Accounting Policies of Tolins Tyres Ltd. Company

Mar 31, 2024

1 Corporate information:

Tolins Tyres Limited [Formerly known as Tolins Tyres Private Limited] (“the Company”) is a public limited company domiciled and incorporated in India under the erstwhile Companies Act, 1956 vide CIN No. U25119KL2003PLC016289 and incorporated on 10th of July 2003. The registered office of the Company is located at No. 1/47, MC Road, Kalady, Ernakulam, Kerala - 683574 India. The Company is primarily engaged in the manufacture of rubber tyres for various vehicle.

Pursuant to a special resolution passed in the extraordinary general meeting of the shareholders of the Company held on 01^st January 2024, the Company has converted from a Private Limited Company to a Public Limited Company and consequently, name of the Company has changed to Tolins Tyres Limited pursuant to fresh certificate of incorporation issued by ROC on 26^th January 2024.

2 Material Accounting Policy Info:

This note provides a list of the material accounting policies adopted in the preparation of these Financial Information. These policies have been consistently applied to all the years presented, unless otherwise stated.

First Time Adoption of Ind AS

Upto the Financial year ended 31^st March 2023, the Company prepared its financial statements in accordance with accounting standards notified under the Section 133 of the Act, read together with paragraph 7 of the companies (accounts) Rule,2014 (" Indian GAAP" or "Previous GAAP"). The financial statement for the period ended 31^st March 2024 is the first Ind AS Annual Financial Statements prepared in accordance with the requirements of Ind AS 101 - First time adoption of Indian Accounting Standards. Accordingly, the transition date to Ind AS is 01^st April 2022.

The Ind AS Financial Statements as at and for the year ended 31^st March 2024, 31^st March 2023 and 01^st April 2022 have been prepared after making suitable adjustments to the accounting heads from their Indian GAAP values following accounting policies and accounting policy choices (both mandatory exceptions and optional exemptions availed as per Ind AS 101) consistent with that used at the date of transition to Ind AS (01^st April 2022) and as per the presentation, accounting policies and grouping/classifications including revised Schedule III disclosures. The details required as per Ind AS 101 have been discussed in Note 40 of the Ind AS Financial Information.

Transition to Ind AS

All general explanations regarding impact of transition to Ind AS for respective items have been disclosed in Note 40 of the Financial Information.

2.1 Basis of preparation and presentation of Ind AS Financial Information:

(i) Basis of preparation

a) The Financial Information of the Company comprising of the Statement of Assets and Liabilities as at 31^st March 2024, 31^st March 2023 and 01^st April 2022, the Statements of Profit and Loss (including other comprehensive income) as at 31^st March 2024 and March 31, 2023, the Statement of Changes in Equity, as at 31^st March 2024, March 31, 2023 and 01 April, 2022, the Cash Flow Statement for the as at 31^st March 2024 andjyiafehJil 2023, the Statement of Material Accounting Policy information, and other explanate^i^fb^m» (collectively, the “Financial Information” or “Financial Statements"),

b) The Financial Statements have been prepared c/ta/ggKBBB6fh yk. The ad^§rtfTng~^)ll^i

are applied consistently to all the periods preser^llMjainJNTANTS/^/j o/ KALADY [I

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c) The Financial Statements have been prepare^^^jinalsiFi^s^itable adjWiWlts^to tbfe accounting heads from their Indian GAAP values. Tf^^ffin^^fStatements^jiot^stajytory financial statements under the Companies Act, 2013. ^^=====:::^

d) These Financial Statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016 and other accounting principles generally accepted in India, along with the presentation requirement of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant ), which have been approved by the board of directors at their meeting held on 24^th July 2024.

e) Historical cost convention:

The Financial Statements have been prepared on a historical cost basis, except for the following assets and liabilities:

i. Certain financial assets and liabilities that are measured at fair value

ii. Defined benefit plans-plan assets measured at fair value

f) The Financial Statements are presented in Indian Rupees (In Rupees) and disclosed in millions except as otherwise stated.

g) New and amended standards adopted by the Company

The Ministry of Corporate Affairs had vide notification dated March 31, 2023 notified the Companies (Indian Accounting Standards) Amendment Rules, 2023, which amended certain accounting standards, and are effective April 1, 2023.

i. Disclosure of accounting policies - amendments to Ind AS 1

The amendment aims to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. The amendments did not have an impact on the Company''s disclosures of accounting policies, on the measurement, recognition or presentation of any items in the Company’s financial statements.

ii. Definition of accounting estimates - amendment to Ind AS 8

The amendment aims to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. The amendments did not have an impact on the Company’s disclosures of accounting policies, on the measurement, recognition or presentation of any items in the Company’s financial statements.

iii. Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendment to Ind AS 12

The amendments narrow the scope of the initiaf^^wi^S^ception under Ind AS 12, so that it no longer applies to transactions that giv^r^fe^equaltafeDte and deducJife^&Rporary differences. There was no impact on the opemritjr^^ned earru^aas at

These amendments did not have any material irr ^®^^^<ft^5lWIj^^iecogni|^(m^A^eyii9i^ and not expected to significantly affect the curren\(^^^^p^i^^^/

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:

(i) In the principal market for asset or liability, or

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

The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non- financial asset considers a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

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

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

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

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

Level 3- Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

(i) Current versus non-current classification:

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

a. An asset is treated as current when it is:

i. Expected to be realized or intended to be sold or consumed in normal operating cycle.

ii. Held primarily for the purpose of trading.

iii. Expected to be realized within twelve months after the reporting period, or

iv. Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

b. A liability is current when it is:

i. It is expected to be settled in normal operating cycle.

ii. It is held primarily for the purpose of trading.

iii. It is due to be settled within twelve months after the reporting period, or

iv. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current.

c. Deferred tax assets and deferred tax liabilities are classified as non- current assets and liabilities.

d. The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle.

(ii) Property, plant and equipment:

Company initially recognised Property, Plant and Equipment including capital work in progress are stated at cost, less accumulated depreciation and accumulated impairment losses, if any. The cost comprises of purchase price, taxes, duties, freight and other incidental expenses directly attributable and related to acquisition and installation of the concerned assets and are further adjusted by the amount of input tax credit availed wherever applicable. Subsequent costs are included in asset''s carrying amount or recognised as separate assets, as appropriate, only when it is probable that future economic benefit associated with the item will flow to the Company and the cost of item can be measured reliably. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their respective useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied.

All other repair and maintenance costs are recognized in Statement of Profit or Loss as incurred.

The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognitiomcfiteaajor a provision are met.

Any item of property, plant and equipment and a^^^hlficiT^^h. initially recp^^^l^s. derecognizea upon disposal or when no future econ/amc benefits arer^oected frj^raHjs^^^^ disposal. Any gain or loss arising on derecognitiotjf/®''tl^^$eft$®lk3ated as w

between the net disposal proceeds and the carrying al^tiHK

Capital work- in- progress includes cost of property, plant and equipment under installation / under development as at the balance sheet date.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

Land is carried at historical cost and is not depreciated.

The useful lives, residual values and depreciation method of PPE are reviewed, and adjusted appropriately, at-least as at each reporting date so as to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from these assets. The effects of any change in the estimated useful lives, residual values and / or depreciation method are accounted prospectively, and accordingly the depreciation is calculated over the PPE’s remaining revised useful life. The cost and the accumulated depreciation for PPE sold, scrapped, retired or otherwise disposed off are derecognised from the Statement of Assets and Liabilities and the resulting gains / (losses) are included in the statement of profit and loss within other expenses / other income.

The management based on its past experience and technical assessment has estimated the useful life, which has no variance with the life prescribed in Part C of Schedule II of the Companies Act, 2013 and has accordingly, depreciated the assets over such useful life.

Transition to Ind AS -

Property, plant and equipment under the previous GAAP (Indian GAAP), property, plant and equipment were carried in the balance sheet on the basis of historical cost. For the transition to Ind AS, the Group has elected to continue with the carrying value for all of its property, plant and equipment recognised as of April 01, 2022 (date of transition to Ind AS as per statutory financial statements) based per the previous GAAP and use that carrying value as its deemed cost as at the date of transition.

(iii) Intangible Assets:

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangibles (except for goodwill as covered under Ind AS 103), excluding development cost, are not capitalized and the related expenditure is reflected in Statement of Profit and Loss in the period in which the expenditure is incurred. Cost comprises the purchase price, taxes to the extent of nonrefundable and any attributable cost of bringing the asset to its working condition for its intended use.

The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets is recognized in the

statement of profit and loss in the expense category consi^^Si^rttA^^l^tio^ of the intangible

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Intangible assets with indefinite useful lives are not apqrti^e^EE^iPe Wsted fo/f^^mentS^Vi annually, either individually or at the cash-generating uli^^/er.nwl^^^fent of|r^4f^Qtfe ) m is reviewed annually to determine whether the indefinit^^continuesifc^^sup portable If nob/ /) the change in useful life from indefinite to finite is made or^^^^^^^^sis.

Gains or losses arising from disposal of the intangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the assets are disposed off.

Intangible assets with finite useful life are amortized on a written down value basis over the estimated useful economic life of 10 years, which represents the period over which the Company expects to derive economic benefits from the use of the assets.

Intangible Assets under development includes cost of intangible assets under development as at the balance sheet date.

Transition to Ind AS

On transition to Ind AS, the Group has elected to continue with the carrying value of all the items of intangible assets recognized as at April 01, 2022, measured as per the previous GAAP, and use that carrying value as the deemed cost of such property, plant and equipment.

(iv) Impairment of non- financial Assets:

Intangible assets that have an indefinite useful life are net subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.

Other assets are tested for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for the which there are separately identifiable cash inflows which largely independent of the cash inflows from other assets or group of assets (cash generating units). Non - financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period

(v) Compound financial instruments:

Compound financial instruments are separated into liability and equity components based on the terms of the contract. On issuance of compound financial Instruments, the fair value of the liability component is determined using a market rate for an equivalent instrument. This amount is classified as a financial liability measured at amortised cost (net of transaction cost) until it is extinguished on redemption/ conversion.

(vi) investment In Subsidiaries, Associates, Joint Ventures:

Any investments in its subsidiaries, associates and joint ventures are carried at cost less impairment.

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

a) Financial Assets -

Classification:

The Company classifies its financial assets in the following measurement categories:

i. Those to be measured at fair value through other comprehensive income.

ii. Those to be measured at fair value through profit or loss.

iii. Those to be measured at amortised cost.

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

Initial recognition and measurement ¦

All financial assets (not recorded at fair value through profit or loss) are recognized initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset. Transaction cost of financial assets carried at fair value through profit or loss are expensed in profit or loss account.

Subsequent measurement -

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

i. Debt instruments at amortized cost

ii. Debt instruments at fair value through other comprehensive income (FVTOCI)

iii. Debt instruments at fair value through profit and loss (FVTPL)

iv. Equity instruments

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

For investment in debt instruments, this will depend on the business model in which the investment is held.

For investment in equity instruments, this will depend on whether the Company has made an irrevocable selection at the time of initial recognition to account for equity instruments at FVTOCI.

Derecognition -

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

i. The rights to receive cash flows from the asset have expired, or

ii. The Company has transferred its rights to receive cash flows from the asset or has assumed

an obligation to pay the received cash flows in full without material delay to a third party under a "pass through" arrangement and either;

a. the Company has transferred the rights to receive cash flows from the financial assets or

b. the Company has retained the contractual right to receive the cash flows of the financial asset but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the Company has transferred an asset, the Company evaluates whether it has transferred substantially all the risks and rewards of the ownership of the financial assets. In such cases, the financial asset is derecognized. Where the entity has not transferred substantially all the risks and rewards of the ownership of the financial assets, the financial asset is not derecognized.

Where the Company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.

Impairment of financial assets:

In accordance with Ind AS 109, the Company applies expected credit losses (ECL) model for measurement and recognition of impairment loss on the following financial asset and credit risk exposure -

a. Financial assets measured at amortized cost;

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

The Company follows "simplified approach" for recognition of impairment loss allowance on Trade receivables or contract revenue receivables.

Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

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

ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss. This amount is reflected under the head ‘other expenses’ in the statement of profit and loss.

The balance sheet presentation for various financial instruments is described below: -

i Financial assets measured as at amortized cost: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.

ii. Debt instruments measured at FVTOCI: For debt instruments measured at FVTOCI, the expected credit losses do not reduce the carrying amount in the balance sheet which remains at fair value. Instead, an amount equal to the allowance that would arise if the asset was measured at amortised cost is recognised in other comprehensive income as the "accumulated impairment amount".

b) Financial liabilities:

Classification -

The Company classifies its financial liabilities in the following measurement categories:

i. Those to be measured at fair value through profit or loss (FVTPL).

ii. Those to be measured at amortised cost.

Initial recognition and measurement -

Financial liabilities are classified at initial recognition as financial liabilities at fair value through profit or loss, loans and borrowings, and payables, net of directly attributable transaction costs. The Company financial liabilities include loans and borrowings including bank overdraft, trade payables, trade deposits, retention money, liabilities towards services and other payables.

Subsequent measurement -

A. Financial liabilities at fair value through profit or loss (FVTPL):

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered by the Company that are not designated as hedging instruments in a hedge relationship as defined by Ind AS 109. The separated embedded derivate are also classified as held for trading unless they areid^sgffiSfted-as effective hedging instruments.

Gains or losses on liabilities he#. for frading''ar^tec''ognized in the of profit and loss.

Financial liabilities designatedvfejton initial recogMfon at faiiv^^ThTm^^fcrofit or loss are designated as such at the initf ^a^^l^SRitife, and on$$/^pj$^diwnd AS 109 are satisfied. For liabilities designb®(^PW^^^ralue gaii|^lb^^^riMt|ble to changes in own credit risk are recognizdtfw

The Company has not designated any financial liability as at fair value through profit and loss unless otherwise specified.

B. Financial liabilities at amortised cost (AC):

i. Trade Payables -

These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 90 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period.

They are recognized initially at fair value and subsequently measured at amortized cost.

ii. Loans and borrowings -

Borrowings are initially recognized at fair value, net of transaction cost incurred. After initial recognition, interest-bearing borrowings are subsequently measured at amortized cost. Gains and losses are recognized in profit or loss when the liabilities are derecognised as well as through the amortization process.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

iii. Refundable Deposits

Refundable Deposits are initially recognized at fair value, net of transaction cost incurred. After initial recognition, refundable deposits are subsequently measured at amortized cost. Gains and losses are recognized in profit or loss when the liabilities are derecognised as well as through the amortization process.

Derecognition -

A financial liability is derecognized 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 medication is treated as the derecognition of the original liability and the recognition of a new liability.

The difference in the respective carrying amounts is recognized in the statement of profit and loss.

c) General

Offsetting of financial instruments:

Financials assets and financial liabilities are offset, and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

Reclassification of financial assets/ financial liabilities:

The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company’s senior management determines change in the business model as a result of external or internal changes which are significant to the Company’s operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.

(viii) Inventories:

a. Basis of Valuation:

Inventories are valued at lower of cost and net realizable value after providing cost of obsolescence, if any. The comparison of cost and net realizable value is made on an item-byitem basis.

b. Method of Valuation:

i. Cost of raw materials and component been determined by using FIFO method and comprises all costs of purchase, duties, taxes (other than those subsequently recoverable/ refundable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.

ii. Cost of finished goods and work-in-progress includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity but excluding borrowing costs.

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

(ix) Taxes:

Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. ^

Current and deferred tax are re^ognised’in''ff^^tement of Profit a^tp§s; except when they relate to items that are recognisSpin Other Comprehensive Income or directly in equity, in which case, the current and deferrec^ax afatAIBffiEfB&figmsed in Other Cfflm^^ij^yd fplpme or directly in equity, respectively. O^CCOUim^ |^\^83574yojf

a. Current tax:

Current tax expenses are accounted in the same period to which the revenue and expenses relate. Provision for current income tax is made for the tax liability payable on taxable income after considering tax allowances, deductions and exemptions determined in accordance with the applicable tax rates and the prevailing tax laws. The Company’s management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off recognised amounts and there is an intention to settle the asset and the liability on a net basis.

b. Deferred tax:

Deferred income tax is recognized using the balance sheet approach. Deferred tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in financial statements.

Deferred income tax assets are recognized to the extent that it is probable that taxable profit will be Deferred income tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting period.

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

(x) Revenue Recognition and Contracts with Customers

Revenue is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

The Company collects Goods and Service Tax, TCS if any, on behalf of government, and therefore, these are not consideration to which the Company is entitled, hence, these are excluded from revenue. In accordance with Ind AS 115, the Company recognises the amount as revenue from contracts with customers, which is received for the transfer of promised goods or services to customers in exchange for those goods or services. Performance obligation are deemed to have been met when the controlgtg^ogsor services transferred to the customer at an amount that reflects the consideratioa^^NiAfSth&Company expects to be entitled in exchange for those goods or services. The^^yafTTpoifmh{tihne or period of time is the transfer of control of the goods or services (control aMMS^ch). The Corttoany recognises r^r^^^^nt in time, i.e. when control of the goods is trans#j^d(lpAlRSP3gt$>mer depending ov^rms of^atek Revenue is reduced for customer returns, ta>lteUr§etmTft^ftefl rebates ahoT?_Ls^)J^f)o wa nces. To determine when to recognise reVep\ie and at wha£§rfiount, the fi|^at^§rgj^l| gapplied. By applying the five-step model distin^perfQrman^e^^gations are iaentrfied. Variable consideration includes various forms of discounSi^^^^i^^fscounts, price cotoesSlunsi incentives, etc. on the goods sold or services rendered to its customers, dealers and distributors. In all such cases, accumulated experience is used to estimate and provide for the variability in revenue, using the expected value method and the revenue is recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur in future on account of refund or discounts. The transaction price is determined and allocated to the performance obligations according to the requirements of Ind AS 115.

The Company also considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated.

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.

a. Revenue from sale of goods:

Revenue from the sale of goods is recognised at the point in time when control of the assets is transferred to the customer, generally on delivery of the goods.

The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of goods, the Company considers the effects of variable consideration, the existence of significant financing components, non-cash consideration, and consideration payable to the customer (if any).

b. Revenue from sale of services:

Revenue from sale of services is recognised over a period because the customer simultaneously receives and consumes the benefits provided by the Company and accounted revenue as and when services are rendered and there is no unfulfilled obligation.

c. Consideration of significant financing component in a contract:

The Company receives short-term advances from its customers. 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.

d. Trade Receivables:

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within one year and therefore are all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Company holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.

e. Contract Assets:

A contract asset is the entity’sricifet±o_;ransideration in exchange for goods or services that the entity has transferred to the^^tM^^^ontract asset becomes a receivable when the entity’s right to consideration is ur^^afff^ar^K^TOe the case whempfily-the passage of time is required before payment of the (ra^sideration is due The impairri*$nj ,of corvtract assets is measured presented and disclosed/^/tKdf^fflgftiasidSsltrade receufafles,

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f. 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, contract liability is recognised when the payment is made, or the payment is due (whichever is earlier).

g. Impairment:

An impairment is recognised to the extent that the carrying amount of receivable or asset relating contracts with customers.

a. the remaining amount of consideration that the Company expects to receive in exchange for the goods or services to which such asset relates; less.

b. the costs that relate directly to providing those goods or services and that have not been recognised as expenses.

(xi) Other Income:

a. 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 proportion basis by reference to the principal outstanding and effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. Interest income is included in other income in the statement of profit and loss.

(xii) Employee benefits:

a. Short-term obligations:

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

Accumulated leaves, which are expected to be utilised within the next twelve months, is treated as short term employee benefits. The Company measured the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company recognises the expected cost of short-term employee benefit as an expense, when an employee renders the related services. The Company presents the leave encashment as a current liability in the balance sheet to the extent it does not have an unconditional right to defer its settlement for twelve months after the reporting date.

b. Defined Contribution Plan:

The Company makes d^^^^^ft^ution to Employees Provident Fund Organization (EPFO), Pension Fund a^0riploy§es^^te Insurance (ESI)^high are accounted on accrual basis as expenses in $fe*natement of nigwt and Loss in^^i^^uring which the related services are rendered/b$r/tenopl$>S(?§RED ---

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Prepaid contributions are recognised asm |lsset to th|e>ffle^k?tja/0$h refund or reduction in future payments is

c. Defined Benefit Plan:

Retirement benefit in the form of Gratuity is considered as defined benefit plan. The liability recognised in the balance sheet in respect of gratuity is the present value of the defined benefit obligation at the balance sheet date, together with adjustments for unrecognised actuarial gains or losses and past service costs. The defined benefit obligation is determined by actuarial valuation as or, the balance sheet date, using the projected unit credit method.

Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability, are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognised in profit or loss on the earlier of:

i The date of the plan amendment or curtailment, and

ii The date that the Company recognises related restructuring costs.

Net interest is calculated by applying the discount rate to the net defined benefit liability.

The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:

i Service costs comprising current service costs, past-service costs gains and losses on curtailments and nonroutine settlements; and

ii Net interest expense or income.

The Company recognises the following changes in OCI on account of actuarial (gain) or Loss on total liabilities:

i Due to changes in financial assumptions

ii Due to changes in demographic assumption

iii Due to experience variance

(xiii) Leases:

Leases are accounted for using the principles of recognition, measurement, presentation and disclosures as set out in Ind AS 116 Leases.

On inception of a contract, the Company assesses whether it contains a lease. A contract contains a lease when it conveys the right to control the use of an identified asset for a period in exchange for consideration. The right to use the asset and the obligation under the lease to make payments are recognised in the Company’s financial statements as a right-of-use asset and a lease liability.

Lease contracts may contain both lease and non-lease components. The Company allocates payments in the contract to the lease and non-lease components based on their relative standalone prices and applies the lease accounting model only to lease components.

Right to use assets

The right-of-use asset recognisej^^^^Q^mmencement includes the amount of lease liabilities on initial measuremerajwttiafCTi^^^sts incurred, an^yeas^oayments made at or before the commencement de$pless any lea^&Jhcentives

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Right-of-use assets are value a^/tlx

useful life or the lease term\\vmchever is loww^Right-of-uIpe a^ts ate also adjusted for any remeasurement of lease liabiliMsVid are suWetMo impairrrtentN^stin^/Reaaual value is reassessed at each reporting

The lease liability is initially measured at the present value of the lease payments to be made over the lease term. The lease payments include fixed payments (including ‘in-substance fixed’ payments) and variable lease payments that depend on an index or a rate, less any lease incentives receivable. ''In-substance fixed’ payments are payments that may, in form, contain variability but that, in substance, are unavoidable.

In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable.

After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest on lease liability and reduced for lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification e g. a change in the lease term, a change in the ‘in-substance fixed’ lease payments or as a result of a rent review or change in the relevant index or rate.

Variable lease payments that do not depend on an index or a rate are recognised as an expense in the period over which the event or condition that triggers the payment occurs. In respect of variable leases which guarantee a minimum amount of rent over the lease term, the guaranteed amount is an ‘in-substance fixed’ lease payment and included in the initial calculation of the lease liability. Payments which are ‘in-substance fixed’ are charged against the lease liability.

The Company has opted not to apply the lease accounting model to intangible assets, leases of low value assets or leases which have a term of less than 12 months. Costs associated with these leases are recognised as an expense on a straight-line basis over the lease term

Lease payments are presented as follows in the Company’s statement of cash flows:

i Short-term lease payments, payments for leases of low-value assets and variable lease payments that are not included in the measurement of the lease liabilities are presented within cash flows from operating activities.

ii Payments for the interest element of recognised lease liabilities are presented within cash flows from financing activities; and

iii Payments for the principal element of recognised lease liabilities are presented within cash flows from financing activities.

[xiv) Earnings per share:

a. Basic EPS -

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equities shares outstanding during the period. The weighted average number of equities shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.

b. Diluted EPS -

For the purpose of calculating-stilytedearnings per share, the net profit or loss for the period attributable to equity sha^[§1^i&§TO^he weighted average number of shares outstanding

during the period are of all potentiaiJ»=effiBtissse equity shares.

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(xv) Borrowing Costs:

Borrowing cost includes interest and other costs incurred in connection with the borrowing of funds and charged to Statement of Profit & Loss on the basis of effective interest rate (EIR) method. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing cost.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. Capitalization of Borrowing Cost is suspended and charged to the statement of profit and loss during extended periods when active development activity on the qualifying asset is interrupted. All other borrowing costs are recognized as expense in the period in which they occur.

(xvi) Cash and Cash Equivalents:

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposit held at call with financial institutions, other short - term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

(xvii) Foreign currencies:

a. Functional and presentation currency:

Items included in the Financial Statements of the Company are measured using the currency of the primary economic environment in which the entity operates (''the functional currency''). The Financial Statements are presented in Indian rupee (INR ?) which is also the Company functional and presentation currency of holding Company.

b. Transactions and balances:

Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transaction and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rate are generally recognised in the Statement of profit and loss.

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 initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.

c. Exchange differences:

Exchange differences arising on settlement or translation of monetary items are recognized as income or expense in the period in which they arise except for exchange differences on gain or loss arising on translation of non-monetary items measured at fair value which 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 valuegaj&dafeJgss is recognized in OCI or profit or loss are also recognized in OCI or profit or loss jj£spectivetyj. N

d. Translation of financial stateil^nts of foreltfp dperationsff^^?z/\

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On consolidation, the assets and liabiMeeWfoWEgn opera[\orlL^/e^fⁱM^M^ho (INR ?) at the rate of exchange prevailing at ''^reporting date and their Watefift^W''jMfit and loss are translated at the exchange rates pjeyaUing at the dates of the tonsbctionsrFor Dractical reason, the Company uses monthly averagfe ra^M^jjffis^te income andN^gdhsgji^s, if average rate

approximates the exchange rates at the dates of the transactions. The exchange differences arising