2. Material accounting policies

2.1 Statement of compliance and basis of preparation

The Standalone financial statements of the Company have
been prepared in accordance with Indian Accounting
Standards (Ind AS) notified under the Companies (Indian
Accounting Standards) Rules, 2015 (as amended from time to
time) and presentation requirements of Division II of Schedule
III to the Companies Act, 2013 (as amended from time to
time), (Ind AS compliant Schedule III), as applicable to the
standalone financial statements.

The standalone financial statements have been prepared on
a historical cost basis, except for the following assets and
liabilities which have been measured at fair value:

Derivative financial instruments,

Certain financial assets and liabilities measured at fair value
(refer accounting policy regarding financial instruments), and
Contingent consideration arising from business combination

Equity settled ESOP at grant date fair value

The accounting policies and related notes further described
the specific measurements applied for each of the assets and
liabilities.

In addition, the carrying values of recognised assets and
liabilities designated as hedged items in fair value hedges
that would otherwise be carried at amortised cost are
adjusted to record changes in the fair values attributable
to the risks that are being hedged in effective hedge
relationships.

The financial statements are presented in INR and all values
are rounded to the nearest lakh (INR 00,000), except when
otherwise indicated.

The Company has prepared the financial statements on the
basis that it will continue to operate as a going concern.

2.2 Summary of material accounting policies

a) Investment in subsidiaries and associates

A subsidiary is an entity that is controlled by another entity.

An associate is an entity over which the Company has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions
of the investee but is not control or joint control over those
policies.

The Company’s investments in its subsidiaries and associates
are accounted at cost less impairment.

Impairment of investments

The Company reviews its carrying value of investments
carried at cost annually, or more frequently when there is
indication for impairment. If the recoverable amount is less
than its carrying amount, the impairment loss is recorded in
the Statement of Profit and Loss.

When an impairment loss subsequently reverses, the carrying
amount of the Investment is increased to the revised estimate
of its recoverable amount, so that the increased carrying
amount does not exceed the cost of the Investment. A
reversal of an impairment loss is recognised immediately in
Statement of Profit or Loss.

b) Current versus non-current classification

The Company segregates assets and liabilities into current
and non-current categories for presentation in the balance
sheet after considering its normal operating cycle and
other criteria set out in Ind AS 1, "Presentation of Financial
Statements". For this purpose, current assets and liabilities
include the current portion of non-current assets and liabilities
respectively. Deferred tax assets and liabilities are always
classified as non-current.

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 period up to twelve
months as its operating cycle.

c) Property, plant and equipment

Capital work in progress is stated at cost, net of accumulated
impairment loss, if any. Plant and equipment are stated at
cost, net of accumulated depreciation and accumulated
impairment losses, if any. Such cost includes the cost of
replacing part of the plant and equipment and borrowing
costs for long-term construction projects if the recognition
criteria are met. Repair and maintenance costs are
recognised in 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
recognition criteria for a provision are met.

Advances paid towards the acquisition of property, plant
and equipment outstanding at each balance sheet date is
classified as capital advances under other non-current assets
and the cost of assets not put to use before such date are
disclosed under ‘Capital work-in-progress’. Subsequent
expenditures relating to property, plant and equipment is
capitalised only when it is probable that future economic
benefits associated with these will flow to the Company and
the cost of the item can be measured reliably.

An item of property, plant and equipment and any significant
part initially recognised is derecognised upon disposal or
when no future economic benefits are expected from its
use or disposal. Any gain or loss arising on derecognition
of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is
included in the statement of profit and loss when the asset is
derecognised.

The Company depreciates property, plant and equipment
over their estimated useful lives using the straight-line
method. The estimated useful lives of assets are as follows:

The Company, based on management estimate, depreciates
workstations over estimated useful lives which are
different from the useful life prescribed in Schedule II to
the Companies Act, 2013. The management believes that
these estimated useful lives are realistic and reflect fair
approximation of the period over which the assets are likely to
be used.

The Company has evaluated the applicability of component
accounting as prescribed under Ind AS 16, Property, plant
and equipment, and Schedule II of the Companies Act, 2013,
the Management has not identified any significant component
having different useful lives. Schedule II requires the
Company to identify and depreciate significant components
with different useful lives separately.

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.

Leasehold improvements are depreciated over its lease
period including renewable period or estimated useful life,
whichever is shorter, on a straight-line basis.

d) Intangible assets

Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible
assets are carried at cost less any accumulated amortisation
and accumulated impairment losses. Internally generated
intangibles, excluding capitalised development costs (refer
below policy for R&D costs), are not capitalised and the
related expenditure is reflected in profit or loss in the period in
which the expenditure is incurred

The useful lives of intangible assets are assessed as either
finite or indefinite.

Expenditure incurred towards development, if eligible
for capitalisation, is carried as ‘intangible assets under
development’ where such assets are not yet ready for their
intended use.

Intangible assets with finite lives are amortised over the useful
economic life and assessed for impairment whenever there
is an indication that the intangible asset may be impaired.

The amortisation period and the amortisation method for an
intangible asset with a finite useful life are 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 are considered to
modify the amortisation period or method, as appropriate,
and are treated as changes in accounting estimates. The
amortisation expense on intangible assets with finite lives is
recognised in the statement of profit and loss unless such
expenditure forms part of carrying value of another asset.

Intangible assets with indefinite useful lives are not amortised,
but are tested for impairment annually, either individually or at
the cash-generating unit level. The assessment of indefinite
life is reviewed annually to determine whether the indefinite life
continues to be supportable. If not, the change in useful life
from indefinite to finite is made on a prospective basis.

An intangible asset is derecognised upon disposal (i.e., at the
date the recipient obtains control) or when no future economic
benefits are expected from its use or disposal. Any gain or
loss arising upon derecognition of the asset (calculated as
the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the statement of
profit and loss when the asset is derecognised.

Process manuals are amortised over the remaining project
term or the useful life of the process manual, whichever is
shorter. Software’s are amortised over the period of 6 years /
over the period of the respective project.

The residual values, useful lives and methods of amortization
of intangible assets are reviewed at each financial year end
and adjusted prospectively, if appropriate.

Research and development costs

Research costs are expensed as incurred. Development
expenditures on an individual project are recognised as an
intangible asset when the Company can demonstrate:

- The technical feasibility of completing the intangible
asset so that the asset will be available for use or sale

- Its intention to complete and its ability and intention to
use or sell the asset

- How the asset will generate future economic benefits

- The availability of resources to complete the asset

- The ability to measure reliably the expenditure during
development.

Following initial recognition of the development expenditure
as an asset, the asset is carried at cost less any accumulated
amortisation and accumulated impairment losses.
Amortisation of the asset begins when development is
complete, and the asset is available for use. It is amortised
over the period of expected future benefit. Amortisation
expense is recognised in the statement of profit and loss
unless such expenditure forms part of carrying value of
another asset. During the period of development, the asset is
tested for impairment annually.

e) 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 asset’s
recoverable amount. An asset’s recoverable amount is the
higher of an asset’s or cash-generating unit’s (CGU) fair value
less costs of disposal and its value in use. The recoverable
amount is determined for an individual asset, unless the asset
does not generate cash inflows that are largely independent
of those from other assets or group of assets. When 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 costs 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, quoted share prices
for publicly traded companies or other available fair value
indicators.

The Company bases its impairment calculation on detailed
budgets and forecast calculations, which are prepared
separately for each of the Company’s CGUs to which the
individual assets are allocated. These budgets and forecast
calculations generally cover a period of five years. For longer
periods, a long-term growth rate is calculated and applied to
project future cash flows after the fifth year. To estimate cash

flow projections beyond periods covered by the most recent
budgets/forecasts, the Company extrapolates cash flow
projections in the budget using a steady or declining growth
rate for subsequent years, unless an increasing rate can be
justified. In any case, this growth rate does not exceed the
long-term average growth rate for the products, industries, or
country or countries in which the Company operates, or for
the market in which the asset is used.

Impairment losses are recognised in the statement of profit
and loss.

For assets excluding goodwill an assessment is made
at each reporting date to determine whether there is an
indication that previously recognised impairment losses no
longer exist or have decreased. If such indication exists,
the Company estimates the asset’s or CGU’s recoverable
amount. A previously recognised impairment loss is reversed
only if there has been a change in the assumptions used
to determine the asset’s recoverable amount since the last
impairment loss was recognised. The reversal is limited so
that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that
would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years.
Such reversal is recognised in the statement of profit and
loss.

Intangible assets with indefinite useful lives are tested for
impairment annually at the CGU level, as appropriate, and
when circumstances indicate that the carrying value may be
impaired.

) Revenue from operations

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

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 to
which the Company expects to be entitled in exchange for
those goods or services and excludes amounts collected on
behalf of third parties. The Company has generally concluded
that it is the principal in its revenue arrangements because
it typically controls the goods or services before transferring
them to the customer.

Sale of services (Technology services and solutions)

The Company derives its revenues primarily from engineering
design services entailing delivering of numerous engineering
design reports as per specifications provided by the
customers that are used in aerospace, automotive and other
industries. These design reports are generally prepared and
delivered within a period ranging between one to three days.
Each of these reports are separate performance obligation
with a transaction price agreed with the customers. Revenue
from time and material contracts are recognized on output
basis measured by time and efforts expended, units delivered
etc.

Revenue from above contracts is recognized over time as
the related services are performed and revenue from the end
of the last invoicing to the reporting date is recognized as
unbilled revenue.

Finance income

For all financial instruments measured at amortised cost,
interest income is recorded using the effective interest rate
(EIR). EIR is the rate that exactly discounts the estimated
future cash payments or receipts over the expected life of the
financial instrument or a shorter period, where appropriate,
to the net carrying amount of the financial asset or to the
amortised cost of a financial liability. When calculating EIR, the
Company estimates the expected cash flows by considering
all the contractual terms of the financial instrument but does
not consider the expected credit losses. Interest income is
included in finance income in the statement of profit and
loss.

Contract balances
Contract assets

A contract asset is the right to consideration in exchange for
services transferred to the customer. If the Company perform;
by providing services to a customer before the customer pay;
consideration or before payment is due, a contract asset is
recognised for the earned consideration that is conditional.

Revenues in excess of invoicing are classified as contract
assets (which we refer to as Unbilled Revenue). Contract
assets are subject to impairment assessment. Refer to
accounting policies on impairment of financial assets in
section 2 (p) Impairment of financial assets.

Trade receivables

A receivable represents the Company’s right to an amount of
consideration that is unconditional (i.e., only the passage of
time is required before payment of the consideration is due).
Refer to accounting policies of financial assets in section 2
(o) Financial instruments - initial recognition and subsequent
measurement.

Contract liabilities

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

Employee benefits

Expenses and liabilities in respect of employee benefits are
recorded in accordance with Ind AS 19, Employee Benefits.

Defined contribution plan

Retirement benefit in the form of provident fund is a defined
contribution scheme. The Company has no obligation, other
than the contribution payable to the provident fund. The

Company recognises contribution payable to the provident
fund scheme as an expenditure, when an employee renders
the related service. Prepaid contributions are recognised as
an asset to the extent that a cash refund or a reduction in the
future payments is available.

Overseas social security

The Company contributes to social security charges of
countries to which the Company deputes its employees on
employment or has permanent employees. The plans are
defined contribution plan and contributions paid or payable
is recognised as an expense in these periods in which the
employee renders services in those respective countries.

Defined benefit plan
Gratuity

The liability or asset recognised in the balance sheet in
respect of defined benefit gratuity plans is the present value
of the defined benefit obligation at the end of the reporting
period less the fair value of plan assets (if any). The cost
of providing benefits under the defined benefit plan is
determined using the projected unit credit method.

Compensated absences

The Company provides benefit of compensated absences
under which unavailed leave are allowed to be accumulated
to be availed in future. The compensated absences
comprises of vesting as well as non vesting benefit. The cost
of short term compensated absences are provided for based
on estimates. Long term compensated absence costs are
provided for based on actuarial valuation using the project
unit credit method. The Company presents the entire leave as
a current liability in the balance sheet, since it does not have
an unconditional right to defer its settlement for 12 months
after the reporting date.

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

Service cost on the Company’s defined benefit plan
is included in employee benefits expense. Employee
contributions, all of which are independent of the number of
years of service, are treated as a reduction of service cost.

Net interest expense on the net defined benefit liability is
included in finance costs.

Gains and losses through re-measurements of the defined
benefit plans are recognized in other comprehensive income,
which are not reclassified to Statement of Profit and Loss
in a subsequent period. Further, as required under Ind AS
compliant Schedule III, the Company transfers those amounts
recognized in other comprehensive income to retained
earnings in the statement of changes in equity and in the
balance sheet.

Short-term employee benefits

Short-term employee benefits comprise of employee costs
such as salaries, bonus etc. is recognized on the basis of the
amount paid or payable for the period during which services
are rendered by the employee.

h) Leases

The Company has lease contracts for buildings, plant and
machinery used in its operations. Lease terms generally
ranges between 3 and 9 years.

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

Company as a lessee

The Company applies a single recognition and measurement
approach for all leases, except for short-term leases and
leases of low-value assets. The Company recognises lease
liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.

(i) Right-of-use assets

The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-
of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease
payments made at or before the commencement date
less any lease incentives received. Right-of-use assets
are depreciated on a straight-line basis over the shorter
of the lease term and the estimated useful lives of the
assets, as follows:

Buildings 3 to 9 years

Plant and machinery 3 years

If ownership of the right to use asset transfers to the
Company at the end of the lease term or the cost
reflects the exercise of a purchase option, depreciation
is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment.

(ii) Lease Liabilities

At the commencement date of the lease, the Company
recognises lease liabilities measured at the present
value of lease payments to be made over the lease term.
The lease payments include fixed payments (including
in substance fixed payments) less any lease incentives
receivable, variable lease payments that depend on
an index or a rate, and amounts expected to be paid
under residual value guarantees. The lease payments
also include the exercise price of a purchase option
reasonably certain to be exercised by the Company and
payments of penalties for terminating the lease, if the

lease term reflects the Company exercising the option to
terminate. Variable lease payments that do not depend
on an index or a rate are recognised as expenses
(unless they are incurred to produce inventories) in the
period in which the event or condition that triggers the
payment occurs.

In calculating the present value of lease payments,
the Company uses its incremental borrowing rate at
the lease commencement date because 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
and reduced for the lease payments made. In addition,
the carrying amount of lease liabilities is remeasured
if there is a modification, a change in the lease term, a
change in the lease payments (e.g., changes to future
payments resulting from a change in an index or rate
used to determine such lease payments) or a change in
the assessment of an option to purchase the underlying
asset.

(iii) Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition
exemption to its short-term leases of machinery and
equipment (i.e., those leases that have a lease term of
12 months or less from the commencement date and do
not contain a purchase option). It also applies the lease
of low-value assets recognition exemption to leases of
office equipment that are considered to be low value.
Lease payments on short-term leases and leases of low-
value assets are recognised as expense on a straight¬
line basis over the lease term.

) Foreign currencies

The Company’s Standalone financial statements are
presented in Indian Rupees (T or ‘INR’), which is also the
Company’s functional currency.

Transactions and balances

Transactions in foreign currencies are initially recorded by the
Company at functional currency spot rates at the date the
transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot rates
of exchange at the reporting date.

Exchange differences arising on settlement or translation of
monetary items are recognised in profit or 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. 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).

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

j) Borrowing costs

Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily takes
a substantial period of time to get ready for its intended use
or sale are capitalised as part of the cost of the asset. All
other borrowing costs are expensed in the period in which
they occur. Borrowing costs consist of interest and other
costs that an entity incurs in connection with the borrowing of
funds. Borrowing cost also includes exchange differences to
the extent regarded as an adjustment to the borrowing costs.

k) Investments in subsidiaries

The Company’s investment in equity instruments in
subsidiaries are accounted for at cost. Where the carrying
amount of an investment is greater than its estimated
recoverable amount, it is written down immediately to its
recoverable amount and the difference is transferred to the
Statement of Profit and Loss. On disposal of investment,
the difference between the net disposal proceeds and the
carrying amount is charged or credited to the Statement of
Profit and Loss.

l) Taxes

Current income tax

Tax expense comprises current tax expense and deferred tax.

Current income tax assets and liabilities are measured at the
amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted,
at the reporting date in the countries where the Company
operates and generates taxable income.

Current income tax relating to items recognised outside
profit or loss is recognised outside profit or loss (either in
other comprehensive income or in equity). Current tax items
are recognised in correlation to the underlying transaction
either in OCI or directly in equity. Management periodically
evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject
to interpretation and considers whether it is probable that
a taxation authority will accept an uncertain tax treatment.

The Company shall reflect the effect of uncertainty for each
uncertain tax treatment by using either most likely method or

expected value method, depending on which method predicts
better resolution of the treatment.

Deferred tax

Deferred tax is provided using the balance sheet approach on
temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary
differences, except:

When the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a transaction
that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable
profit or loss and does not give rise to equal taxable and
deductible temporary differences;

In respect of taxable temporary differences associated with
investments in subsidiaries, associates and interests in joint
ventures, when the timing of the reversal of the temporary
differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable
future.

Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are
recognised 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 utilised, except:

When the deferred tax asset relating to the deductible
temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss and
does not give rise to equal taxable and deductible temporary
differences;

In respect of deductible temporary differences associated
with investments in subsidiaries, associates and interests
in joint ventures, deferred tax assets are recognised only to
the extent that it is probable that the temporary differences
will reverse in the foreseeable future and taxable profit will
be available against which the temporary differences can be
utilised

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 utilised.
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.

In assessing the recoverability of deferred tax assets,
the Company relies on the same forecast assumptions
used elsewhere in the financial statements and in other
management reports.

Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the year when the asset is
realised, or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the
reporting date.

Deferred tax relating to items recognised outside profit
or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Deferred tax items are
recognised in correlation to the underlying transaction either
in OCI or directly in equity.

The Company offsets deferred tax assets and deferred tax
liabilities if and only if it has a legally enforceable right to
set off current tax assets and current tax liabilities and the
deferred tax assets and deferred tax liabilities relate to income
taxes levied by the same taxation authority on either the
same taxable entity which intends either to settle current tax
liabilities and assets on a net basis, or to realise the assets
and settle the liabilities simultaneously, in each future period
in which significant amounts of deferred tax liabilities or
assets are expected to be settled or recovered.