Note 2 - Material Accounting Policy
Information:

A. Statement of Compliance

These financial statements are prepared in accordance
with Indian Accounting Standard (Ind AS), under the
historical cost convention on the accrual basis except for
certain financial instruments which are measured at fair
values, the provisions of the Companies Act, 2013 (“the
Act”) (to the extent notified) and guidelines issued by the
Securities and Exchange Board of India (SEBI). The Ind
AS are prescribed under Section 133 of the Act of the
Companies (Indian Accounting Standards) Rules, 2015
and relevant amendment rules issued there after.

Accounting policies have been consistently applied except
where a newly issued accounting standard is initially
adopted or a revision to an existing accounting standard
requires a change in the accounting policy hitherto in use.

Operating cycle for current and non-current
classification :

All assets and liabilities have been classified as current or
non-current as per the Company’s operating cycle, based
on the duration of the specified project/contract/product
line/service including the defect liability period, wherever
applicable and extends up to the realization of receivables
(including retention monies) within the agreed credit
period normally applicable to this industry.

B. Basis of Preparation and Presentation

The financial statements have been prepared on a
historical cost convention and on an accrual basis, except
for the following material items that have been measured
at fair value as required by relevant Ind AS:

i) Derivative financial instruments

ii) Certain financial assets and financial liabilities
measured at fair values (as required by the relevant Ind
AS)

iii) Share based payment transactions and

iv) Defined benefit and other long term employee benefits

Historical cost is generally based on the fair value of
the consideration given in exchange of goods and
services.

Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date, regardless of whether that price
is directly observable or estimated using another
valuation technique. In estimating the fair value of an
asset or a liability, the Company takes into account
the characteristics of the assets or liability if market
participants would take those characteristics into
account when pricing the asset or liability at the
measurement date. Fair value for measurement and
disclosure purpose in these financial statement is
determined on such basis, except for share-based
transactions that are within scope of Ind AS 102,
leasing transactions that are within the scope of Ind AS
116, and measurements that have some similarities to
fair value but are not fair value, such as net realisable
value in Ind AS 2 or value in use in Ind AS 36.

Amounts in the financial statements are presented
in Indian ' in million and rounded off as permitted by
Schedule III to the Companies Act, 2013, except where
otherwise indicated. Per share data are presented in
Indian ' to two decimal places.

C. Property, Plant and Equipment

Property, Plant and Equipment are stated at acquisition
cost, net of accumulated depreciation and accumulated
impairment losses, if any.

Items of Property, Plant and Equipment that have been
retired from active use and are held for disposal are stated
at the lower of their net book value and net realisable value
and are shown separately in the financial statements. Any
expected loss is recognised immediately in the Statement
of Profit and Loss.

Losses arising from the retirement of, and gains or losses
arising from disposal of Property, Plant and Equipment
are recognised in the Statement of Profit and Loss.

Freehold land is not depreciated.

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:

Based on technical evaluation, the management believes
that the useful lives as given above best represent the
period over which management expects to use these
assets. Hence, the useful lives for these assets are
different from the useful lives as prescribed under Part C
of Schedule II of the Companies Act, 2013.

Assets installed in leased premises are depreciated over
lease period or useful life of assets whichever is lower.

The estimated useful life of the Property, Plant and
Equipment are reviewed at the end of each financial year,
with the effect of any changes in estimate accounted for
on a prospective basis.

D. Intangible Assets and Amortization

Intangible assets are stated at acquisition cost, net of
accumulated amortization and accumulated impairment
losses, if any. Intangible assets are amortised on a
straight line basis over their estimated useful lives. The
amortisation period and the amortisation method are
reviewed at each financial year end. If the expected useful
life of the asset is significantly different from previous
estimates, the amortisation period is changed accordingly.

Losses arising from the retirement of, gain or losses arising
from disposal of an intangible asset are recognised in the
Statement of Profit and Loss. The Purchased Software are
amortized over a period of 3 years.

The estimated useful life of the intangible assets are
reviewed at the end of each financial year, with the effect
of any changes in estimate accounted for on a prospective
basis.

E. Impairment of Property, Plant and
Equipment and Intangible Assets

Assessment is done at each Balance Sheet date as to
whether there is any indication that an asset (property,
plant and equipment and intangible) may be impaired.
For the purpose of assessing impairment, the smallest
identifiable group of assets that generates cash inflows

from continuing use that are largely independent of the
cash inflows from other assets or groups of assets, is
considered as a cash generating unit. If any such indication
exists, an estimate of the recoverable amount of the asset/
cash generating unit is made. Assets whose carrying value
exceeds their recoverable amount are written down to the
recoverable amount. Recoverable amount is higher of an
asset’s or cash generating unit’s net selling price and its
value in use. Value in use is the present value of estimated
future cash flows expected to arise from the continuing
use of an asset and from its disposal at the end of its useful
life. Assessment is also done at each Balance Sheet date
as to whether there is any indication that an impairment
loss recognised for an asset in prior accounting periods
may no longer exist or may have decreased.

F. Inventories

Inventories comprise of raw material, work in progress,
finished goods, stock in trade and are stated at lower of
cost and net realisable value. Cost is determined using the
technique of standard cost method, which approximates
the actual cost using the Moving Weighted Average basis.
The cost of finished goods and work in progress comprises
design costs, raw materials, direct labour, other direct
costs and related production overheads. Net realisable
value is the estimated selling price in the ordinary course
of business, less the estimated costs of completion and
the estimated costs necessary to make the sale.

G. Revenue Recognition

The Company earns revenue primarily from turnkey
projects with respect to automation and related control
systems, AMC services and other business solutions.

i) Revenue from turnkey contracts with performance
obligations satisfied over time are recognized using
input method. Revenue from such contracts is
recognized over time because of the continuous
transfer of control to the customer. With control
transferring over time, revenue is recognized based
on the extent of progress towards completion of the
performance obligation. Cost based input method of
progress is used because it best depicts the transfer
of control to the customer that occurs as costs are
incurred. Under the cost based cost method, the
extent of progress towards completion is measured
based on the proportion of costs incurred to date
to the total estimated costs at completion of the
performance obligation. Cost estimates on significant
contracts are reviewed on a periodic basis, or when
circumstances change and warrant a modification to
a previous estimate. Cost estimates are largely based
on negotiated or estimated purchase contract terms,

historical performance trends and other economic
projections. Significant factors that influence these
estimates include if the desired site is made available
on time, inflationary trends, technical and schedule
risk, internal and subcontractor performance trends,
business volume assumptions, asset utilization
and anticipated labour agreements. Provisions for
anticipated losses on long-term contracts are recorded
in full when such losses become evident, to the extent
required.

ii) Revenue from contract with customers is recognised
when control of the goods or services are transferred
to the customer at an amount that reflects the
consideration Company expects to be entitled in
exchange for those goods or services. Service sales,
principally representing software development are
recognized over the contractual period or as services
are rendered.

iii) The terms of a contract or the historical business
practice can give rise to variable consideration due
to, but not limited to, cash-based incentives, rebates,
performance awards, or credits. Variable consideration
is estimated at the most likely amount receivable from
customers. Estimated amounts are included in the
transaction price to the extent it is probable that a
significant reversal of cumulative revenue recognized
for such transaction will not occur, or when the
uncertainty associated with the variable consideration
is resolved. Estimates of variable consideration
and determination of whether to include estimated
amounts in the transaction price are based largely on
an assessment of our anticipated performance and all
information (historical, current and forecasted) that is
reasonably available.

iv) A contract asset is the right to consideration in exchange
for goods or services transferred to the customer. If the
Company performs by transferring goods or services to
a customer before the customer pays consideration or
before payment is due, a contract asset is recognised
for the earned consideration excluding any amounts
presented as a receivable.

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

H. Foreign Currency Transactions

i) Functional currency

The functional currency of the Company is the Indian
rupee. These financial statements are presented in
Indian ' (rounded off to millions).

ii) Initial Recognition

On initial recognition, all foreign currency transactions
are recorded by applying to the foreign currency
amount the exchange rate between the functional
currency and the foreign currency at the date of the
transaction.

iii) Subsequent Recognition

As at the reporting date, non-monetary items which
are carried in terms of historical cost denominated in a
foreign currency are reported using the exchange rate
at the date of the transaction. All non-monetary items
which are carried at fair value or other similar valuation
denominated in a foreign currency are reported using
the exchange rates that existed when the values were
determined.

All monetary assets and liabilities in foreign currency are

restated at the end of accounting period.

Exchange differences on restatement of all other monetary

items are recognised in the Statement of Profit and Loss.

I. Employee Benefits

a) Short-term employee benefit obligations are measured
on an undiscounted basis and are expensed as the
related service is provided. A liability is recognised
for the amount expected to be paid e.g., under short¬
term cash bonus, if the Group has a present legal or
constructive obligation to pay this amount as a result
of past service provided by the employee, and the
amount of obligation can be estimated reliably.

b) The Company participates in various employee benefit
plans. Post-employment benefits are classified as
either defined contribution plans or defined benefit
plans:

i) Superannuation fund:

Contribution towards superannuation fund for
certain employees is made to the Life Insurance
Corporation, where the Company has no further
obligations. Such benefits are classified as Defined
Contribution Schemes as the Company does
not carry any further obligations, apart from the
contributions made on a monthly basis.

ii) Provident Fund:

A defined contribution plan is a postemployment
benefit plan under which an entity pays fixed
contributions into a separate entity and will
have no legal or constructive obligation to pay
further amounts. The Company makes specified
monthly contributions towards Government
administered provident fund scheme. Obligations
for contributions to defined contribution plans
are recognised as an employee benefit expense in
profit or loss in the periods during which the related
services are rendered by employees.

iii) Gratuity:

The Company provides for gratuity, a defined
benefit plan (the “Gratuity Plan”) covering eligible
employees in accordance with the Payment of
Gratuity Act, 1972 (as amended from time to
time). The Gratuity Plan provides a lump sum
payment to eligible employees at retirement, death,
incapacitation or termination of employment, of an
amount based on the respective employee’s salary
and the tenure of employment. The Company’s
liability is actuarially determined (using the
Projected Unit Credit method) at the end of each
reporting period.

iv) Compensated Absences:

Accumulated compensated absences, which
are expected to be availed or encashed within 12
months from the end of the year end are treated
as short term employee benefits. The obligation
towards the same is measured at the expected cost
of accumulating compensated absences as the
additional amount expected to be paid as a result
of the unused entitlement as at the year end.

v) Termination Benefits:

Termination benefits in the nature of voluntary
retirement benefits are recognised in the Statement
of Profit and Loss as and when incurred.

Actuarial gain or losses and remeasurements:
Actuarial gains or losses on defined benefit obligations
are recognized in other comprehensive income. Further,
the profit or loss does not include an expected return
on plan assets. Instead net interest recognized in profit
and loss is calculated by applying the discount rate
used to measure the defined benefit obligation to the
net defined benefit liability or asset. The actual return
on the plan assets above or below the discount rate is

recognized as part of re-measurement of net defined
liability or asset through other comprehensive income.

Remeasurements comprising actuarial gains or losses
and return on plan assets (excluding amounts included
in net interest on the net defined benefit liability)
are not reclassified to profit and loss in subsequent
periods.

J. Share Based Payments

Certain employees of the Company receive remuneration
in the form of equity settled instruments given by the
ultimate holding company (Honeywell International Inc.),
for rendering services over a defined vesting period. Equity
instruments granted are measured by reference to the fair
value of the instrument at the date of grant.

The expense is recognized in the statement of profit and
loss with a corresponding increase to the share based
payment reserve, as a component of equity. The equity
instruments generally vest in a graded manner over the
vesting period. The fair value determined at the grant
date is expensed over the vesting period of the respective
tranches of such grants. The stock compensation expense
is determined based on the Company’s estimate of equity
instruments that will eventually vest.

K. Income Tax

Tax expense for the period, comprising current tax and
deferred tax, are included in the determination of the net
profit or loss for the period, except to the extent that it
relates to items recognized directly in equity, in which case
it is recognized in equity or other comprehensive income.

Current tax:-

Current tax is measured at the amount expected to
be paid to the tax authorities in accordance with the
taxation laws prevailing in the respective jurisdictions.
Current tax assets and current tax liabilities are offset when
there is a legally enforceable right to set off the recognised
amounts and there is an intention to settle the asset and
the liability on a net basis.

Deferred tax:-

Deferred 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 tax asset are recognized to the extent that it is
probable that taxable profit will be available against which

such deferred tax assets can be realised. 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 income tax asset to be utilized.
Deferred tax liabilities are recognized for all taxable
temporary differences.

Deferred tax assets and liabilities are measured at
the tax rates that are expected to apply in the period
when the asset is realized 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 assets and deferred tax liabilities are offset
when there is a legally enforceable right to set off assets
against liabilities representing current tax and where the
deferred tax assets and the deferred tax liabilities relate
to taxes on income levied by the same governing taxation
laws.