2. Material accounting policies

2.1 Statement of compliance and basis of preparation

The standalone financial statements of the Company
have been prepared and presented in accordance with
the Generally Accepted Accounting Principles (GAAP).
GAAP comprises of Indian Accounting Standards (Ind AS)
as specified in Sec 133 of the Companies Act, 2013 ('the
Act') read together with Rule 4 of the Companies (Indian
Accounting Standards) Rules, 2015 and the relevant
amendment rules issued thereafter, pronouncements of
regulatory bodies applicable to the Company and other
provisions of the Act.

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

These Standalone Financial Statements are presented
in Indian rupees, which is the functional currency of the
Company. All financial information presented in Indian
rupees has been rounded to the nearest million, except
otherwise indicated.

The standalone financial statements has been prepared
as a going concern on the basis of relevant Ind AS that are
effective at the reporting date, March 31, 2026.

Transactions and balances with values below the
rounding off norm adopted by the Company have been
reflected as “0” in the relevant notes in these standalone
financial statements.

The standalone financial statements of the Company
for the year ended March 31, 2026 were approved and
authorised for issue in accordance with the resolution of
the Board of Directors on May 08, 2026.

2.2 Basis of measurement

These standalone financial statements have been
prepared under the historical cost basis, except for
defined benefit obligation which are measured at fair
values at the end of each reporting period, as explained
in accounting policies below. Historical cost is generally
based on the fair value of the consideration given in
exchange for 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
asset or liability if market participants would take those
characteristics into account when pricing the asset or
liability at the measurement date.

In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2, or 3
based on the degree to which the inputs to the fair value
measurements are observable and the significance of the
inputs to the fair value measurement in its entirety, which
are described as follows:

(i) Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities that
the entity can access at the measurement date;

(ii) Level 2 inputs are other than quoted prices included
within Level 1, that are observable for the asset or
liability, either directly or indirectly; and

(iii) Level 3 inputs are unobservable inputs for the asset
or liability.

2.3 Use of judgements and estimates

In the application of the Company's accounting policies,
the management of the Company is required to make
judgements, estimates and assumptions about the
reported amounts of assets, liabilities, income and
expenses. The estimates and associated assumptions
are based on historical experience and other factors that
are considered to be relevant. Actual results may differ
from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only
that period, or in the period of the revision and future
periods if revision affects both current and future periods.

Information about judgements made in applying
accounting policies that have the most significant effects
on the amounts recognised in the standalone financial
statement is included in the following notes:

(i) Judgements

♦ Lease term: whether the Company is reasonably
certain to exercise extension options. (Refer
Note 2.16).

I information about assumptions and estimation
uncertainties at the reporting date that have a
significant risk of resulting in a material adjustment
to the carrying amounts of assets and liabilities
within the next financial year is included in the
following notes:

(ii) Estimates

♦ Useful lives of Property, plant and equipment
and intangible assets (Refer Note 2.9 and Note
2.10)

♦ Measurement of defined benefit obligation; key
actuarial assumptions (Refer Note 2.15)

♦ Provision for warranty (Refer Note 2.21)

♦ Measurement of Lease liabilities and Right of
Use Asset (Refer Note 2.16)

♦ Recognition and measurement of provisions
and contingencies: key assumptions about
the likelihood and magnitude of an outflow of
resources. (Refer Note 2.21)

2.4 Inventories

I nventories are valued at the lower of cost and net
realizable value.

The cost of raw materials, components, consumable
stores and spare parts and stock-in-trade are determined
on a weighted average basis. Cost includes freight, taxes
and duties and other charges incurred for bringing
the goods to the present location and condition and is
net of credit under the Goods and Services Tax ('GST')
where applicable.

The valuation of manufactured finished goods and work-
in-progress includes the combined cost of material,
labour and manufacturing overheads incurred in bringing
the goods to the present location and condition.

Due allowance is estimated and made by the management
for slow moving / non-moving items of inventory,
wherever necessary, based on the past experience
and such allowances are adjusted against the carrying
inventory value.

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

The net realisable value of work-in-progress is determined
with reference to the selling prices of related finished
goods. Raw materials, components and other supplies
held for use in the production of finished products are not
written down below cost except in cases when a decline
in the price of materials indicates that the cost of the
finished products shall exceed the net realisable value.

The comparison of cost and net realisable value is made
on an item-by-item basis.

Sale of raw materials

Sale of raw materials are considered as a recovery
of cost of materials and adjusted against cost of
materials consumed.

2.5 Cash and cash equivalents

The Company's cash and cash equivalents consist of cash
on hand and in banks and demand deposits with banks,
which can be withdrawn at any point of time, without
prior notice or penalty on the principal and without any
significant risk of change in value.

For the purposes of the statement of cash flows, cash
and cash equivalents include cash on hand, in banks and
deposits with banks, net of outstanding bank overdrafts
that are repayable on demand and are considered part of
the Company's cash management system.

2.6 Cash flow statement

Cash flows are reported using the indirect method,
whereby profit / (loss) after tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or
accruals of past or future cash receipts or payments.
The cash flows from operating, investing and financing
activities of the Company are segregated based on the
available information.

2.7 Revenue recognition

Revenue towards satisfaction of a performance obligation
is measured at the amount of transaction price (net of
variable consideration) allocated to that performance
obligation. The transaction price of goods sold and
services rendered is net of variable consideration on
account of various discounts and schemes offered by the
Company and any taxes or duties collected on behalf of
the government. Revenue is recognised when recovery
of consideration is probable.

Sale of products

Revenues from domestic sale is recognized on
unconditional appropriation of goods from factory /
stockyard on transfer of goods to common carrier and
there are no unfulfilled obligations to the customer as per
the terms of sale / understanding with the customers.
Further revenues from export sale is recognized when
goods are shipped on board or delivery of goods at the
destination port as per the terms of sale / understanding
with the customers.

Sale of services

Income from sale of maintenance services and extended
warranties are recognised as income over the relevant
period of service or extended warranty. When the
Company sells products that are bundled with additional
service or extended period of warranty, such services
are treated as a separate performance obligation only
if the service or warranty is optional to the customer or
includes an additional service component. In such cases,
the transaction price allocated towards such additional
service or extended period of warranty is recognised as a
contract liability until the service obligation has been met.

Income from service activities are recognized at the
time of satisfaction of performance obligation towards
rendering of such services in accordance with the terms
of arrangement.

The consideration received in respect of transport
arrangements made for delivery of vehicles to the dealers
are shown as revenue and the corresponding cost is
shown separately as part of expenses.

The contract liabilities primarily relate to the advance
consideration received from customers towards services,
for which revenue is recognised over the relevant period
of service.

2.8 Recognition of dividend income and interest
income

Dividend income on investments is recognised when the
right to receive dividend is established.

Interest income is recognized using the effective interest
rate method.

♦ the gross carrying amount of the financial asset; or

♦ the amortised cost of the financial liability.

In calculating interest income and expense, the effective
interest rate is applied to the gross carrying amount of
the asset (when the asset is not credit-impaired) or to
the amortised cost of the liability. However, for financial
assets that have become credit-impaired subsequent
to initial recognition, interest income is calculated by
applying the effective interest rate to the amortised cost
of the financial asset. If the asset is no longer credit-
impaired, then the calculation of interest income reverts
to the gross basis.

2.9 Property, plant and equipment ('PPE')

The cost of an item of property, plant and equipment shall
be recognised as an asset if, and only if it is probable that
future economic benefits associated with the item will
flow to the Company and the cost of the item can be
measured reliably.

Property, plant and equipment held for use in the
production or supply of goods or services, or for
administrative purposes, are stated in the balance sheet
at cost less accumulated depreciation and accumulated
impairment losses, if any. Freehold land is measured at
cost and is not depreciated.

Cost includes purchase price, non-recoverable taxes
and duties, labor cost and direct overheads for self-
constructed assets and other direct costs incurred up to
the date the asset is ready for its intended use. Interest
cost incurred is capitalised up to the date the asset is
ready for its intended use for qualifying assets, based on
borrowings incurred specifically for financing the asset
or the weighted average rate of all other borrowings, if no
specific borrowings have been incurred for the asset

Any part or components of PPE which are separately
identifiable and expected to have a useful life which is
different from that of the main assets are capitalised
separately, based on the technical assessment of
the management.

Subsequent expenditure is capitalised only if it is probable
that the future economic benefits associated with the
expenditure will flow to the Company and the cost of the
item can be measured reliably.

Internally manufactured vehicles are capitalized at cost
including an appropriate share of relevant overheads.

Capital work-in-progress:

Properties in the course of construction for production,
supply or administrative purposes are carried at cost, less
any recognised impairment loss.

Depreciation:

Depreciation on property, plant and equipment is
provided using the straight-line method, pro-rata from
the month of capitalisation over the useful lives of the
assets, assessed as below:

Individual PPE costing less than ? 5,000 each are
depreciated in the year of purchase considering the type
and usage pattern of these assets.

The useful lives mentioned above are different from the
useful lives specified for these assets as per Schedule
II of the Companies Act, 2013, where applicable. The
useful lives followed in respect of these assets are based
on management's assessment, based on technical
advice, taking into account factors such as the nature
of the assets, the estimated usage pattern of the assets,
the operating conditions, past history of replacement,
anticipated technological changes, manufacturers'
warranties and maintenance support etc. Depreciation
methods, useful lives and residual values are reviewed at
each reporting date and adjusted if appropriate.

Depreciation is accelerated on PPE, based on their
condition, usability, etc. as per the technical estimates of
the management, wherever necessary.

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.

2.10 Intangible assets

An intangible asset is recognised only if it is probable
that future economic benefits attributable to the asset
will flow to the Company and the cost of the asset can
be measured reliably Intangible assets with finite useful
lives that are acquired separately are carried at cost less
accumulated amortisation and impairment losses, if any.
The cost of an intangible asset comprises its purchase
price, including any import duties and other taxes (other
than those subsequently recoverable from the taxing
authorities) and any directly attributable expenditure on
making the asset ready for its intended use.

The intangible assets are amortised over their respective
individual estimated useful lives on a straight-line basis,
commencing from the date, the asset is available to the
Company for its use. Amortisation methods, useful lives
and residual values are reviewed at each reporting date
and adjusted if appropriate..

Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure is
recognised in profit or loss as incurred.

An intangible asset is derecognised on disposal or when
no future economic benefits are expected to arise from
continued use of the asset. Gains or losses arising from
derecognition of an intangible asset, measured as the
difference between the net proceeds from disposal
and the carrying amount of the asset, are recognised
in the statement of profit and loss when the asset
is derecognised.

2.11 Foreign currencies

Transactions in foreign currencies are initially recognised
in the standalone financial statement using exchange
rates prevailing on the date of transaction or an average
rate if the average rate approximates the actual rate at the
date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated to
the relevant functional currency at the exchange rates
prevailing at the reporting date. Non-monetary assets
and liabilities denominated in foreign currencies that are
measured at fair value are translated to the functional
currency at the exchange rate prevailing on the date that
the fair value was determined. Non-monetary assets and
liabilities denominated in foreign currency and measured
at historical cost are translated at the exchange rate
prevalent at the date of transaction.

Exchange differences on monetary items are recognised
in the statement of profit and loss in the period in which
they arise, except for exchange differences on foreign
currency borrowings relating to assets under construction
for future productive use, which are included in the cost
of those assets when they are regarded as an adjustment
to interest cost on those foreign currency borrowings.

2.12 Government grants and export benefits

Government grants are not recognised until there is
reasonable assurance that the Company will comply with
the conditions attaching 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 periods in
which the Company recognises as expenses the related
costs for which the grants are intended to compensate.
Specifically, government grants whose primary condition
is that the Company should purchase, construct or
otherwise acquire non-current assets are recognised as

deferred income in the balance sheet and transferred
to the statement of profit and loss on a systematic and
rational basis.

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 the
statement of profit and loss in the period in which they
became receivable.

The benefit of a government loan at a below-market rate
interest is treated as a government grant, measured as the
difference between the proceeds received and the fair
value of the loan based on prevailing market interest rates
has been disclosed as "Other non-operating income"
under "Other income" .

Export benefits in the nature of duty drawback are
recognised in the statement of profit and loss in the year
of exports based on eligibility / expected eligibility duly
considering the entitlements as per the policy, industry
specific developments, interpretations arising out of
judicial / regulatory proceedings where applicable,
management assessment etc. and when there is no
uncertainty in receiving the same.

Export benefits in the nature of RoDTEP & Merchandise
Exports from India Scheme (MEIS) under Foreign Trade
Policy are recognised in the statement of profit and loss
when there is no uncertainty in receiving / utilizing the
same, taking into consideration the prevailing regulations.

Adjustments, if any, to the amounts recognised in
accordance with the accounting policy, based on
final determination by the authorities, are dealt
with appropriately in the year of final determination
and acceptance.

2.13 Financial instruments - Classification, initial
recognition and measurement

A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity. Financial assets other
than equity instruments are classified into categories:
financial assets at fair value through profit and loss
and at amortised cost. Financial assets that are equity
instruments are classified as fair value through profit
and loss or fair value through other comprehensive
income. Financial liabilities are classified into financial
liabilities at fair value through profit and loss and other
financial liabilities.

Financial instruments are recognised on the balance sheet
when the Company becomes a party to the contractual
provisions of the instrument.

Initially, a financial instrument is recognised at its
fair value. Transaction costs directly attributable to
the acquisition or issue of financial instruments are

recognised in determining the carrying amount, if it is not
classified as at fair value through profit and loss. However,
trade receivables that do not contain a significant
financing component are measured at transaction
price. Subsequently, financial instruments are measured
according to the category in which they are classified.

Determination of fair value:

The fair value of a financial instrument on initial
recognition is normally the transaction price (fair value
of the consideration given or received). Subsequent to
initial recognition, the Company determines the fair value
of financial instruments that are quoted in active markets
using the quoted bid prices (financial assets held) or
quoted ask prices (financial liabilities held) and using
valuation techniques for other instruments. Valuation
techniques include discounted cash flow method and
other valuation models.

2.14Financial instruments - Financial assets and
Liabilities - Classification

Financial assets at amortised cost:

Financial assets having contractual terms that give rise
on specified dates to cash flows that are solely payments
of principal and interest on the principal outstanding and
that are held within a business model whose objective is
to hold such assets in order to collect such contractual
cash flows are classified in this category. Subsequently,
these are measured at amortised cost using the
effective interest method less any impairment losses.
The amortised cost is reduced by impairment losses.
Interest income, foreign exchange gains and losses and
impairment are recognised in profit or loss. Any gain or
loss on derecognition is recognised in profit or loss.

Financial assets at fair value through profit and loss:

Financial assets are measured at fair value through profit
and loss unless it is measured at amortised cost or at fair
value through other comprehensive income on initial
recognition. The transaction costs directly attributable
to the acquisition of financial assets and liabilities at fair
value through profit and loss are immediately recognised
in profit and loss.

Impairment of financial assets:

The Company recognises loss allowances for expected
credit losses ('ECL') on financial assets measured at
amortised cost, if any.

The Company measures loss allowances at an amount
equal to lifetime ECLs. Loss allowances for trade and
finance lease receivables, loans and contract assets are
always measured at an amount equal to lifetime ECLs.
Lifetime expected credit losses are the expected credit
losses that result from all possible default events over the
expected life of a financial instrument.

In all cases, the maximum period considered when
estimating expected credit losses is the maximum
contractual period over which the Company is exposed
to credit risk.

Measurement of ECLs

Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due
to the entity in accordance with the contract and the
cash flows that the Company expects to receive). Loss
allowances for financial assets measured at amortised
cost are deducted from the gross carrying amount of the
assets, if any.

Write-off

The gross carrying amount of a financial asset is written
off (either partially or in full) to the extent that there is no
realistic prospect of recovery. This is generally the case
when the Company determines that the debtor does not
have assets or sources of income that could generate
sufficient cash flows to repay the amounts subject to the
write-off. However, financial assets that are written off
could still be subject to enforcement activities in order to
comply with the Company's procedures for recovery of
amounts due.

Financial liabilities:

Financial liabilities at FVTPL are measured at fair value
and net gains and losses, including any interest expense,
are recognised in profit or loss. Other financial liabilities
are subsequently measured at amortised cost using the
effective interest method. Interest expense and foreign
exchange gains and losses are recognised in profit or
loss. Financial liabilities are classified as at FVTPL when
the financial liability is either held for trading or it is
designated as at FVTPL.

Equity Instruments:

An equity instrument is any contract that evidences
a residual interest in the assets of the Company after
deducting all its liabilities. Equity instruments issued by
the Company are recorded at the proceeds received, net
of direct issue costs.

Derecognition of financial assets and financial
liabilities:

The Company derecognises a financial asset only when
the contractual rights to the cash flows from the asset
expires or it transfers the financial asset and substantially
all the risks and rewards of ownership of the asset to
another entity. If the Company neither transfers nor
retains substantially all the risks and rewards of ownership
and continues to control the transferred asset, the
Company recognises its retained interest in the asset
and an associated liability for amounts it may have to

pay. If the Company retains substantially all the risks and
rewards of ownership of a transferred financial asset,
the Company continues to recognise the financial asset
and also recognises a collateralised borrowing for the
proceeds received.

Financial liabilities are derecognised when these are
extinguished, that is when the obligation is discharged,
cancelled or has expired. Any gain or loss on derecognition
of financial asset or financial liabilities (whether classified
at amortized costs or at fair value through P&L) is
recognised in profit or loss.

The Company recognises a loss allowance for expected
credit losses on a financial asset that is at amortised cost.

Offsetting:

Financial assets and financial liabilities are offset and
the net amount is presented in the balance sheet when,
and only when, the Company currently has a legally
enforceable right to set off amounts and it indents either
to settle them on a net basis or to realise the asset and
settle the liability simultaneously.

2.15Employee benefits

Employee benefits include provident fund,
superannuation, gratuity, National Pension Scheme
('NPS') and compensated absences.

Defined contribution plans:

Provident fund:

Contributions towards Employees’ Provident Fund
are made to the Employees’ Provident Fund Scheme
maintained by the Central Government and the
Company's contribution to the fund are recognized as an
expense in the year in which the services are rendered by
the employees.

Superannuation fund:

the Company contributes a specified percentage of
eligible employees’ salary to a superannuation fund
administered by trustees and managed by the insurer.
The Company has no liability for future superannuation
benefits other than its annual contribution and recognizes
such contributions as an expense in the year in which the
services are rendered by the employees.

National pension scheme:

The Company contributes a specified percentage of
the eligible employees’ salary to the National Pension
Scheme of the Central Government. The Company has
no liability for future pension benefits and the Company's
contribution to the scheme are recognized as an expense
in the year in which the services are rendered by the
employees. Obligations for contributions to defined
contribution plan are expensed as an employee benefits
expense in the statement of profit and loss in period in
which the related service is provided by the employee.

Defined benefit plans:

Gratuity:

The Company contributes to a gratuity fund administered
by trustees and managed by the Insurer. The Company
accounts its liability for future gratuity benefits based
on actuarial valuation, as at the balance sheet date,
determined every year by an independent actuarial using
the projected unit credit method. Obligation under the
defined benefit plan is measured at the present value of
the estimated future cash flows using a discount rate that
is determined by reference to the prevailing market yields
at the balance sheet date on government bonds.

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

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.

Compensated absences:

Accumulated absences expected to be carried forward
beyond twelve months is treated as long-term employee
benefit for measurement purposes. The Company
accounts for its liability towards compensated absences
based on actuarial valuation done as at the balance sheet
date by an independent actuary using the Projected
Unit Credit Method. The liability includes the long term
component accounted on a discounted basis and the
short term component which is accounted for on an
undiscounted basis.

The obligations are presented as current liabilities in
the balance sheet if the Company does not have an
unconditional right to defer the settlement for at least
twelve months after the reporting date.

Short-term employee benefits

Short-term employee benefits are measured on an
undiscounted basis and expensed as the related service is
provided. A liability is recognised for the amount expected
to be paid under short-term employee benefits, 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

2.16 Leases
As a Lessee

The Company’s lease asset classes primarily consist of
leases for land and buildings. The Company assesses
whether a contract is or contains a lease, at inception of a
contract. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset
for a period of time in exchange for consideration. To
assess whether a contract conveys the right to control the
use of an identified asset, the Company assesses whether:

(i) the contract involves the use of an identified asset

(ii) the Company has substantially all of the economic
benefits from use of the asset through the period of the
lease and (iii) the Company has the right to direct the use
of the asset. the Company evaluates if an arrangement
qualifies to be a lease as per the requirements of Ind
AS 116 and this may require significant judgment. the
Company also uses significant judgement in assessing
the lease term (including anticipated renewals) and the
applicable discount rate.

At the date of commencement of the lease, the
Company recognises a right-of-use asset (“ROU”) and a
corresponding lease liability for all lease arrangements in
which it is a lessee, except for leases with a term of twelve
months or less (short-term leases) and leases of low value
assets. For these short-term and leases of low value
assets, the Company recognises the lease payments as an
operating expense on a straight-line basis over the term
of the lease.

The Company determines the lease term as the non¬
cancellable period of a lease, together with both periods
covered by an option to extend or terminate the lease
if the Company is reasonably certain based on relevant
facts and circumstances that the option to extend will be
exercised / the option to terminate will not be exercised.
If there is a change in facts and circumstances, the
expected lease term is revised accordingly.

The right-of-use assets are initially recognised at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently
measured at cost less accumulated depreciation and
impairment losses, if any. Right-of-use assets are
depreciated from the commencement date on a straight¬
line basis over the shorter of the lease term and useful life
of the underlying asset.

The lease liability is initially measured at the present
value of the future lease payments that are not paid at the
commencement date. The lease payments are discounted
using the interest rate implicit in the lease or, if not readily
determinable, using the incremental borrowing rates. the
Company determines its incremental borrowing rate by
obtaining interest rates from various external financing
sources and makes certain adjustments to reflect the
terms of the lease and type of the asset leased. The lease
liability is measured at amortised cost using the effective
interest method. The lease liability is subsequently
remeasured by increasing the carrying amount to reflect
interest on the lease liability, reducing the carrying
amount to reflect the lease payments made.

Lease liability and right-of-use assets have been
separately presented in the Balance Sheet and lease
payments have been classified as financing cash flows.

As a lessor

At inception or on modification of a contract that
contains a lease component, the Company allocates the
consideration in the contract to each lease component on
the basis of their relative stand-alone prices.

When the Company acts as a lessor, it determines at
lease inception whether each lease is a finance lease or
an operating lease.

To classify each lease, the Company makes an overall
assessment of whether the lease transfers substantially
all of the risks and rewards incidental to ownership of
the underlying asset. If this is the case, then the lease is
a finance lease; if not, then it is an operating lease. As
part of this assessment, the Company considers certain
indicators such as whether the lease is for the major part
of the economic life of the asset.

When the Company is an intermediate lessor, it accounts
for its interests in the head lease and the sub-lease
separately. It assesses the lease classification of a sub¬
lease with reference to the right-of-use asset arising from
the head lease, not with reference to the underlying asset.
If a head lease is a short-term lease to which the Company
applies the exemption described above, then it classifies
the sub-lease as an operating lease.

If an arrangement contains lease and non-lease
components, then the Company applies Ind AS 115 to
allocate the consideration in the contract.

The Company applies the derecognition and impairment
requirements in Ind AS 109 to the net investment in the
lease. The Company recognises lease payments received
under operating leases as income on a straight-line basis
over the lease term as part of ‘other income'.

2.17Earnings per share

Basic earnings per share is computed by dividing the
profit / (loss) after tax (including the post tax effect of
extraordinary items, if any) by the weighted average
number of equity shares outstanding during the year.

Diluted earnings per share has been computed using the
weighted average number of shares and dilutive potential
shares, except where the result would be anti-dilutive.

2.18Taxation
Current tax:

The tax currently payable is based on taxable profit for the
year and any adjustment to the tax payable or receivable in
respect of previous years. Taxable profit differs from 'profit
before tax' as reported in the statement of profit and loss
because of items of income or expense that are taxable or
deductible in other years and items that are never taxable
or deductible. The Company's current tax is calculated
using tax rates that have been enacted or substantively
enacted by the end of the reporting period. The amount of
current tax payable or receivable is the best estimate of the
tax amount expected to be paid or received that reflects
uncertainty related to income taxes, if any.

Deferred tax:

Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities in
the standalone financial statement and the corresponding
tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all
taxable temporary differences. Deferred tax assets
are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable
profits will be available against which those deductible
temporary differences can be utilized. Deferred tax is also
recognised in respect of carried forward tax losses and
tax credits.

Deferred tax is not recognised for:

(i) temporary differences on the initial recognition of
assets and liabilities in a transaction that: is not a
business combination; and at the time of transaction
(a) affects neither the accounting nor taxable profit
or loss and (b) does not give rise to equal taxable and
deductible temporary differences.

(ii) temporary differences related to investment in
subsidiaries to the extent the Company is able to
control the timing of the reversal of the temporary
differences and it is probable that they will not
reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed
at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to
be recovered.

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

The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the
manner in which the Company expects, at the end of the
reporting period, to recover or settle the carrying amount
of its assets and liabilities.

Offsetting:

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
assets and deferred tax liabilities are offset when there
is a legally enforceable right to set off current tax assets
against current tax liabilities; and the deferred tax assets
and the deferred tax liabilities relate to income taxes
levied by the same taxation authority.

Current and deferred tax for the year:

Current and deferred tax are recognised in profit or loss,
except when they relate to items that are recognised
in other comprehensive income or directly in equity,
in which case, the current and deferred tax are also
recognised in other comprehensive income or directly in
equity respectively.

2.19Research and development expenditure

Expenditure on research activities are recognised as
expense in the period in which it is incurred.

An internally generated intangible asset arising from
development (or from the development phase of an

internal project) is recognised if, and only if, all the
following have been demonstrated:

♦ the technical feasibility of completing the intangible
assets so that it will be available for use or sale;

♦ the intention to complete the intangible asset and
use or sell it;

♦ the ability to use or sell the intangible asset;

♦ how the intangible asset will generate probable
future economic benefits;

♦ the availability of adequate technical, financial and
other resources to complete the development and to
use or sell the intangible asset; and

♦ the ability to reliably measure the expenditure
attributable to the intangible asset during
its development.

The amount initially recognised for internally-generated
intangible assets is the sum of the expenditure incurred
from the date when the intangible asset first meets the
recognition criteria listed above. Where no internally-
generated asset can be recognised, development
expenditure is recognised in the statement of profit and
loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated
intangible assets are reported at cost less accumulated
amortisation and accumulated impairment losses,
on the same basis as intangible assets that are
acquired separately.

2.20Impairment of 'PPE' and intangible assets

At the end of each reporting period, the Company reviews
the carrying amounts of its PPE and intangible assets or
cash generating units to determine whether there is any
indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount
of the asset is estimated in order to determine the extent
of the impairment loss (if any). When it is not possible
to estimate the recoverable amount of an individual
asset, the Company estimates the recoverable amount
of the cash-generating unit to which the asset belongs.
When a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated to
individual cash-generating units, or otherwise they are
allocated to the smallest company of cash-generating
units for which a reasonable and consistent allocation
basis can be identified.

Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment
at least annually, or whenever there is an indication that
the asset may be impaired.

Recoverable amount is the higher of fair value less costs
of disposal and value in use. 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 for which the estimates
of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is
reduced to its recoverable amount. An impairment loss
is recognised immediately in the statement of profit and
loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.

When an impairment loss subsequently reverses, the
carrying amount of the asset (or a cash-generating unit)
is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been
determined had no impairment loss been recognised for
the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in the
statement of profit and loss, unless the relevant asset is
carried at a revalued amount, in which case the reversal
of the impairment loss is treated as a revaluation increase.