CORPORATE INFORMATION

Permanent Magnet Limited (PML) is one of the flagship
Companies of Taparia Group, Mumbai and one of the
leading manufacturers of Cast Alloy Permanent Magnets,
Parts and accessories of electricity and electric vehicle
parts in the world. PML also supplies Gas meters parts and
accessories. The assembly includes Die cast parts, Plastic
parts, Brass parts, Bi-metal parts, Stainless steel parts and
special copper alloy and nickel alloy parts. The combination
of these parts fitted together is further aligned under special
conditions to be directly used in gas meters. PML is adding
a similar range of products and forward integration of
parts to assemblies in current business based on customer
demand. Company has good customer base in India as
well as in Europe, USA, South America and South-East Asia.
Permanent Magnets Limited (the 'Company') is listed on the
Bombay Stock Exchange (BSE). The Significant Accounting
Policies are as follows:

PREPARATION AND PRESENTATION OF
FINANCIAL STATEMENTSA. Basis of Preparation

The financial statements have been prepared in accordance
with Indian Accounting Standards (Ind AS), under the
historical cost convention on accrual basis except for
certain financial instruments which are measured at
fair values, the provisions of the Companies Act, 2013
("the Act"). The Ind AS are prescribed under Section 133
of the Companies Act, 2013, read with Rule 3 of the
Companies (Indian Accounting Standards) Rules, 2015 (as
amended from time to time).

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

B. Operating cycle for current and non-current
classification

The Company identifies asset/liabilities as current if the
same are receivable/payable within twelve months else the
same are considered as non-current.

C. Use of Estimates and Judgements

Preparation of financial statements in conformity with Indian
Accounting Standards (Ind AS) requires the management
of the Company to make estimates and assumptions that
affect the income and expense reported for the period and
assets, liabilities and disclosures reported as of the date of
the financial statements. Examples of such estimates include
useful lives of tangible and intangible assets, allowance for
expected credit loss, fair value measurement of financial
instruments, impairment of financial assets, provisions
and contingent liabilities, future obligations in respect
of retirement benefit plans, considering the extension
period for determination of lease term, etc. Actual results
could vary from these estimates. 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 by giving prospective impact
in the standalone financial statements.

D. Segment reporting

Operating segments are reported in a manner consistent
with the internal reporting provided to the Chief Operating
Decision Maker (CODM). The CODM, who is responsible for
allocating resources and assessing the performance of the
operating segments, has been identified as the Managing
Director of the Company.

The Company's organization structure, internal reporting
look-up, and financial evaluation frameworks are built
around a single primary business segment. Consequently,
there are no separate reportable segments as per the
requirements of Ind AS 108 'Operating Segments'.

E. Foreign currency translation

i) Functional and presentation currency

Items included in the Standalone financial statements are
measured using the currency of the primary economic
environment in which the entity operates (the functional
currency). The Standalone financial statements are
presented in Indian rupee ('), which is the Company's
functional and presentation currency.

ii) Transactions and balances

Foreign currency transactions are translated into the
functional currency using the exchange rates at the dates
and from the translation of monetary assets and liabilities
denominated in foreign currencies at year end exchange
rates are generally recognized in profit or loss.

Non-monetary items that are measured at fair value in a
foreign currency are translated using the exchange rates at
the date when the fair value was determined. Translation
differences on assets and liabilities carried at fair value are
reported as part of the fair value gain or loss.

F. Revenue Recognition

Effective from April 1, 2018, the company adopted Ind
AS 115 "Revenue from Contracts with Customers" using
the cumulative catch-up transition method, applied to
contracts that were not completed as of April 1, 2018. The
core principle of the new standard is that an entity should
recognize revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled
in exchange for those goods or services. In accordance
with the cumulative catch-up transition method, the
comparatives have not been retrospectively adjusted. The
effect on adoption of Ind AS 115 was insignificant.

Revenue is recognized upon transfer of control of promised
products or services to customers in an amount that
reflects the consideration we expect to receive in exchange
for those products or services.

Other income is comprised primarily of interest income,
dividend income, gain/loss on investments, exchange gain/
loss on translation of other assets and liabilities.

Interest income is recognized on a time proportion basis
taking into account the amount invested and rate of interest.

Dividend income is recognized when the Company's right
to receive dividend is established by the Balance Sheet date,
it is probable that the economic benefits associated with
the dividend will flow to the Company, and the amount of
the dividend can be measured reliably.

Claims for export incentives/duty drawbacks, duty refunds
and insurance are accounted when the right to receive
payment is established.

G. Taxation

Current Income tax

Current income tax assets and liabilities are measured at
the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or
substantively enacted, at the reporting date in the countries
where the Company operates and generates taxable
income.

Current income tax relating to items recognized outside
profit or loss is recognized in outside profit or loss (either
in other comprehensive income or in equity). Current
tax items are recognized in correlation to the underlying
transaction either in OCI or directly in equity. Management
periodically evaluates positions taken in the tax returns with
respect to situations in which applicable tax regulations are
subject to interpretation and establishes provisions where
appropriate.

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

Deferred tax

Deferred tax is provided using the liability method on
temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes at the reporting date. Deferred tax liabilities are
recognized for all taxable temporary differences.

Deferred tax assets including Minimum Alternate Tax (MAT)
are generally recognized for all deductible temporary
differences, the carry forward of unused tax credits and any
unused tax losses. Deferred tax assets are recognized to the
extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and
the carry forward of unused tax credits and unused tax
losses can be utilized.

The carrying amount of deferred tax assets is reviewed at
each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available
to allow all or part of the deferred tax assets to be utilized.
Unrecognized deferred tax assets are re-assessed at each
reporting date and are recognized to the extent that it has

become probable that future taxable profits will allow the
deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the year when the asset
is 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 items are recognized
in correlation to the underlying transaction either in OCI
or directly in equity. 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 taxable entity and the
same taxation authority.

H. Leases

As a lessee

Initial measurement

Lease Liability: At the commencement date, a Company
measure the lease liability at the present value of the lease
payments that are not paid at that date. The lease payments
shall be discounted using incremental borrowing rate.

Right-of-use assets: 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.

Subsequent measurement

Lease Liability: Company measures the lease liability by (a)
increasing the carrying amount to reflect interest on the
lease liability; (b) reducing the carrying amount to reflect
the lease payments made; and (c) remeasuring the carrying
amount to reflect any reassessment or lease modifications.

Right-of-use assets: Subsequently measured at cost less
accumulated depreciation and impairment losses. Right-
of-use assets are depreciated from the commencement
date on a WDV basis over the shorter of the lease term and
useful life of the under lying asset.

Impairment

Right of use assets are evaluated for recoverability whenever
events or changes in circumstances indicate that their
carrying amounts may not be recoverable. For the purpose
of impairment testing, the recoverable amount (i.e. the
higher of the fair value less cost to sell and the value-in-use)
is determined on an individual asset basis unless the asset
does not generate cash flows that are largely independent
of those from other assets. In such cases, the recoverable
amount is determined for the Cash Generating Unit (CGU)
to which the asset belongs.

Short term Lease

Short term lease is that, at the commencement date, has
a lease term of 12 months or less. A lease that contains a
purchase option is not a short-term lease. If the company
elected to apply short term lease, the lessee shall recognise
the lease payments associated with those leases as an
expense on either a straight-line basis over the lease term
or another systematic basis. The lessee shall apply another
systematic basis if that basis is more representative of the
pattern of the lessee's benefit.

As a lessor

Leases for which the company is a lessor is classified as a
finance or operating lease. Whenever the terms of the lease
transfer substantially all the risks and rewards of ownership
to the lessee, the contract is classified as a finance lease. All
other leases are classified as operating leases.

Lease income is recognised in the statement of profit and
loss on straight line basis over the lease term.

I. Impairment of Non-Financial Assets

Property, plant, and equipment (PPE), right-of-use (ROU)
assets, and intangible assets are evaluated for recoverability
at each balance sheet date, or whenever events or changes
in circumstances indicate that their carrying amounts may
not be recoverable.

For the purpose of impairment testing, the recoverable
amount is determined, The recoverable amount of an
asset or a cash-generating unit (CGU) is the higher of its
fair value less costs of disposal (FVLCD) and its value in use
(VIU). If the carrying amount of an asset or CGU exceeds
its estimated recoverable amount, an impairment loss is
recognized immediately in the Statement of Profit and Loss.

Allocation of Impairment Losses:

Assets are grouped at the lowest levels for which there
are separately identifiable cash inflows that are largely
independent of the cash inflows from other assets or groups
of assets (CGUs). Impairment losses recognized in respect
of a CGU are allocated to reduce the carrying amounts of
the other non-financial assets in the unit on a pro-rata basis.

Reversal of Impairment Losses:

An impairment loss recognized in prior periods is reviewed
at each reporting date for any indication that the loss has
decreased or no longer exists. A previously recognized
impairment loss is reversed through the Statement of Profit
and Loss only if there has been a change in the estimates
used to determine the asset's recoverable amount since
the last impairment loss was recognized. The increased
carrying amount of an asset attributable to a reversal of
an impairment loss cannot exceed the carrying amount
that would have been determined (net of depreciation or
amortization) had no impairment loss been recognized for
the asset in prior years.

J. Cash and cash equivalents

For the purpose of presentation in the statement of cash
flows, cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other short¬
term, highly liquid investments with original maturities of
three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant
risk of changes in value.

K. Trade receivables

Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using effective
interest method, less provision for impairment.

L. Inventories

a) Raw materials and stores, work-in-progress, traded
and finished goods are stated at the lower of cost and
net realizable value.

b) Cost of raw materials and traded goods comprise of
cost of purchase.

c) Cost of work-in-progress and manufactured finished
goods comprises direct materials, direct labour and an
appropriate proportion of variable and fixed overhead
expenditure, the later being allocated on the basis of
normal operating capacity.

d) Cost of inventories also includes all other costs incurred
in bringing the inventories to their present location
and condition. Costs are assigned to individual items
of inventory on a weighted average basis. Costs of
purchased inventory are determined after deducting
rebates and discounts.

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

M. Financial Instruments

(i) Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as
financial assets measured at fair value or as financial assets
measured at amortised cost. All financial assets not recorded
at fair value though profit or loss are recognized initially at
fair value plus transaction costs that are attributable to the
acquisition of the financial asset.

Subsequent measurement

For Purposes of subsequent measurement, financial assets
are classified in two broad categories:

• Financial assets at fair value

• Financial assets at amortized cost

Where assets are measured at fair value, gains and losses
are either recognized in the statement of profit and loss
(i.e. fair value through profit or loss) or recognized in
other comprehensive income (i.e. fair value though other
comprehensive income).

A financial asset that meets the following two conditions
is measured at amortized cost (net of any write down for
impairment) unless the asset is designated at fair value
through profit or loss under the fair value option.

• Business model test: The objective of the company's
business model is to hold the financial asset to collect
the contractual cash flows (rather than to sell the
instrument prior to its contractual maturity to realize
its fair value changes).

• Cash flow characteristics test: The contractual terms
of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.

A financial asset that meets the following two conditions
is measured at fair value through other comprehensive
income unless the asset is designated at fair value through
profit or loss under the fair value option.

• Business model test: The financial asset is held within
a business model whose objective is achieved by both
collecting contractual cash flow and selling financial
assets.

• Cash flow characteristics test: The contractual terms
of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.

Even if an instrument meets the two requirements to be
measured at amortised cost or fair value through other
comprehensive income, a financial asset is measured
at fair value through profit or loss as doing so eliminates
or significantly reduces a measurement or recognition
inconsistency (sometimes referred to as an 'accounting
mismatch') that would otherwise arise from measuring
assets or liabilities or recognizing the gains and losses on
them on different bases.

All other financial assets are measured at fair value through
profit or loss.

All equity investments are measured at fair value in the
balance sheet, with value changes recognized in the
statement of profit and loss, except for those equity
investments for which the entity has elected to present
value changes in 'other comprehensive income'.

If an equity investment is not held for trading, an irrevocable
election is made at initial recognition to measure it at fair
value through other comprehensive income with only
dividend income recognized in the statement of profit and
loss.

Derecognition

A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is primarily
derecognized (i.e. removed from the company's statement
of financial position) when:

• The rights to receive cash flows from the asset have
expired, or

• The Company has transferred its rights to receive cash
flows from the asset or has assumed an obligation
to pay the received cash flows in full without
material delay to a third party under a 'pass-through'
arrangement and either:

(a) The company has transferred substantially all the
risks and rewards of the asset, or

(b) The company has either transferred substantially
all the risks and rewards of the asset but has
transferred control of the asset.

When the company has transferred its rights to receive
cash flow from an asset or has entered into a pass-through
arrangement, it evaluates if and to what extent it has retained
the risks and rewards of ownership. When it has neither
transferred nor retained substantially all of the risks and

rewards of the asset, nor transferred control of the asset,
the company continues to recognize the transferred asset
to the extent of the company's continuing involvement.
In that case, the company also recognises an associated
liability. The transferred assets and the associated liability are
measured on a basis that reflects the rights and obligations
that the Company has retained.

Continuing involvement that takes the form of a guarantee
over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum
amount of consideration that the Company could be
required to repay.

Impairment

The Company applies to the expected credit loss model for
recognising impairment loss on financial assets measured
at amortised cost, debt instruments at FVTOCI, lease
receivables, trade receivables, other contractual rights
to receive cash or other financial assets, and financial
guarantees not designated as at FVTPL.

Effective interest method

The effective interest method is a method of calculating
the amortised cost of a debt instrument and of allocating
interest income over the relevant period. The effective
interest rate is the rate that exactly discounts estimated
future cash receipts (including all fees and points paid or
received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts)
through the expected life of the debt instrument, or, where
appropriate, a shorter period, to the net carrying amount
on initial recognition. Income is recognised on an effective
interest basis for debt instruments other than those financial
assets classified as at FVTPL. Interest income is recognized
in profit or loss and is included in the 'Other income'
line item.

(ii) Financial liabilities and equity instruments

Classification as debt or equity

Debt and equity instruments issued by a company
are classified as either financial liabilities or as equity
in accordance with the substance of the contractual
arrangements and the definitions of financial liability and an
equity instrument.

Equity Instruments

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

Financial Liabilities

Initial recognition and measurement

All financial liabilities are recognized initially at fair value and,
in the case of loans and borrowings and payables, net of
directly attributable transaction costs.

The Company's financial liabilities include trade and
other payables and loans and borrowings including bank
overdrafts.

Subsequent measurement

The measurement of financial liabilities depends on their
classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include
financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through
profit or loss.

Financial liabilities are classified as held for trading if they are
incurred for the purpose of repurchasing in the near term.
Gains or losses on liabilities held for trading are recognized
in the statement of profit and loss.

Financial liabilities designated upon initial recognition at
fair value through profit or loss are designated at the initial
date of recognition, and only if the criteria in Ind AS 109 are
satisfied.

Loans and borrowings

After initial recognition, interest bearing loans and
borrowings are subsequently measured at amortised cost
using the EIR method. Gains and losses are recognized in
profit or loss when the liabilities are derecognized as well as
through the EIR amortization process.

Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or cost that
are an integral part of the EIR. The EIR amortization is
included as finance costs in the statement of profit and loss.

The Company enters into deferred payment arrangements
(acceptances) whereby lenders such as banks and other
financial institutions make payments to supplier's banks for
purchase of raw materials/services. The banks and financial
institutions are subsequently repaid by the Company at a
later date. These are normally settled for up to 3 months.
These arrangements for raw materials are recognized as
Deferred Payment Liabilities under Borrowings.

Derecognition

Financial liability is derecognized when the obligation under
the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the
same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of
the original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognized
in the statement of profit and loss.

Reclassification of Financial Instruments

The Company determines classification of financial assets
and liabilities on initial recognition. After initial recognition,
no reclassification is made for financial assets which are
equity instruments and financial liabilities. For financial
assets which are debt instruments, a reclassification is made
only if there is a change in the business model for managing
those assets. Changes to the business model are expected
to be infrequent.

N. Offsetting financial instruments

Financial assets and liabilities are offset, and the net amount
is reported in the balance sheet where there is a legally
enforceable right to offset the recognized amounts and
there is an intention to settle on a net basis or realize the
asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events
and must be enforceable in the normal course of business
and in the event of default, insolvency or bankruptcy of the
Company or the counterparty.

O. Property, plant and equipment

Property, plant and equipment are stated at acquisition
cost net of accumulated depreciation and accumulated
impairment losses, if any. Subsequent costs are included in
the asset's carrying amount or recognised as an 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. All other
repairs and maintenance are charged to the Statement of
Profit and Loss during the period in which they are incurred.

Gains or Losses arising on retirement or disposal of property,
plant and equipment are recognised in the Statement of
Profit and Loss.

Capital work-in-progress/intangible assets under
development are carried at cost, comprising direct cost,
related incidental expenses and attributable borrowing cost.

The residual values are not more than 5% of the original
cost of the asset. The assets' residual values and useful
lives are reviewed, and adjusted if appropriate, at the end of
each reporting period. An asset's carrying amount is written
down immediately to its recoverable amount if the asset's
carrying amount is greater than its estimated recoverable
amount.

Spares in the nature of capital spares/insurance spares are
added to the cost of the assets. The total cost of such spares
is depreciated over a period not exceeding the useful life of
the asset to which they relate.

Depreciation/Amortization methods, estimated
useful lives and residual value

Depreciation on tangible fixed assets has been provided on
WDV method as per the useful life prescribed in Schedule
II to the Companies Act, 2013 except in respect of certain
categories of assets, where the useful life of the assets
has been assessed based on a technical evaluation. The
estimated useful lives and residual values are reviewed at
the end of each reporting period, with the effect of any
change in estimate accounted for on a prospective basis.
For any addition during the year, depreciation is charged
for whole year whereas for disposals of any assets during
the year, depreciation is provided on pro-rata for the year
of use.

*The Company believes that the technically evaluated useful lives, different
from Schedule II of the Companies Act, 2013, best represent the period over
which these assets are expected to be used.

Depreciation is not recorded on capital work-in-progress
until construction and installation are complete and the
asset is ready for its intended use.

P. Intangible assets

a) Recognition

Intangible assets are recognised only when future economic
benefits arising out of the assets flow to the enterprise and
are amortised over their useful life.

b) Amortization methods and periods

The Company amortizes intangible assets on a straight-line
method over their estimated useful life not exceeding 5
years. Software is amortised over a period of five years.

Q. Trade and other payables

These amounts represent liabilities for goods and services
provided to the company prior to the end of financial year
which are unpaid. The amounts are unsecured are presented
as current liabilities unless payment is not due within 12
months after the reporting period. They are recognized
initially at their fair value and subsequently measured at
amortized cost using the effective interest method.

R. Borrowings

Borrowings are initially recognized at fair value, net of
transaction cost incurred. Borrowings are subsequently
measured at amortized cost. Any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognized in profit or loss over the period of the
borrowings using the effective interest method. Fees paid
on the establishment of loan facilities are recognized as
transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this
case, the fee is deferred until the draw down occurs. To the
extent there is no evidence that it is probable that some or
all the facility will be drawn down, the fee is capitalized as
a prepayment for liquidity services and amortized over the
period of the facility to which it relates.

Borrowings are removed from the balance sheet when the
obligation specified in the contract is discharged, cancelled
or expired. The difference between the carrying amount of
a financial liability that has been extinguished or transferred
to another party and the consideration paid, including
any non-cash assets transferred or liabilities assumed, is
recognized in profit or loss.

Where the terms of a financial liability are renegotiated and
the entity issues equity instruments to a creditor to extinguish
all or part of the liability (debt for equity swap), a gain or loss
is recognized in profit or loss, which is measured as the
difference between the carrying amount of the financial
liability and the fair value of the equity instrument issued.

S. Borrowing costs

General and specific borrowing costs that are directly
attributable to the acquisition, construction or production
of a qualifying asset are capitalized during the period of
time that is required to complete and prepare the asset for

its intended use or sale. Qualifying assets are assets that
necessarily take a substantial period of time to get ready for
their intended use or sale.

Investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing cost eligible for
capitalization.

Other borrowings costs are expensed in the period in which
they are incurred.

T. Exceptional Items

Exceptional items are disclosed separately in the financial
statements where it is necessary to do so to improve
the understanding of the financial performance of the
Company. These are material items of income or expense
which by its size, incidence or nature require separate
disclosure.