2. Material Accounting Policies

2.1 Statement of compliance and basis of preparation

The 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 (Ind AS
compliant Schedule III) as applicable to these financial
statements.

These financial statements have been prepared on the
historical cost basis, except for certain financial
instruments which are measured at fair values at the
end of each reporting period, as explained in accounting
polices below. Historical cost is generally based on the
fair value of the consideration given in exchange for
goods and services. The financial statements are
presented in lakhs of Indian rupees and all values are
rounded to the nearest lakhs, except when otherwise
indicated.

Going Concern

The directors have, at the time of approving the financial
statements, a reasonable expectation that the company
have adequate resources to continue in operational
existence for the foreseeable future. Thus, they continue
to adopt the going concern basis of accounting in
preparing the financial statements

2.2 Summary of Material Accounting Policies

a) Current versus non-current classification

The Company presents assets and liabilities in the
balance sheet based on current / non-current
classification. An asset is treated as current when
it is:

• Expected to be realised or intended to be sold
or consumed in normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realised within twelve months
after the reporting period; or

• 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.

A liability is current when:

• It is expected to be settled in normal operating
cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months after
the reporting period; or

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

The Company classifies all other liabilities as non¬
current.

Deferred tax assets and liabilities are classified as
non-current assets and liabilities. The operating
cycle is the time between the acquisition of assets
for processing and their realisation in cash and cash
equivalents. The Company has identified twelve
months as its operating cycle.

b) Foreign currency transactions and balances

Financial Statements are presented in Indian
rupees ($) which is also the functional currency of
the Company. Transactions in foreign currencies
are initially recorded by the 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 statement of 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).

c. Fair value measurement

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:

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

(b) 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 a 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
takes into account a market participant's ability to
generate economic benefits by using the asset in
its highest and best use of 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 under the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorised 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:

For assets and liabilities that are recognised in the
financial statements on a recurring basis, the
Company determines whether transfers have
occurred between levels in the hierarchy by re¬
assessing categorisation (based on the lowest level
input that is significant to the 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 on the basis of the nature, characteristics
and risks of the asset or liability and the level of the
fair value hierarchy as explained above.

This note summarizes accounting policy for fair
value. Other fair value related disclosures are given
in the relevant notes to the financial statements.

d. Revenue from operations

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. 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 Goods

Revenue is measured at the transaction value of the
consideration received or receivable, including freight
recovered and net of returns, allowances and rebates
and Goods and Services tax.

Revenue is recognised upon transfer of control of
promised products to customers,in accordance with a
sales contract, which is primarily ex-works in case of
dealers and in accordance with incoterms with respect
to other than dealers, in an amount that reflects the
consideration which the company expects to receive in
exchange for those products. Revenue is recognised
only to the extent that there is a probability of ultimate
collections.

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 products, the
Company considers the effects of variable
consideration and consideration payable to the
customer.

Variable Consideration - Incentives

The Company provides retrospective incentives to
certain dealers once the quantity or value of the products
purchased during the period exceeds a threshold
specified in the contract. The Company applies the most
likely amount method or the expected value method to
estimate the variable consideration in the contract. The
selected method that best predicts the amount of variable
consideration is primarily driven by the number of volume
thresholds contained in the contract. The most likely
amount is used for those contracts with a single volume
threshold, while the expected value method is used for

those with more than one volume threshold. The
Company then applies the requirements on constraining
estimates in order to determine the amount of variable
consideration that can be included in the transaction
price and recognised as revenue. A refund liability is
recognised for the expected future incentives (i.e., the
amount not included in the transaction price).

Installation services

The Company provides installation services that are
bundled together with the sale of certain products for
which the installation services can be obtained from
other providers and does not significantly customise
or modify the product. The Company determined that
both the equipment and installation are capable of
being distinct.

Rendering of services

Revenue from services is recognised when the services
are rendered in accordance with the specific terms of
contract and when collectability of the resulting receivable
is reasonably assured.

Interest Income

Interest income from financial assets is recognised at
the effective interest rate method applicable on initial
recognition. Interest income is accrued on a time basis,
by reference to the principal outstanding and at the
effective interest rate applicable.

Export Benefits

Export incentives such as Remission of Duties and
Taxes on Export Products (RoDTEP) are recognised
when there is reasonable assurance that the grant
will be received and all attached conditions will be
complied with. Export Benefits are accounted for in
the year export of products and services based on
eligibility and where there is no uncertainly in receiving
the same.

Contract balances
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 (n) Financial instruments -
initial recognition and subsequent measurement.

Refund liabilities

A refund liability is recognised for the obligation to refund
some or all of the consideration received (or receivable)
from the customer. The Company's refund liabilities arise
from customers' incentives. The Company updates its
estimates of refund liabilities (and the corresponding

change in the transaction price) at the end of each
reporting period.

Other 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 asset's net
carrying amount on initial recognition. Dividend Income
is accounted when the right to receive is established.

e. Taxes

Income taxes comprise Current and deferred tax.
Income tax expense/credit is recognised in the
statement of profit and loss, except when they relate
to items that are recognised in other comprehensive
income or directly in equity, in which case, the income
taxes are also recognised in other comprehensive
income or directly in equity, respectively.

(i) Current income 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 country 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.

(ii) Deferred tax

Deferred tax is provided using the balance sheet
method 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 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.
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.

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.

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.

f. Non-current assets held for sale

The Company classifies non-current assets as
held for sale if their carrying amounts will be
recovered principally through a sale rather than
through continuing use. Actions required to
complete the sale should indicate that it is
unlikely that significant changes to the sale will
be made or that it is unlikely that the decision to
sell will be withdrawn. Management must be
committed to the sale expected within one year
from the date of classification.

The criteria for held for sale classification is met
only when the asset is available for immediate
sale in its present condition, subject only to terms
that are usual and customary for sale of such
assets, its sale is highly probable; and it will
genuinely be sold, not abandoned. The Company
treats sale of the asset to be highly probable
when:

• The appropriate level of management is
committed to a plan to sell the asset,

• An active programme to locate a buyer and
complete the plan has been initiated (if
applicable),

• The asset is being actively marketed for
sale at a price that is reasonable in relation
to its current fair value,

• The sale is expected to qualify for
recognition as a completed sale within one
year from the date of classification, and

• Actions required to complete the plan
indicate that it is unlikely that significant
changes to the plan will be made or that
the plan will be withdrawn.

Non-current assets held for sale are measured
at the lower of their carrying amount and the fair
value less costs to sell. Assets and liabilities
classified as held for sale are presented
separately in the balance sheet.

Property, plant and equipment and intangible
assets once classified as held for sale are not
depreciated or amortised.

g. Property, plant and equipment and
Depreciation of PPE

Property, Plant and Equipment (PPEs) are
recorded at cost less accumulated depreciation
and accumulated impairment loss (if any). The
Company capitalizes all costs relating to
acquisition and installation of Property, Plant and
Equipment. The cost of Property, Plant and
Equipment comprises its purchase price net of
any trade discounts and rebates, any import
duties and other taxes (other than those

subsequently recoverable from the tax
authorities), any directly attributable expenditure
on making the asset ready for its intended use,
other incidental expenses and interest on
borrowings attributable to acquisition of qualifying
Property, Plant and Equipment up to the date
the Property, Plant and Equipment is ready for
its intended use.

Cost of spares relating to specific item of
Property, Plant and Equipment is capitalized.
Cost of modifications that enhance the operating
performance or extend the useful life of Property,
Plant and Equipment are also capitalized, where
there is a certainty of deriving future economic
benefits from the use of such assets.

Any part or components of Property, Plant and
Equipment which are separately identifiable and
expected to have a useful life which is different
from that of the main assets are capitalized
separately, based on the technical assessment
of the Management.

Advances paid towards the acquisition of
Property, Plant and Equipment outstanding at
each balance sheet date are disclosed as
"Capital Advances" under Other Non Current
Assets and cost of Property, Plant and
Equipment not ready to use before such date
are disclosed under "Capital Work-in-Progress".

Capital Work in Progress

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. When significant parts of plant and
equipment are required to be replaced at
intervals, the Company depreciates them
separately based on their specific useful lives.
All other repair and maintenance costs are
recognised in profit or loss as incurred.

Depreciation :

The Company, based on technical assessment
made by technical expert and management
estimate, depreciates certain items of building,
plant and equipment 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 estimated useful lives, residual values and
depreciation method are reviewed on an annual
basis and if necessary, changes in estimates are
accounted for prospectively.

Derecognition of Property, Plant and
Equipment:

An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from the
continued use of the asset. Any gain or loss on
disposal or retirement of an item of property, plant
and equipment is determined as the difference
between the sale proceeds and the carrying
amount of the asset and is recognised in the
Statement of Profit and Loss.

h. Intangible Assets

Intangible assets with finite useful lives that are
acquired separately are measured on initial
recognition at cost. They are carried at cost less
accumulated amortisation and accumulated
impairment losses. Amortisation is recognised
on a straight line basis over their estimated
useful lives from the date of capitalisation. The
estimated useful life is reviewed at the end of
each reporting period and the effect of any
changes in estimate being accounted for
prospectively.

The Company holds only acquired computer
software which are amortized on a straight line
basis over a period of 4 years.

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.

i. 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, 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. 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
groups 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.

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, industry or country in
which the entity operates, or for the market in
which the asset is used.

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

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 or loss unless the asset
is carried at a revalued amount, in which case,
the reversal is treated as a revaluation increase.

j. Inventories

Inventories are valued at the lower of cost and
net realisable value. Costs incurred in bringing
each product to its present location and
condition are accounted for as follows:

Raw materials:

Cost includes cost of purchase and other costs
incurred in bringing the inventories to their
present location and condition. Cost is
determined on first in, first out basis.

Finished goods and work in progress:

Cost includes cost of direct materials and labour
and a proportion of manufacturing overheads
based on the normal operating capacity. Cost is
determined on first in, first out basis.

Stock in Trade ( Goods acquired for Trading):

Cost includes cost of purchase and other costs
incurred in bringing the inventories to their
present location and condition. Cost is
determined on first in, first out basis.

An allowance for Inventory is recognised for cases
where the realisable value is estimated to be lower
than the inventory carrying value. The inventory
allowance is estimated taking into account various
factors, including prevailing sales prices of
inventory item and losses associated with excess
obsolete / slow-moving / redundant inventory
items. The Company has, based on these
assessments, made adequate provision in the
books.An allowance for Inventory is recognised
for cases where the realisable value is estimated
to be lower than the inventory carrying value. The
inventory allowance is estimated taking into
account various factors, including prevailing sales
prices of inventory item and losses associated with
excess obsolete / slow-moving / redundant
inventory items. The Company has, based on
these assessments, made adequate provision in
the books.

Stores and spares which do not meet the
definition of Property, plant and equipment are
accounted as inventories.

k. Retirement and other employee benefits

Employee benefits include provident fund,
gratuity, pension, compensated absences and
other termination benefits.

i. Defined contribution plans

Employee defined contribution plans include
Provident Fund, Employee state insurance.

Provident Fund and Employee State Insurance:

All employees of the Company receive benefits
from Provident Fund and Employee's State
Insurance (where applicable), which are defined
contribution plans. Both, the employee and the
Company make monthly contributions to the
plan, each equalling to a specified percentage
of employee's basic salary. The Company has
no further obligations under the plan beyond its
monthly contributions. The Company contributes
to the Employee Provident Fund and Employee's
State Insurance (where appplicable) scheme
maintained by the Central Government of India
and the contribution thereof is charged to the
Statement of Profit and Loss in the year in which
the services are rendered by the employees.

ii. Defined benefit plans

The Company operates two defined benefit plans
for its employees, viz., gratuity and pension. For
defined benefit retirement benefit plans, the cost
of providing benefits is determined using the
projected unit credit method, with actuarial
valuations being carried out at the end of each
annual reporting period. Remeasurement,
comprising actuarial gains and losses, the effect
of the changes to the asset ceiling (if applicable)
and the return on plan assets (excluding net
interest), is reflected immediately in the balance
sheet with a charge or credit recognised in other
comprehensive income in the period in which
they occur. Remeasurement recognised in other
comprehensive income is reflected immediately
in retained earnings and is not reclassified to
profit or loss. Past service cost is recognised in
the Statement of profit or loss in the period of a
plan amendment. Net interest is calculated by
applying the discount rate at the beginning of
the period to the net defined benefit liability or
asset.

Defined benefit costs are categorised as follows:

• Service cost (including current service cost,
past service cost, as well as gains and
losses on curtailments and settlements);

• Net interest expense or income; and

• Remeasurement comprising actuarial gains
or losses and return on plan assets
(excluding amounts included in net interest
on the net defined benefit liability).

The Company presents the first two components
of defined benefit costs in profit or loss in the
line item 'Employee benefits expense'.
Curtailment gains and losses are accounted for
as past service costs. The retirement benefit
obligation recognised in the balance sheet
represents the actual deficit or surplus in the
Company's defined benefit plans. Any surplus
resulting from this calculation is limited to the
present value of any economic benefits available
in the form of refunds from the plans or reductions
in future contributions to the plans.

A liability for a termination benefit is recognised
at the earlier of when the entity can no longer
withdraw the offer of the termination benefit and
when the entity recognises any related
restructuring costs.

The Company makes contribution to a scheme
administered by the insurer to discharge gratuity
liabilities to the employees. Short-term employee
benefits: A liability is recognised for benefits
accruing to employees in respect of wages and
salaries in the period the related service is
rendered at the undiscounted amount of the
benefits expected to be paid in exchange for that
service.The Company has funded this with Life
Insurance Corporation of India ('LIC').

iii. Other employee benefits

Accumulated leave, which is expected to be
utilized within the next 12 months, is treated as
short-term employee benefit. The Company
measures 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
recognizes expected cost of short-term
employee benefit as an expense, when an
employee renders the related service.

The Company treats accumulated leave
expected to be carried forward beyond twelve
months, as long-term employee benefit for
measurement purposes. Such long-term
compensated absences are provided for based
on the actuarial valuation using the projected unit
credit method at the period-end. Re¬
measurements as a result of experience

adjustments and changes in actuarial
assumptions are recognized in statement of profit
and loss. The Company presents the leave as a
current liability in the balance sheet, to the extent
it does not have an unconditional right to defer
its settlement for 12 months after the reporting
date. Where Company has the unconditional
legal and contractual right to defer the settlement
for a period beyond 12 months, the same is
presented as non-current liability.