Note 2 - Significant accounting policies

2.1 Basis of preparation of Financial Statements

These Financial Statements of the Company have been prepared in accordance with Indian Accounting
Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended
thereafter. For all periods up to and including the year ended March 31, 2024, the Company prepared its
Financial Statements in accordance with the accounting standards notified under the section 133 of the
Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

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

A. Derivative financial instruments;

B. Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial
instruments).

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

2.2 Current versus non-current classification

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

A. Expected to be realised or intended to be sold or consumed in normal operating cycle

B. Held primarily for the purpose of trading

C. Expected to be realised within twelve months after the reporting period, or

D. Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve
months

after the reporting period

All other assets are classified as non-current.

A liability is current when:

A. It is expected to be settled in normal operating cycle

B. It is held primarily for the purpose of trading

C. It is due to be settled within twelve months after the reporting period, or

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

The Company classifies all other liabilities as non-current.

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

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and
cash equivalents. The Company has identified twelve months as its operating cycle.

2.3 Foreign currencies transactions and translation

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency
closing rates of exchange at the reporting date.

Exchange differences arising on settlement or translation of monetary items are recognised in Statement of
Profit and Loss except to the extent of exchange differences which are regarded as an adjustment to interest
costs on foreign currency borrowings that are directly attributable to the acquisition or construction of
qualifying assets, are capitalized as cost of assets. Additionally, exchange gains or losses on foreign currency
borrowings taken prior to April 1, 2017 which are related to the acquisition or construction of qualifying assets
are adjusted in the carrying cost of such assets.

Non-monetary items that are measured in terms of historical cost in a foreign currency are recorded using the
exchange rates at the date of the transaction. Non-monetary items measured at fair value in a foreign currency
are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising
on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain
or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss
is recognised in OCI or Statement of Profit and Loss are also recognised in OCI or Statement of Profit and
Loss, respectively).

2.4 Fair value measurement

The Company measures financial instruments at fair value on initial recognition.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place either:

A. In the principal market for the asset or liability, or

B. In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair
value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use 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, maximising the use of
relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the Financial Statements are categorised
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the
fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable

For assets and liabilities that are recognised in the Financial Statements on a recurring basis, the Company
determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each
reporting period.

External valuers are involved for valuation of significant assets, such as properties and unquoted financial
assets. Involvement of external valuers is decided upon annually by the management. Selection criteria include
market knowledge, reputation, independence and whether professional standards are maintained. The
management decides, after discussions with the Company’s external valuers, which valuation techniques and
inputs to use for each case.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as
explained above.

2.5 Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and
the revenue can be reliably measured. The following specific recognition criteria must also be met before
revenue is recognized:

Sale of goods

Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods
have been passed to the buyer, usually on delivery of the goods. Revenue from sale of goods is measured at the
fair value of the consideration received or receivable, taking into account contractually defined terms of
payment and excluding taxes or duties collected on behalf of the government.

Income from services

Revenue in respect of contracts for services is recognized on completion of services.

Interest

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the
applicable interest rate. Interest income is included under the head “other income” in the statement of profit and
loss.

Dividend

Dividend income is recognized when the company’s right to receive dividend is established by the reporting
date.

Government grants

Grants from the government are recognized at fair value where there is a reasonable assurance that the grant
will be received and the Company will comply with all attached conditions.

Government grants relating to income are deferred and recognized in the profit or loss over the period necessary
to match them with the costs they are intended to compensate and presented within other income.

Government grants relating to the purchase of property, plant and equipment are included in non-current
liabilities as deferred income and are credited to profit and loss on a straight line basis over the expected lives
of the related assets and presented within other income.

The benefit of a government loan at a below market rate of interest is treated as a government grant, measured
as the difference between proceeds received and the fair value of the loan based on prevailing market interest
rates.

2.6 Property, plant and equipment

Since there is no change in the functional currency, the Company has elected to continue with the carrying
value for all of its property, plant and equipment as recognised in its Indian GAAP Financial Statements as
deemed cost at the transition date, viz., April 1, 2016.

Property, plant and equipment are stated at cost of acquisition or construction net of accumulated depreciation
and impairment loss (if any). Internally manufactured property, plant and equipment are capitalised at cost,
including non-cenvatable excise duty, wherever applicable. All significant costs relating to the acquisition and
installation of property, plant and equipment are capitalised. Such cost includes the cost of replacing part of the
property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria
are met.

When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates
them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is
recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are
satisfied. All other repair and maintenance costs are recognised in statement of profit and loss as incurred. The
present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the
respective asset if the recognition criteria for a provision are met.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when 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. The carrying amount of the replaced part is derecognised.

The identified components are depreciated over their useful lives, the remaining asset is depreciated over the
life of the principal asset. Depreciation on the identified components has been provided for on straight line
method at the rates prescribed and in the manner specified in Schedule II to the Companies Act, 2013.
Depreciation on additions is provided on Pro-rata basis for the period for which the Assets are put to use. Assets
costing ? 5000/- or less are fully depreciated in the year of purchase.

Freehold land is carried at cost.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at
each financial year end and adjusted prospectively, if appropriate.

2.7 Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.
Internally generated intangible assets, excluding capitalized development costs, are not capitalized and
expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.

The amortization period and the amortization method are reviewed at least at each financial year end. If the
expected useful life of the asset is significantly different from previous estimates, the amortization period is
changed accordingly.

2.8 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction of qualifying asset that necessarily takes a
substantial period of time to get ready for its intended use are capitalized as part of the cost of the respective
asset. All other borrowing costs are charged to Profit and Loss accounts.

2.9 Leases

Company in its capacity as lessee

Finance leases, which effectively transfer to the company substantially all the risks and benefits incidental to
ownership of the leased item, are capitalized at the inception of the lease term at the lower of the fair value of
the leased property and present value of minimum lease payments. Lease payments are apportioned between
the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are recognized as finance costs in the statement of profit and
loss. Lease management fees, legal charges and other initial direct costs of lease are capitalized.

2.10 Inventories

Raw materials, 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. Cost of raw
materials, components and stores and spares is determined on First-in First-Out basis.

Finished Goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour
and a proportion of manufacturing overheads based on normal operating capacity. Cost of Finished Goods
includes excise duty and is determined on First-in First-Out basis.

2.11 Impairment of non-financial assets

The Company assesses at each reporting date as to whether there is any indication that any property, plant and
equipment and intangible assets or group of assets, called cash generating units (CGU) may be impaired. If any
such indication exists the recoverable amount of an asset or CGU is estimated to determine the extent of
impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the
Company estimates the recoverable amount of the CGU to which the asset belongs.

An impairment loss is recognised in the Statement of Profit and Loss to the extent, asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is higher of an asset’s fair value less cost of disposal
and value in use. Value in use is based on the estimated future cash flows, discounted to their present value
using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific
to the assets.

The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate
of recoverable amount.

2.12 Retirement and other employee benefits

Retirement benefit in the form of provident fund is a defined contribution scheme. The contributions to the
provident fund are charged to the statement of profit and loss for the year when the contributions are due. The
company has no obligation, other than the contribution payable to the provident fund.

The company operates one defined benefit plan for its employees, viz., gratuity. The costs of providing benefits
under these plans are determined on the basis of actuarial valuation at each year-end. Actuarial valuation is
carried out for plan using the projected unit credit method. Actuarial gains and losses for defined benefit plan
are recognized in full in the period in which they occur in the statement of profit and loss.

2.13 Income taxes

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to
be paid to the tax authorities in accordance with the Income-Tax Act, 1961.Deferred income taxes reflects the
impact of current year timing differences between taxable income and accounting income for the year and
reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance
sheet 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 tax assets and deferred tax liabilities relate
to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognized only to the
extent that there is reasonable certainty that sufficient future taxable income will be available against which
such deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down
the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain that sufficient
future taxable income will be available against which deferred tax asset can be realized. Any such write-down
is reversed to the extent that it becomes reasonably certain that sufficient future taxable income will be
available.

Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The
company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that
the company will pay normal income tax during the specified period, i.e., the period for which MAT credit is
allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in
accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax
under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and
shown as “MAT Credit Entitlement”.

2.14 Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity
shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding
during the period.