trade receivables Company applies âsimplified approachâ
which requires expected lifetime losses to be recognised
from initial recognition of the receivables. The Company
uses historical default rates to determine impairment loss
on the portfolio of trade receivables. At every reporting date
these historical default rates are reviewed and changes in the
forward looking estimates are analysed.

For other assets, the Company uses 12 month ECL to provide
for impairment loss where there is no significant increase
in credit risk. If there is significant increase in credit risk full
lifetime ECL is used.

Financial Liabilities - Initial recognition and measurement:

The financial Liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.

Financial Liabilities - Subsequent measurement:

Financial Liabilities are subsequently carried at amortised
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 Liabilities - Financial guarantee contracts:

Financial guarantee contracts issued by the Company
are those contracts that require a payment to be made to
reimburse the holder for a loss it incurs because the specified

debtor fails to make a payment when due in accordance with
the terms of a debt instrument. Financial guarantee contracts
are recognised initially as a liability at fair value, adjusted for
transaction costs that are directly attributable to the issuance
of the guarantee. Subsequently, the liability is measured at the
higher of the amount of loss allowance determined and the
amount recognised less cumulative amortisation.

Financial liability - Derecognition:

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

(H) Fair Value:

The Company measures financial instruments at fair value
at each Balance sheet date. Fair value is the price that would
be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the
measurement date. The fair value measurement is based
on the presumption that the transaction to sell the asset or
transfer the liability takes place either:

- in the principal market for the asset or liability, or

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

All assets and liabilities for which fair value is measured
or disclosed in the Standalone Financial Statements are
categorized within the fair value hierarchy that categorizes
into three levels, described as follows, the inputs to valuation
techniques used to measure value. The fair value hierarchy
gives the highest priority to quoted prices in active markets
for identical assets or liabilities (Level 1 inputs) and the lowest
priority to unobservable inputs (Level 3 inputs).

Level 1 â quoted (unadjusted) market prices in active markets
for identical assets or liabilities

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

Level 3 â inputs that are unobservable for the asset or liability

For assets and liabilities that are recognized in the Standalone
Financial Statements at fair value on a recurring basis, the
Company determines whether transfers have occurred
between levels in the hierarchy by re-assessing categorization
at the end of each reporting period and discloses the same.

(I) Investment in Subsidiaries and Associates:

The Company has elected to recognize its investments
in subsidiaries and associate at cost in accordance with
the option available in Ind AS 27, âSeparate Standalone
Financial Statementsâ.

(J) Revenue Recognition and Other Income:

Sales of goods and services:

The Company derives revenues primarily from sale of products
comprising of Defence & Space Applications

Revenue from contracts with customers is recognised
when control of the goods or services are transferred to the
customer at an amount that reflects the consideration entitled
in exchange for those goods or services. Generally, control is
transferred upon shipment of goods to the customer or when
the goods is made available to the customer, provided transfer
of title to the customer occurs and the Company has not
retained any significant risks of ownership or future obligations
with respect to the goods shipped.

Revenue is measured at the amount of consideration which the
company expects to be entitled to in exchange for transferring
distinct goods or services to a customer as specified in the
contract, excluding amounts collected on behalf of third
parties (for example taxes and duties collected on behalf of the
government). Consideration is generally due upon satisfaction
of performance obligations and a receivable is recognized
when it becomes unconditional.

The Company does not expect to have any contracts where the
period between the transfer of the promised goods or services
to the customer and payment by the customer exceeds one
year. As a consequence, it does not adjust any of the transaction
prices for the time value of money.

Revenue is measured based on the transaction price, which is
the consideration, adjusted for volume discounts, performance
bonuses, price concessions and incentives, if any, as specified
in the contract with the customer. Revenue also excludes taxes
collected from customers.

Revenue from rendering of services is recognised over time
by measuring the progress towards complete satisfaction of
performance obligations at the reporting period.

Contract Balances - Trade Receivables

A receivable represents the Companyâs right to an amount of
consideration that is unconditional.

Contract liabilities

transfers goods or services to the customer, a contract liability
is recognised when the payment is made or the payment is
due (whichever is earlier). Contract liabilities are recognised as
revenue when the Company performs under the contract.

Other Income:

Incentives on exports and other Government incentives related
to operations are recognised in the statement of profit and loss
after due consideration of certainty of utilization/receipt of
such incentives.

Interest Income:

Interest income from a financial asset is recognised when
it is probable that the economic benefits will flow to the
Company and the amount of income can be measured reliably.
Interest income is accrued on a timely basis, by reference to
the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
asset to that assetâs net carrying amount on initial recognition.

Dividend Income:

Dividend Income is recognised when the right to receive the
payment is established.

Rental income:

Rental income arising from operating leases is accounted for
on a straight-line basis over the lease terms and is included as
other income in the statement of profit or loss.

(K) Foreign currency transactions and translation:

Transactions in foreign currencies are recorded at the exchange
rate prevailing on the date of transaction. Monetary assets and
liabilities denominated in foreign currencies are translated
at the functional currency closing rates of exchange at the
reporting date.

Exchange differences arising on settlement or translation of
monetary items are recognised in Statement of Profit and Loss
except to the extent of exchange differences which are regarded
as an adjustment to interest costs on foreign currency borrowings
that are directly attributable to the acquisition or construction of
qualifying assets, are capitalized as cost of assets.

Non-monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange
rates at the dates of the transaction. Non-monetary items
carried at fair value that are denominated in foreign currencies
are translated at the exchange rates prevailing at the date
when the fair value was determined. The gain or loss arising
on translation of non-monetary items measured at fair value
is treated in line with the recognition of the gain or loss on the
change in fair value of the item (i.e., translation differences on
items whose fair value gain or loss is recognised in OCI or profit
or loss are also recognised in OCI or profit or loss, respectively).

Foreign exchange differences regarded as an adjustment to
borrowing costs are presented in the statement of profit and
loss, within finance costs. All other finance gains / losses are
presented in the statement of profit and loss on a net basis.

In case of an asset, expense or income where a monetary
advance is paid/received, the date of transaction is the date
on which the advance was initially recognized. If there were
multiple payments or receipts in advance, multiple dates of
transactions are determined for each payment or receipt of
advance consideration.

(L) Employee Benefits:

Short term employee benefits are recognized as an expense
in the statement of profit and loss of the year in which the
related services are rendered. Contribution to Provident Fund,
a defined contribution plan, is made in accordance with the
statute, and is recognised as an expense in the year in which
employees have rendered services.

The cost of providing gratuity, a defined benefit plans, is
determined based on Projected Unit Credit Method, on the
basis of actuarial valuations carried out by third party actuaries
at each Balance Sheet date. Actuarial gains and losses arising
from experience adjustments and changes in actuarial
assumptions are charged or credited to other comprehensive
income in the period in which they arise. Other costs are
accounted in statement of profit and loss.

Remeasurements of defined benefit plan in respect of post
employment and other long term benefits are charged to the
other comprehensive income in the year in which they occur.
Remeasurements are not reclassified to statement of profit
and loss in subsequent periods.

(M) Share based payments

The cost of equity-settled transactions with employees is
measured at fair value at the date at which they are granted.
The fair value of share options are determined with the
assistance of an external valuer and the fair value at the grant
date is expensed on a proportionate basis over the vesting
period based on the Companyâs estimate of shares that will
eventually vest. The estimate of the number of options likely
to vest is reviewed at each balance sheet date up to the vesting
date at which point the estimate is adjusted to reflect the
current expectations.

Mar 31, 2024

1.1 Corporate Information

Paras Defence and Space Technologies Limited (the âCompanyâ) is a public limited Company domiciled and incorporated in India under the Indian Companies Act, 1956. The registered office of the Company is situated at D-112, TTC industrial area, Nerul, Navi Mumbai- 400706. The company is involved in design, development, manufacturing, testing & commissioning of products, systems and solutions for Defence & Space Applications. The shares of the company are publicly traded on the BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) in India.

The Standalone Financial Statements of the Company for the year ended March 31, 2024 were approved and adopted by board of directors in their meeting held on May 25, 2024.

1.2 Basis of preparation

The Standalone Financial Statements of the Company have been prepared in accordance with Indian Accounting Standards (âInd ASâ) notified under Section 133 of the Companies Act, 2013, read together with the Companies (Indian Accounting Standards) Rules, as amended from time to time.

The Standalone Financial Statements have been prepared and presented on going concern basis and historical cost basis, except for the following assets and liabilities, which have been measured as indicated below:

- Certain Financial assets and liabilities at fair value (refer accounting policy regarding financial instruments).

- Employee''s Defined Benefit Plans measured per actuarial valuation.

These Standalone Financial Statements are presented in Indian Rupees, which is the company''s functional and presentation currency and all values are rounded to the nearest lakhs, except when otherwise indicated.

1.3 Material Accounting policies

(A) Property, Plant and Equipment :

Property, plant and equipment are carried at its cost, net of recoverable taxes, trade discounts and rebate less accumulated depreciation and impairment losses, if any. Cost includes purchase price, borrowing cost, non refundable taxes or levies and directly attributable cost of bringing the asset to its working condition for its intended use. Expenditure related to plans, designs and drawings of buildings or plant and machinery is capitalized under relevant heads of property, plant and equipment if the recognition criteria are met. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with

the item will flow to the entity and the cost can be measured reliably. In case of Property, Plant and Equipment, the Company has availed the fair value as deemed cost on the date of transition i.e. April 01, 2016.

Property, Plant and Equipment not ready for the intended use on the date of Balance Sheet are disclosed as âCapital Work-inProgressâ and expenses incurred relating to it, net of income earned during the development stage, are disclosed as preoperative expenses under âCapital Work-in-Progressâ.

Property, Plant and Equipment are eliminated from Standalone Financial Statements, either on disposal or when retired from active use. Gains / losses arising in the case of retirement/ disposal of Property, Plant and Equipment are recognised in the statement of profit and loss in the year of occurrence.

Capital work in progress and Capital advances:

Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work in progress. Advances given towards acquisition of property, plant and equipment outstanding at each Balance Sheet date are disclosed as Other Non-Current Assets.

Depreciation:

Depreciation on property, plant and equipment is provided on straight line method for the year for which the assets have been used as under:

(a) Depreciation on assets is provided over the useful life of assets as prescribed under schedule II of Companies Act, 2013 except Mobile phones where 3 years have been taken

(b) Leasehold land is amortised over the period of lease.

The asset''s residual values, useful lives and method of depreciation are reviewed at each financial year end and are adjusted prospectively, if appropriate.

(B) Intangible Assets and Amortisation:

Intangible Assets are stated at cost, net of accumulated amortization and impairment losses, if any. Intangible assets are amortised on a straight line basis over their estimated useful lives. The amortisation period and the amortisation method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortisation period is changed accordingly. Gain or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognized as income or expense in the Statement of Profit and Loss. In case of Intangible Assets, the Company has availed the fair value as deemed cost on the date of transition i.e. April 01, 2016.The period of amortisation is as under :

Asset

Period

of amortisation

Computer Software

6 Years

Technical Know how

6 Years

Investment property is held for long term rental income and/or for capital appreciation. Investment properties are measured initially at cost, including transaction costs and net of recoverable taxes, trade discounts and rebates. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and impairment losses, if any.

Depreciation on investment properties is provided using straight line method over the estimated useful lives as specified in Schedule II to the Companies Act, 2013. Residual values, useful lives and method of depreciation of investment properties are reviewed at each financial year end and are adjusted prospectively, if appropriate. The effects of any revision are included in the statement of profit and loss when the changes arises.

Though the Company measures investment properties using cost based measurement, the fair value of investment property is disclosed in the notes.

Investment properties are derecognised either when they have been disposed off or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in statement of profit and loss in the period of de-recognition.

(D) Impairment of Non-Financial Assets - Property, Plant and Equipment & Intangible Assets:

The Company assesses at each reporting date as to whether there is any indication that any property, plant and equipment and intangible assets or group of assets, called cash generating units (CGU) may be impaired. If any such indication exists the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs. An impairment loss is recognised in the Statement of Profit and Loss to the extent, assetâs carrying amount exceeds its recoverable amount. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. The recoverable amount is higher of an assetâs fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets.

(E) Taxes on Income:

Tax expense represents the sum of current tax (including income tax for earlier years) and deferred tax. Tax is recognised in the statement of profit and loss, except to the extent that it relates to items recognised directly in equity or other comprehensive income, in such cases the tax is also recognised directly in equity or in other comprehensive income. Any subsequent change in direct tax on items initially recognised in equity or other comprehensive income is also recognised in equity or other comprehensive income.

Current tax provision is computed for Income calculated after considering allowances and exemptions under the provisions of the applicable Income Tax Laws. Current tax assets and current tax liabilities are off set, and presented as net.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Balance sheet and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences, carry forward tax losses and allowances to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised. Deferred tax assets and liabilities are measured at the applicable tax rates. The carrying amount of deferred tax assets is reviewed at each Balance Sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilised.

(F) Inventories:

Inventories are measured at lower of cost and net realisable value (NRV) after providing for obsolescence , if any. NRV is the estimate selling price in the ordinary course of business, less estimated costs of completion and estimate cost necessary to make the sale. Cost of Inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. Cost of raw materials, stores & spares, packing materials are determined on weighted average basis. The Cost of Work in Progress and Finished Goods is determined on absorption costing methods.

(G) Financial Instruments:

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

Financial Assets -Initial recognition and measurement

initial recognition. Financial assets are classified, at initial recognition, as financial assets measured at fair value or as financial assets measured at amortised cost. Purchase and sale of financial assets are recognized using trade date accounting. However, trade receivables that do not contain a significant financing component are measured at transaction price.

Financial assets - Subsequent measurement

For the purpose of subsequent measurement financial assets are classified in two broad categories:-

a) Financial assets at fair value

b) Financial assets at amortised cost

Where assets are measured at fair value, gains and losses are either recognised entirely in the statement of profit and loss (i.e. fair value through profit and loss), or recognised in other comprehensive income (i.e. fair value through other comprehensive income).

A financial asset that meets the following two conditions is measured at amortised cost (net of any write down for impairment) unless the asset is designated at fair value through profit or loss under the fair value option.

a) Business model test: The objective of the Company''s business model is to hold the financial asset to collect the contractual cash flow.

b) Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flow that are solely payments of principal and interest on the principal amount outstanding.

A financial asset that meets the following two conditions is measured at fair value through other comprehensive income unless the asset is designated at fair value through profit or loss under the fair value option.

a) Business model test: The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flow and selling financial assets.

b) Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flow that are solely payments of principal and interest on the principal amount outstanding.

All other financial asset is measured at fair value through profit or loss.

Financial assets - Derecognition

A financial assets (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company''s statement of financial position) when:

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

b) The Company has transferred its rights to receive cash flow from the asset.

Impairment of Financial Assets

In accordance with Ind AS 109, the Company uses âExpected Credit Lossâ (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).

Expected credit losses are measured through a loss allowance at an amount equal to:

a) The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or

b) Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument)

For trade receivables Company applies âsimplified approachâ which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed.

For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.

Financial Liabilities - Initial recognition and measurement:

The financial Liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

Financial Liabilities - Subsequent measurement:

Financial Liabilities are subsequently carried at amortised 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 Liabilities - Financial guarantee contracts:

transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined and the amount recognised less cumulative amortisation.

Financial liability - Derecognition:

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

(H) Fair Value:

The Company measures financial instruments at fair value at each Balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- in the principal market for the asset or liability, or

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

All assets and liabilities for which fair value is measured or disclosed in the Standalone Financial Statements are categorized within the fair value hierarchy that categorizes into three levels, described as follows, the inputs to valuation techniques used to measure value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).

Level 1 â quoted (unadjusted) market prices in active markets for identical assets or liabilities

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

Level 3 â inputs that are unobservable for the asset or liability

For assets and liabilities that are recognized in the Standalone Financial Statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period and discloses the same.

(I) Investment in Subsidiaries and Associates:

The Company has elected to recognize its investments in subsidiaries and associate at cost in accordance with

the option available in Ind AS 27, âSeparate Standalone Financial Statementsâ.

(J) Revenue Recognition and Other Income:

Sales of goods and services:

The Company derives revenues primarily from sale of products comprising of Defence & Space Applications

Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration entitled in exchange for those goods or services. Generally, control is transferred upon shipment of goods to the customer or when the goods is made available to the customer, provided transfer of title to the customer occurs and the Company has not retained any significant risks of ownership or future obligations with respect to the goods shipped.

Revenue is measured at the amount of consideration which the company expects to be entitled to in exchange for transferring distinct goods or services to a customer as specified in the contract, excluding amounts collected on behalf of third parties (for example taxes and duties collected on behalf of the government). Consideration is generally due upon satisfaction of performance obligations and a receivable is recognized when it becomes unconditional.

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, it does not adjust any of the transaction prices for the time value of money.

Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, performance bonuses, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.

Revenue from rendering of services is recognised over time by measuring the progress towards complete satisfaction of performance obligations at the reporting period.

Contract Balances - Trade Receivables

A receivable represents the Companyâs right to an amount of consideration that is unconditional.

Contract liabilities

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

Other Income:

Incentives on exports and other Government incentives related to operations are recognised in the statement of profit and loss after due consideration of certainty of utilization/receipt of such incentives.

Interest Income:

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a timely basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.

Dividend Income:

Dividend Income is recognised when the right to receive the payment is established.

Rental income:

Rental income arising from operating leases is accounted for on a straight-line basis over the lease terms and is included as other income in the statement of profit or loss.

(K) Foreign currency transactions and translation:

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.

Exchange differences arising on settlement or translation of monetary items are recognised in Statement of Profit and Loss except to the extent of exchange differences which are regarded as an adjustment to interest costs on foreign currency borrowings that are directly attributable to the acquisition or construction of qualifying assets, are capitalized as cost of assets.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the transaction. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the exchange rates prevailing at the date when the fair value was determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other finance gains / losses are presented in the statement of profit and loss on a net basis.

In case of an asset, expense or income where a monetary advance is paid/received, the date of transaction is the date on which the advance was initially recognized. If there were multiple payments or receipts in advance, multiple dates of transactions are determined for each payment or receipt of advance consideration.

(L) Employee Benefits:

Short term employee benefits are recognized as an expense in the statement of profit and loss of the year in which the related services are rendered. Contribution to Provident Fund, a defined contribution plan, is made in accordance with the statute, and is recognised as an expense in the year in which employees have rendered services.

The cost of providing gratuity, a defined benefit plans, is determined based on Projected Unit Credit Method, on the basis of actuarial valuations carried out by third party actuaries at each Balance Sheet date. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income in the period in which they arise. Other costs are accounted in statement of profit and loss.

Remeasurements of defined benefit plan in respect of post employment and other long term benefits are charged to the other comprehensive income in the year in which they occur. Remeasurements are not reclassified to statement of profit and loss in subsequent periods.

(M) Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using equivalent period government securities interest rate. Unwinding of the discount is recognised in the statement of profit and loss as a finance cost. Provisions are reviewed at each Balance Sheet date and are adjusted to reflect the current best estimate.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which 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 a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Information on contingent liability is disclosed in the Notes to the Standalone Financial Statements. Contingent assets are not recognised in financial statement. However, when the realisation of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognised as an asset.

(N) Offsetting financial instruments:

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

1.4 Key accounting estimates and judgements

The preparation of the Companyâs Standalone Financial Statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

a) Depreciation/amortisation and useful lives of property plant and equipment/intangible assets:

Property, plant and equipment/intangible assets are depreciated/amortised over the estimated useful lives of the assets, after taking into account their estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation/ amortisation to be recorded during any reporting period. The useful lives and residual values are based on the Companyâs historical experience with similar assets and take into account anticipated technological changes. The depreciation/ amortisation for future periods is revised if there are significant changes from previous estimates.

b) Provisions:

Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.

c) Defined benefit obligation:

The cost of post-employment benefits is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, future salary increases, expected rate of return on assets and mortality rates. Due to

the long term nature of these plans, such estimates are subject to significant uncertainty.

d) Income Tax:

Company reviews at each balance sheet date the carrying amount of deferred tax assets. The factors used in estimates may differ from actual outcome which could lead to an adjustment to the amounts reported in the Standalone Financial Statements. Deferred tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the unused tax losses or tax credits can be utilised. This involves an assessment of when those assets are likely to reverse, and a judgement as to whether or not there will be sufficient taxable profits available to offset the assets. This requires assumptions regarding future profitability, which is inherently uncertain. To the extent assumptions regarding future profitability change, there can be an increase or decrease in the amounts recognised in respect of deferred tax assets and consequential impact in the statement of profit and loss.

e) Recoverability of trade receivables:

Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.

f) Impairment of Non-Financial Assets:

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or Cash Generating Units (CGU) fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent to those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.

Application of above amended standards are not expected to have any significant impact on the Companyâs Standalone Financial Statements.

Mar 31, 2023

SIGNIFICANT ACCOUNTING POLICIES

(A) Property, Plant and Equipment :

Property, plant and equipment are carried at its cost,
net of recoverable taxes, trade discounts and rebate less
accumulated depreciation and impairment losses, if
any. Cost includes purchase price, borrowing cost, non
refundable taxes or levies and directly attributable cost of
bringing the asset to its working condition for its intended
use. Expenditure related to plans, designs and drawings
of buildings or plant and machinery is capitalized under
relevant heads of property, plant and equipment if the
recognition criteria are met. Subsequent costs are included
in the assetâs carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to
the entity and the cost can be measured reliably. In case of
Property, Plant and Equipment, the Company has availed

the fair value as deemed cost on the date of transition i.e.
April 01, 2016.

Property, Plant and Equipment not ready for the intended
use on the date of Balance Sheet are disclosed as âCapital
Work-in-Progressâ and expenses incurred relating to it,
net of income earned during the development stage, are
disclosed as pre-operative expenses under âCapital Work-
in-Progressâ.

Property, Plant and Equipment are eliminated from
Standalone Financial Statements, either on disposal or
when retired from active use. Gains / losses arising in
the case of retirement/disposal of Property, Plant and
Equipment are recognised in the Statement of Profit and
Loss in the year of occurrence.

Capital work in progress and Capital advances:

Depreciation:

Depreciation on property, plant and equipment is provided
on straight line method for the year for which the assets
have been used as under:

(a) Depreciation on assets is provided over the useful
life of assets as prescribed under Schedule II of
Companies Act, 2013

(b) Leasehold land is amortised over the period of lease.

The assetâs residual values, useful lives and method of
depreciation are reviewed at each financial year end and
are adjusted prospectively, if appropriate.

(B) Intangible Assets and Amortisation:

Intangible Assets are stated at cost, net of accumulated
amortization and impairment losses, if any. Intangible assets
are amortised on a straight line basis over their estimated
useful lives. The amortisation period and the amortisation
method are reviewed at least at each financial year end. If
the expected useful life of the asset is significantly different
from previous estimates, the amortisation period is changed
accordingly. Gain or losses arising from the retirement
or disposal of an intangible asset are determined as the
difference between the net disposal proceeds and the
carrying amount of the asset and recognized as income
or expense in the Statement of Profit and Loss. In case of
Intangible Assets, the Company has availed the fair value
as deemed cost on the date of transition i.e. April 01, 2016.
The period of amortisation is as under :

I nvestment property is held for long term rental income
and/or for capital appreciation. Investment properties
are measured initially at cost, including transaction costs
and net of recoverable taxes, trade discounts and rebates.
Subsequent to initial recognition, investment properties
are stated at cost less accumulated depreciation and
impairment losses, if any.

Depreciation on investment properties is provided using
straight line method over the estimated useful lives as
specified in Schedule II to the Companies Act, 2013.
Residual values, useful lives and method of depreciation
of investment properties are reviewed at each financial
year end and are adjusted prospectively, if appropriate.
The effects of any revision are included in the Statement of
Profit and Loss when the changes arises.

Though the Company measures investment properties
using cost based measurement, the fair value of investment
property is disclosed in the notes.

Investment properties are derecognised either when they have
been disposed off or when they are permanently withdrawn
from use and no future economic benefit is expected from
their disposal. The difference between the net disposal
proceeds and the carrying amount of the asset is recognised
in Statement of Profit and Loss in the period of de-recognition.

(D) Borrowing Cost:

Borrowing costs specifically relating to the acquisition or
construction of qualifying assets that necessarily takes a
substantial period of time to get ready for its intended use
are capitalized (net of income on temporarily deployment
of funds) as part of the cost of such assets. Borrowing
costs consist of interest and other costs that the Company
incurs in connection with the borrowing of funds. For
general borrowing used for the purpose of obtaining a
qualifying asset, the amount of borrowing costs eligible for
capitalization is determined by applying a capitalization
rate to the expenditures on that asset. The capitalization
rate is the weighted average of the borrowing costs
applicable to the borrowings of the Company that are
outstanding during the period, other than borrowings
made specifically for the purpose of obtaining a qualifying
asset. The amount of borrowing costs capitalized during
a year does not exceed the amount of borrowing cost
incurred during that year. All other borrowing costs are
expensed in the year in which they occur.

(E) Impairment of Non-Financial Assets - Property, Plant
and Equipment & Intangible Assets:

The Company assesses at each reporting date as to
whether there is any indication that any property, plant
and equipment and intangible assets or group of assets,
called cash generating units (CGU) may be impaired. If
any such indication exists the recoverable amount of
an asset or CGU is estimated to determine the extent of
impairment, if any. When it is not possible to estimate the
recoverable amount of an individual asset, the Company
estimates the recoverable amount of the CGU to which
the asset belongs. An impairment loss is recognised in the
Statement of Profit and Loss to the extent, assetâs carrying
amount exceeds its recoverable amount. The impairment
loss recognised in prior accounting period is reversed if
there has been a change in the estimate of recoverable
amount. The recoverable amount is higher of an assetâs fair
value less cost of disposal and value in use. Value in use
is based on the estimated future cash flows, discounted to
their present value using pre-tax discount rate that reflects
current market assessments of the time value of money
and risk specific to the assets.

(F) Government Grants and Subsidy:

Grants and subsidies from the government are recognised
when there is reasonable assurance that (i) the Company
will comply with the conditions attached to them, and
(ii) the grant/subsidy will be received. When the grant or
subsidy relates to revenue, it is recognised as income on
a systematic basis in the Statement of Profit and Loss over
the periods necessary to match them with the related
costs, which they are intended to compensate. Where the
grant relates to an asset, it is recognised by deducting the
grant from the value of respective asset to arrive at carrying
amount.

(G) Taxes on Income:

Tax expense represents the sum of current tax (including
income tax for earlier years) and deferred tax. Tax is
recognised in the statement of profit and loss, except to
the extent that it relates to items recognised directly in
equity or other comprehensive income, in such cases
the tax is also recognised directly in equity or in other
comprehensive income. Any subsequent change in
direct tax on items initially recognised in equity or other
comprehensive income is also recognised in equity or
other comprehensive income.

Current tax provision is computed for Income calculated
after considering allowances and exemptions under the
provisions of the applicable Income Tax Laws. Current tax
assets and current tax liabilities are off set, and presented
as net.

Deferred tax is recognised on differences between the
carrying amounts of assets and liabilities in the Balance sheet
and the corresponding tax bases used in the computation of
taxable profit. Deferred tax liabilities are generally recognised
for all taxable temporary differences, and deferred tax assets
are generally recognised for all deductible temporary
differences, carry forward tax losses and allowances to
the extent that it is probable that future taxable profits will
be available against which those deductible temporary
differences, carry forward tax losses and allowances can be
utilised. Deferred tax assets and liabilities are measured at
the applicable tax rates. The carrying amount of deferred tax
assets is reviewed at each Balance Sheet date and reduced
to the extent that it is no longer probable that sufficient
taxable profits will be available against which the temporary
differences can be utilised.

(H) Inventories:

Inventories are measured at lower of cost and net realisable
value (NRV) after providing for obsolescence, if any. NRV
is the estimate selling price in the ordinary course of
business, less estimated costs of completion and estimate
cost necessary to make the sale. Cost of Inventories
comprises of cost of purchase, cost of conversion and other
costs incurred in bringing them to their respective present
location and condition. Cost of raw materials, stores &
spares, packing materials are determined on weighted
average basis. The Cost of Work in Progress and Finished
Goods is determined on absorption costing methods.

(I) Financial Instruments:

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

Financial Assets -Initial recognition and measurement

All financial assets are initially recognized at fair value.
Transaction costs that are directly attributable to the
acquisition of financial assets, which are not at fair value
through profit or loss, are adjusted to the fair value on
initial recognition. Financial assets are classified, at initial
recognition, as financial assets measured at fair value or
as financial assets measured at amortised cost. Purchase
and sale of financial assets are recognized using trade
date accounting. However, trade receivables that do not
contain a significant financing component are measured
at transaction price.

Financial assets - Subsequent measurement

For the purpose of subsequent measurement financial
assets are classified in two broad categories:-

a) Financial assets at fair value

b) Financial assets at amortised cost

a) Business model test: The objective of the Companyâs
business model is to hold the financial asset to
collect the contractual cash flow.

b) Cash flow characteristics test: The contractual terms
of the financial asset give rise on specified dates to
cash flow that are solely payments of principal and
interest on the principal amount outstanding.

A financial asset that meets the following two conditions
is measured at fair value through other comprehensive
income unless the asset is designated at fair value through
profit or loss under the fair value option.

a) Business model test: The financial asset is held
within a business model whose objective is achieved
by both collecting contractual cash flow and selling
financial assets.

b) Cash flow characteristics test: The contractual terms
of the financial asset give rise on specified dates to
cash flow that are solely payments of principal and
interest on the principal amount outstanding.

All other financial asset is measured at fair value through
profit or loss.

Financial assets - Derecognition

A financial assets (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
primarily derecognised (i.e. removed from the Companyâs
statement of financial position) when:

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

b) The Company has transferred its rights to receive
cash flow from the asset.

Impairment of Financial Assets

In accordance with Ind AS 109, the Company uses âExpected
Credit Lossâ (ECL) model, for evaluating impairment of
financial assets other than those measured at fair value
through profit and loss (FVTPL).

Expected credit losses are measured through a loss
allowance at an amount equal to:

a) The 12-months expected credit losses (expected
credit losses that result from those default events on
the financial instrument that are possible within 12
months after the reporting date); or

b) Full lifetime expected credit losses (expected credit
losses that result from all possible default events
over the life of the financial instrument)

For trade receivables Company applies âsimplified
approachâ which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
The Company uses historical default rates to determine
impairment loss on the portfolio of trade receivables.
At every reporting date these historical default rates are
reviewed and changes in the forward looking estimates are
analysed.

For other assets, the Company uses 12 month ECL to
provide for impairment loss where there is no significant
increase in credit risk. If there is significant increase in
credit risk full lifetime ECL is used.

Financial Liabilities - Initial recognition and measurement:

The financial Liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables, net
of directly attributable transaction costs.

Financial Liabilities - Subsequent measurement:

Financial Liabilities are subsequently carried at amortised
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 Liabilities - Financial guarantee contracts:

Financial guarantee contracts issued by the Company
are those contracts that require a payment to be made
to reimburse the holder for a loss it incurs because the
specified debtor fails to make a payment when due
in accordance with the terms of a debt instrument.
Financial guarantee contracts are recognised initially as
a liability at fair value, adjusted for transaction costs that
are directly attributable to the issuance of the guarantee.
Subsequently, the liability is measured at the higher of the
amount of loss allowance determined and the amount
recognised less cumulative amortisation.

Financial liability - Derecognition:

A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another,

from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified,
such an exchange or modification is treated as the
derecognition of the original liability and the recognition
of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit and loss.

(J) Fair Value:

- in the principal market for the asset or liability, or

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

All assets and liabilities for which fair value is measured
or disclosed in the Standalone Financial Statements are
categorized within the fair value hierarchy that categorizes
into three levels, described as follows, the inputs to
valuation techniques used to measure value. The fair value
hierarchy gives the highest priority to quoted prices in active
markets for identical assets or liabilities (Level 1 inputs) and
the lowest priority to unobservable inputs (Level 3 inputs).

Level 1 â quoted (unadjusted) market prices in active
markets for identical assets or liabilities

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

Level 3 â inputs that are unobservable for the asset or
liability

For assets and liabilities that are recognized in the
Standalone Financial Statements at fair value on a
recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by
re-assessing categorization at the end of each reporting
period and discloses the same.

(K) Investment in Subsidiaries and Associates:

The Company has elected to recognize its investments
in subsidiaries and associate at cost in accordance with
the option available in Ind AS 27, âSeparate Standalone
Financial Statementsâ.

(L) Revenue Recognition and Other Income:

Sales of goods and services:

The Company derives revenues primarily from sale of
products comprising of Defence & Space Applications

Revenue from contracts with customers is recognised
when control of the goods or services are transferred to
the customer at an amount that reflects the consideration
entitled in exchange for those goods or services. Generally,
control is transferred upon shipment of goods to the
customer or when the goods is made available to the
customer, provided transfer of title to the customer occurs
and the Company has not retained any significant risks of
ownership or future obligations with respect to the goods
shipped.

Revenue is measured at the amount of consideration
which the company expects to be entitled to in exchange
for transferring distinct goods or services to a customer
as specified in the contract, excluding amounts collected
on behalf of third parties (for example taxes and duties
collected on behalf of the government). Consideration
is generally due upon satisfaction of performance
obligations and a receivable is recognized when it becomes
unconditional.

The Company does not expect to have any contracts
where the period between the transfer of the promised
goods or services to the customer and payment by the
customer exceeds one year. As a consequence, it does not
adjust any of the transaction prices for the time value of
money.

Revenue is measured based on the transaction price,
which is the consideration, adjusted for volume
discounts, performance bonuses, price concessions and
incentives, if any, as specified in the contract with the
customer. Revenue also excludes taxes collected from
customers.

Revenue from rendering of services is recognised over time
by measuring the progress towards complete satisfaction
of performance obligations at the reporting period.

Contract Balances - Trade Receivables

A receivable represents the Companyâs right to an amount
of consideration that is unconditional.

Contract liabilities

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

Other Income:

I ncentives on exports and other Government incentives
related to operations are recognised in the statement
of profit and loss after due consideration of certainty of
utilization/receipt of such incentives.

Interest Income:

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

Dividend Income:

Dividend Income is recognised when the right to receive
the payment is established.

Rental income:

Rental income arising from operating leases is accounted
for on a straight-line basis over the lease terms and is
included as other income in the statement of profit or loss.

(M) Foreign currency transactions and translation:

Transactions in foreign currencies are recorded at the
exchange rate prevailing on the date of transaction.
Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency closing
rates of exchange at the reporting date.

Exchange differences arising on settlement or translation
of monetary items are recognised in Statement of Profit
and Loss except to the extent of exchange differences
which are regarded as an adjustment to interest costs on
foreign currency borrowings that are directly attributable
to the acquisition or construction of qualifying assets, are
capitalized as cost of assets.

Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using
the exchange rates at the dates of the transaction. NonÂ¬
monetary items carried at fair value that are denominated
in foreign currencies are translated at the exchange rates
prevailing at the date when the fair value was determined.
The gain or loss arising on translation of non-monetary
items measured at fair value is treated in line with the
recognition of the gain or loss on the change in fair value
of the item (i.e., translation differences on items whose fair
value gain or loss is recognised in OCI or profit or loss are
also recognised in OCI or profit or loss, respectively).

Foreign exchange differences regarded as an adjustment
to borrowing costs are presented in the statement of profit
and loss, within finance costs. All other finance gains /
losses are presented in the statement of profit and loss on
a net basis.

In case of an asset, expense or income where a monetary
advance is paid/received, the date of transaction is the
date on which the advance was initially recognized. If there
were multiple payments or receipts in advance, multiple
dates of transactions are determined for each payment or
receipt of advance consideration.

(N) Employee Benefits:

Short term employee benefits are recognized as an expense
in the statement of profit and loss of the year in which the
related services are rendered. Contribution to Provident
Fund, a defined contribution plan, is made in accordance
with the statute, and is recognised as an expense in the
year in which employees have rendered services.

The cost of providing gratuity, a defined benefit plans, is
determined based on Projected Unit Credit Method, on
the basis of actuarial valuations carried out by third party
actuaries at each Balance Sheet date. Actuarial gains and
losses arising from experience adjustments and changes
in actuarial assumptions are charged or credited to other
comprehensive income in the period in which they arise.
Other costs are accounted in statement of profit and loss.

Remeasurements of defined benefit plan in respect of post
employment and other long term benefits are charged to
the other comprehensive income in the year in which they
occur. Remeasurements are not reclassified to statement
of profit and loss in subsequent periods.

(O) Lease:

The Company evaluates if an arrangement qualifies to be a
lease as per the requirements of Ind AS 116. Identification
of a lease requires significant judgement. The Company
uses significant judgement in assessing the lease term
(including anticipated renewals) and the applicable
discount rate. The Company determines the lease term as
the non-cancellable period of a lease, together with both
periods covered by an options to extend the lease if the
Company is reasonably certain to exercise that options; and
periods covered by an option to terminate the lease if the
Company is reasonably certain not to exercise that options.
In assessing whether the company is reasonably certain to
exercise an option to extend a lease, or not to exercise an
option to terminate a lease, it considers all relevant facts
and circumstances that create an economic incentive for
the Company to exercise the option to extend the lease,
or not to exercise the option to terminate the lease. The

Company revises the lease term if there is a change in the
non-cancellable period of a lease. The discount rate is
generally based on the incremental borrowing rate specific
to the lease being evaluated or for a portfolio of leases with
similar characteristics.

The Company as a lessee

The Companyâs lease asset classes primarily consist of
leases for land. The Company assesses whether a contract
contains a lease, at inception of a contract. A contract is,
or contains, a lease if the contract conveys the right to
control the use of an identified asset for a period of time in
exchange for consideration. To assess whether a contract
conveys the right to control the use of an identified asset,
the Company assesses whether: (i) the contract involves the
use of an identified asset (ii) the Company has substantially
all of the economic benefits from use of the asset through
the period of the lease and (iii) the Company has the right
to direct the use of the asset.

At the date of commencement of the lease, the Company
recognizes a right-of-use asset (âROUâ) and a corresponding
lease liability for all lease arrangements in which it is a
lessee, except for leases with a term of twelve months or
less (short-term leases) and low value leases. For these
short-term and low value leases, the Company recognizes
the lease payments as an operating expense on a straightÂ¬
line basis over the term of the lease.

Certain lease arrangements includes the options to extend
or terminate the lease before the end of the lease term.
ROU assets and lease liabilities includes these options
when it is reasonably certain that they will be exercised.

The right-of-use assets are initially recognized at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently
measured at cost less accumulated depreciation and
impairment losses.

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

The lease liability is initially measured at amortized cost
at the present value of the future lease payments. The
lease payments are discounted using the interest rate
implicit in the lease or, if not readily determinable, using
the incremental borrowing rates in the country of domicile
of these leases. Lease liabilities are remeasured with a
corresponding adjustment to the related right of use asset
if the Company changes its assessment if whether it will
exercise an extension or a termination option.

The discount rate is generally based on the incremental
borrowing rate specific to the lease being evaluated or for a
portfolio of leases with similar characteristics.

Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments have
been classified as financing cash flows.

The Company as a lessor

Leases for which the Company is a lessor is classified as a
finance or operating lease. Whenever the terms of the lease
transfer substantially all the risks and rewards of ownership
to the lessee, the contract is classified as a finance lease. All
other leases are classified as operating leases.

When the Company is an intermediate lessor, it accounts for
its interests in the head lease and the sublease separately.
The sublease is classified as a finance or operating lease
by reference to the right- of-use asset arising from the head
lease.

For operating leases, rental income is recognized on a
straight line basis over the term of the relevant lease.

(P) Research and Development:

Revenue expenditure on Research and Development
is charged in the year in which it is incurred. Capital
Expenditure for Research and Development is capitalised
when commissioned and included in the Plant, Property
and Equipment and depreciated in accordance with the
policies stated for Property, Plant and Equipment.

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