2. Material Accounting Policies

2.1. Current and non-current classification

The Company classified its assets and liabilities in the Standalone Balance Sheet based as
current or non-current based on their nature. An asset is treated as current if it meets any
of the following criteria:

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

• Held primarily for the purpose of trading

• Expected to be realized 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.

A liability is classified as current if it::

• 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 assets and liabilities as non-current. Deferred tax assets
and liabilities are classified as non-current assets and liabilities, respectively.

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.

2.2. Functional and presentation of currency

The Standalone Financial Statements are presented in Indian rupee (?), which is also the
Company’s functional and presentation currency. All amounts have been rounded to the
nearest millions with two decimals, unless otherwise indicated.

2.3. 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. A fair value
measurement assumes that the transaction to sell the asset or transfer the liability takes
place either in the principal market for the asset or liability or in the absence of a principal
market, in the most advantageous market for the asset or liability. The principal market or
the most advantageous market must be accessible to 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 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 Standalone
Financial Statements are categorized within the fair value hierarchy based on the lowest
level input that is significant to the fair value measurement as a whole. The fair value
hierarchy is described as below:

Level 1 - Unadjusted quoted price in active markets for identical assets and liabilities.

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

Level 3 - unobservable inputs for the asset or liability

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

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 fair value hierarchy.

Fair values have been determined for measurement and / or disclosure purpose using
methods as prescribed in “Ind AS 113 Fair Value Measurement”.

2.4. Use of estimates assumption and judgements

The preparation of these Standalone Financial Statements is in conformity with the
recognition and measurement principles of Ind AS requires management to make
judgments, estimates and assumptions in application of accounting policies that affect the
reported balances of assets and liabilities, disclosure of contingent liabilities as on the date
of Standalone Financial Statements and reported amounts of income and expenses for the
periods presented. The Company based its assumptions and estimates on parameters
available when the Standalone Financial Statements were prepared. Estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimates are revised and future periods
are affected.

Key assumptions concerning the future and other key sources of estimation uncertainty at
the reporting date that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year. Significant
estimates and critical judgement in applying these accounting policies are described below:

2.4.1. Significant estimates

i) Impairment of non-financial assets (tangible and intangible)

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’s) fair
value less costs of disposal and its value in use. It is determined for an individual asset,
unless the asset or CGU exceeds its recoverable amount, the asset is considered impaired
and is written down to its recoverable amount.

In assessing the 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 risks specific to the asset. In determining the fair value less
costs to disposal, recent market transactions are taken into account. If no such
transactions can be identified, an appropriate valuation model is used. These calculations
are corroborated by valuation multiples or other available fair value indicators.

ii) Defined benefit obligations

The cost of the defined benefit gratuity plan, other defined benefit plan and other post¬
employment plans are determined using actuarial valuations. An actuarial valuation
involves making various assumptions that may differ from actual developments in the
future. These include the determination of the discount rate, future salary increases,
expected returns on plan assets and mortality rates. Due to the complexities involved in
the valuation and its long-term nature, a defined benefit obligation is highly sensitive to
changes in these assumptions. All assumptions are reviewed at each reporting date.

The mortality rate is based on publicly available mortality tables for India. Those
mortality tables tend to change only at interval in response to demographic changes.
Future salary increases, discount rate and return on planned assets are based on expected
future inflation rates for India

iii) Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance
sheet cannot be measured based on quoted price in active markets since they are
unquoted, their value is measured using valuation technique including the discounted
cash flow (DCF) model. The inputs to these models are taken from observable markets
where possible, but where this is not feasible, a degree of judgement is required in
establishing fair values. Judgements include considerations of inputs such as liquidity
risk, credit risk and volatility. Changes in assumptions about these factors could affect
the reported fair value of financial instruments.

iv) Impairment of financial assets

The impairment provisions for financial assets are based on assumptions about risk of
default and expected loss rates. The Company uses judgement in making these
assumptions and selecting the inputs to the impairment calculation, based on Company’s
past history, existing market conditions as well as forward looking estimates at the end
of each reporting period. Further, the Company also evaluates risk with respect to
expected loss on account of loss in time value of money which is calculated using average
cost of capital for relevant financial assets.

v) Income tax and deferred tax

Deferred tax assets are not recognized for unused tax losses as it is not probable that
taxable profit will be available against which the losses can be utilized. Significant
management judgement/estimate is required to determine the amount of deferred tax
assets that can be recognized, based upon the likely timing and the level of future taxable
profits together with future tax planning strategies.

vi) Provision for Inventories

Management reviews the inventory listing on a periodic basis. This review involves
comparison of carrying value of aged inventory items with the respective net realizable
value. The purpose is to ascertain whether an allowance is required to be made in the
financial statements for any obsolete slow-moving items and net realisable value.
Management is satisfied that adequate allowance for obsolete and slow-moving
inventories has been made in the financial statements.

2.5. Property, Plant and Equipment and Depreciation

Recognition and measurement

Property, plant and equipment are stated at their cost of acquisition. Cost of an item of
property, plant and equipment includes purchase price including non - refundable taxes
and duties, borrowing cost directly attributable to the qualifying asset, any costs directly
attributable to bringing the asset to the location and condition necessary for its intended
use and the present value of the expected cost for the dismantling/decommissioning of the
asset.

Parts (major components) of an item of property, plant and equipment having different
useful lives are accounted as separate items of property, plant and equipment.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the Company. All other repair and maintenance costs are recognized
in statement of profit and loss as incurred.

Capital work-in-progress comprises of cost incurred on property, plant and equipment
under construction / acquisition that are not yet ready for their intended use at the Balance
Sheet. Advance paid towards the acquisition of PPE outstanding at each reporting date is
classified as Capital Advances under “Other Non-Current Assets” and assets which are not
ready for intended use as on the date of Financial Statement are disclosed as "Capital Work
in Progress".

Depreciation and useful lives

Depreciation on the property, plant and equipment (other than capital work in progress) is
provided on a written down value method (WDV) over their useful lives which is in
consonance of useful life mentioned in Schedule II to the Companies Act, 2013 or useful
lives as determined based on internal technical evaluation. Depreciation for certain

Depreciation methods, useful lives and residual values are reviewed at each financial year
end and adjusted prospectively.

De-recognition

An item of property, plant and equipment and any significant part initially recognised is
de-recognised upon disposal or when no future economic benefits are expected from its
use or disposal. Any gain or loss arising on de-recognition 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 de-recognized.

2.6. Leases

As per Ind AS 116 “Leases”, the determination of whether an arrangement is (or contains)
a lease is based on the substance of the arrangement at the inception of the lease. The
arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use
of a specific asset or assets and the arrangement conveys a right to use the asset or assets,
even if that right is not explicitly specified in an arrangement. A lessee does not have the
right to use an identified asset if, at inception of the contract, a lessor has a substantive right
to substitute the asset throughout the period of use.

The Company accounts for the lease arrangement as follows:

Where the entity is the lessee

The Company applies single recognition and measurement approach for all leases, except
for short term leases and leases of low value assets. On the commencement of the lease, the
Company, in its Balance Sheet, recognize the right of use asset at cost and lease liability at
present value of the lease payments to be made over the lease term.

Subsequently, the right of use asset is measured at cost less accumulated depreciation
[calculated on straight line method] and any accumulated impairment loss. Lease liability
are measured at amortised cost using the effective interest method. The lease payment made,
are apportioned between the finance charge and the reduction of lease liability and are
recognised as expense in the Statement of Profit and Loss.

Lease deposits given are a financial asset and are measured at amortised cost under Ind AS
109 since it satisfies Solely Payment of Principal and Interest (SPPI) condition. The
difference between the present value and the nominal value of deposit is considered as
prepaid rent and recognised over the lease term. Unwinding of discount is treated as finance
income and recognised in the Statement of Profit and Loss.

2.7. Intangible assets and amortisation
Recognition and measurement

Intangible assets are recognized only if it is probable that the future economic benefits
attributable to asset will flow to the Company and the cost of asset can be measured
reliably. Intangible assets are stated at cost of acquisition/development less accumulated
amortization and accumulated impairment loss if any.

Cost of an intangible asset includes purchase price including non - refundable taxes and
duties, borrowing cost directly attributable to the qualifying asset and any directly
attributable expenditure on making the asset ready for its intended use.

Intangible assets under development comprises of cost incurred on intangible assets under
development that are not yet ready for their intended use as at the Balance Sheet date.

Amortization and useful lives

Computer software are amortized in 3 years on Written Down Value (WDV). Amortization
methods and useful lives are reviewed at each period financial year end and adjusted
prospectively.

In case of assets purchased during the year, amortization on such assets is calculated on
pro-rata basis from the date of such addition.

2.8. Impairment of non-financial assets

The carrying amounts of assets are reviewed at each balance sheet date for any indication
of impairment based on internal / external factors. An impairment loss is recognized
wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable
amount is the higher of a) fair value of assets less cost of disposal and b) its value in use.
Value in use is the present value of future cash flows expected to derive from an assets or
Cash-Generating Unit (CGU).

Based on the assessment done at each balance sheet date, recognized impairment loss is
further provided or reversed depending on changes in circumstances. After recognition of
impairment loss or reversal of impairment loss as applicable, the depreciation charge for
the asset is adjusted in future periods to allocate the asset’s revised carrying amount, less
its residual value (if any), on a systematic basis over its remaining useful life. If the
conditions leading to recognition of impairment losses no longer exist or have decreased,
impairment losses recognized are reversed to the extent it does not exceed the carrying
amount that would have been determined after considering depreciation / amortization had
no impairment loss been recognized in earlier years.

2.9. Inventories

Cost of inventories have been computed to include all cost of purchases, cost of conversion
and other costs incurred in bringing the inventories to their present location and condition.

Raw materials and components, stores and spares are valued at lower of cost and net
realizable value. However, materials and other items held for use in the production of
inventories are not written down below cost if the finished products in which they will be
incorporated are expected to be sold at or above cost. Costs are determined on weighted
average basis.

Work-in-progress and finished goods are valued at lower of cost and net realizable value.
Cost includes direct materials and labor and a proportion of manufacturing overheads
based on normal operating capacity. Cost of work-in-progress and finished goods are
determined on a weighted average basis.

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.

2.10. Revenue recognition

The Company recognizes revenue from contracts with the customers based on five step
model defined in Ind AS 115. The Company satisfies a performance obligation and
recognizes revenue over time, if any of the conditions given in Ind AS 115 satisfies; else
revenue is recognized at point in time at which the performance obligation is satisfied.

Revenue is measured at the fair value of the consideration received or receivable, net of
returns and allowances, trade discounts and volume rebates. Revenues are recognized to
the extent it is probable that the economic benefits will flow to the Company and the
revenue & costs, if applicable, can be measured reliably.

(a) Performance Obligation

The Company derives its revenue from selling products in the form of Steel Fittings.

The Company is required to assess each of its contracts with customers to determine
whether performance obligation is satisfied over time or at a point in time in order to
determine the appropriate method for recognizing of revenue. The Company has assessed
that based on the contracts entered into with the customers and the provisions of relevant
laws and regulations, the Company recognizes the revenue over time only if it satisfies the
criteria given in Ind AS 115. Where the criteria as per Ind AS 115 are not met, revenue is
recognized at a point in time.

The Company satisfies its performance obligation when the control over the goods is
transferred to the customer or benefits of the services being provided is received and
consumed by the customer.

In cases where the Company determines that performance obligation is satisfied at a point
in time, revenue is recognized when the control over the goods is transferred to the
customer or benefits of the services being provided is received and consumed by the
customer. The Company considers that the customer has obtained the control of promised
goods or services; when the goods have been dispatched/delivered to the destination as per
terms of the contract or services has been provided and consumed by the customer as per
agreed terms and the company has unconditional right to consideration.

(b) Transaction Price

The Company is required to determine the transaction price in respect of each of its
contracts with customers.

Contract with customers for sale of goods or services are on a fixed price.

For allocating the transaction price, the Company measured the revenue in respect of each
performance obligation of contract at its relative standalone selling price. The price that is
regularly charged for an item when sold separately is the best evidence of its standalone
selling price. In making judgment about the standalone selling price, the company also
assesses the impact of any variable consideration in the contract, due to discounts or
penalties, the existence of any significant financing component and any non-cash
consideration in the contract.

(c) Discounts, Rebates & Incentive to Customers

The Company accounts for volume discounts, rebates and pricing incentives to customer
as a reduction of revenue based on the ratable allocation of the discounts / rebates to each
of the underlying performance obligation that corresponds to the progress made by the
customer towards earning that discounts, rebates or incentive. The Company also
recognizes the liability based on the past performance of the customers fulfilling the criteria
to get the discounts, rebates or incentive and the future outflow of the same is probable. If
it is probable that the criteria for the discounts will not be met or if the amounts thereof
cannot be estimated reliably, then the discount is not recognized until the payment is
probable and the amount can be estimated reliably. The company accounts for discounts,
rebates and pricing incentives in the year of payment where customer qualifies for the same
and wherein provision was not made due to Company's inability to make reliable estimates
based on the available data at reporting date

(d) Export incentives

Income from export incentives is accounted for on export of goods if the entitlements can
be estimated with reasonable assurance and conditions precedent to claim are fulfilled.

(e) Tooling income

Revenue from tooling income is recognized at the point in time when the control of the die
is transferred, which is generally on receipt of customer’s approval (referred to as
production parts approval process or PPAP) as per the terms of the contract.

(f) Sale of services

Revenue from sale of services is in nature of job work on customer product which normally
takes 1 - 4 days for completion and accordingly, revenue is recognized when products are
sent to customer on which job work is completed. The normal credit period is 60 days.

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).

2.11. Recognition of Dividend Income and Interest Income

(a) Interest income

For all financial instruments measured at amortised cost, interest income is recorded using
the effective interest rate (EIR), which is the rate that exactly discounts the estimated future
cash payments or receipts through the expected life of the financial instrument or a shorter
period, where appropriate, to the net carrying amount of the financial asset. Interest income
is included in other income in the statement of profit and loss.

(b) Dividends

Dividend income is recognized when the Company’s right to receive the payment is
established, which is generally when shareholders approve the dividend

(c) Other income

Other incomes are accounted on accrual basis, except interest on delayed payment by
debtors and liquidated damages which are accounted on acceptance of the Company’s
claim.

2.12. Government Grants and Subsidies

Government grants are not recognised until there is reasonable assurance that the Company
will comply with the conditions attached to them and that the grants will be received.

Government grants are recognised in the Statement of Profit and Loss on a systematic basis
over the years in which the Company recognises as expenses the related costs for which
the grants are intended to compensate or when performance obligations are met.

Government grants that are receivable as compensation for expenses or losses already
incurred or for the purpose of giving immediate financial support to the Company with no
future related costs are recognised in Statement of Profit and Loss in the period in which
they become receivable.

Government Grant relating to asset is reduced from the carrying value of the relevant
assets. Such grant is then gets recognized in the Statement of Profit and Loss over the
useful life of the depreciable asset by way of a reduced depreciation charge.

Government grants in the nature of export incentives are accounted for in the period of
export of goods if the entitlements can be estimated with reasonable accuracy and
conditions precedent to claim are reasonably expected to be fulfilled.

2.13. Foreign currency transaction

Transactions denominated in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction. As at the Balance Sheet date, foreign currency
monetary items are translated at closing exchange rate. Exchange difference arising on
settlement or translation of foreign currency monetary items are recognized as income or
expense in the year in which they arise.

Foreign currency non-monetary items which are carried at historical cost are reported using
the exchange rate at the date of transactions.

2.14. Employee benefits

• Short term employee benefits

All employee benefits falling due wholly within twelve months of rendering the service
are classified as short-term employee benefits and they are recognized as an expense at
the undiscounted amount in the Statement of Profit and Loss in the period in which the
employee renders the related service. A liability is recognised for the amount expected
to be paid if the Company has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the obligation can be
estimated reliably.

• Defined Benefit Plans

a. Defined contribution plan

The defined contribution plan is a post-employment benefit plan under which the
Company contributes fixed contribution to a Government Administered Fund and
will have no obligation to pay further contribution. The Company’s defined

contribution plan comprises of Provident Fund, Labor Welfare Fund Employee
State Insurance Scheme, National Pension Scheme, and Employee Pension Scheme.
The Company’s contribution to defined contribution plans are recognized in the
Statement of Profit and Loss in the period in which the employee renders the related
service.

b. Post-employment benefit and other long-term benefits

The Company has defined benefit plans comprising of gratuity and other long-term
benefits in the form of leave benefits. Company’s obligation towards gratuity
liability is unfunded. The present value of the defined benefit obligations and other
long term employee benefits is determined based on actuarial valuation using the
projected unit credit method. The rate used to discount defined benefit obligation is
determined by reference to market yields at the Balance Sheet date on Indian
Government Bonds for the estimated term of obligations.

For gratuity plan, re-measurements comprising of (a) actuarial gains and losses, (b)
the effect of the asset ceiling (excluding amounts included in net interest on the net
defined benefit liability) and (c) the return on plan assets (excluding amounts
included in net interest on the post-employment benefits liability) are recognized
immediately in the balance sheet with a corresponding debit or credit to retained
earnings through other comprehensive income in the period in which they occur.
Re-measurements are not reclassified to statement of profit and loss in subsequent
periods.

Gains or losses on the curtailment or settlement of defined benefit plan are
recognized when the curtailment or settlement occurs.

Actuarial gains or losses arising on account of experience adjustment and the effect
of changes in actuarial assumptions for employee benefit plan [other than gratuity]
are recognized immediately in the Statement of Profit and Loss as income or
expense.

• Compensated absences

A liability is recognised for benefits accruing to employees in respect of privilege leave in
the period the related service is rendered at the amount benefits expected to be paid in
exchange for that service.

2.15. Borrowing cost

Borrowing costs that are directly attributable to the acquisition, construction or production
of a qualifying asset are capitalized as part of the cost of the respective asset till such time
the asset is ready for its intended use or sale. A qualifying asset is an asset which necessarily
takes a substantial period of time to get ready for its intended use or sale. Ancillary cost of

borrowings in respect of loans not disbursed are carried forward and accounted as
borrowing cost in the year of disbursement of loan. All other borrowing costs are expensed
in the period in which they occur. Borrowing costs consist of interest expenses calculated
as per effective interest method, exchange difference arising from foreign currency
borrowings to the extent they are treated as an adjustment to the borrowing cost and other
costs that an entity incurs in connection with the borrowing of funds.

2.16. Taxes on income

Tax expenses for the year comprises of current tax, deferred tax charge or credit and
adjustments of taxes for earlier years. In respect of amounts adjusted outside profit or loss
(i. e., in other comprehensive income or equity), the corresponding tax effect, if any, is
also adjusted outside profit or loss.

Current tax is measured at the amount of tax expected to be payable on the taxable income
for the year and any adjustments to the tax payable or receivable in respect of previous
years as determined in accordance with the provisions of the Income Tax Act,1961 that
have been enacted or subsequently enacted at the end of the reporting period.

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

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply
in the year 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, if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred taxes relate to the same
taxation authority.

Deferred tax assets are recognized only to the extent that it is probable that future taxable
profit will be available against which such deferred tax assets can be utilized. In situations
where the Company has unused tax losses and unused tax credits, deferred tax assets are
recognized only if it is probable that they can be utilized against future taxable profits.
Deferred tax assets are reviewed for the appropriateness of their respective carrying
amounts at each Balance Sheet date.

At each reporting date, the Company re-assesses unrecognized deferred tax assets. It
recognizes previously unrecognized deferred tax assets to the extent that it has become
probable that future taxable profit allows deferred tax assets to be recovered.

2.17. Cash & cash equivalent

Cash and cash equivalents include cash in hand, bank balances, deposits with banks (other
than on lien) and all short term and highly liquid investments that are readily convertible
into known amounts of cash and are subject to an insignificant risk of changes in value.

2.18. Statement of cash flows

Cash flows are reported using the indirect method, where by net profit before tax is
adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of
past or future operating cash receipts or payments and item of income or expenses
associated with investing or financing cash flows. The cash flows from operating, investing
and financing activities are segregated.