1.2. MATERIAL ACCOUNTING POLICIES

1.2.1 BASIS OF PREPARATION AND PRESENTATION

The standalone 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 from
time to time.

Company's standalone financial statements are presented
in Indian Rupees (?) which is also its functional currency,
and all values are rounded to the nearest lakhs (' 00000)
except when otherwise indicated.

The Shareholders have the power to amend the
Standalone Financial Statements after the issue.

1.2.2 PREPARATION OF STANDALONE FINANCIAL
STATEMENTS

(a) Basis of Accounting

The standalone 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 read with Section 133 of Companies Act, 2013
as amended from time to time.

The standalone financial statements have been
prepared on an accrual basis and in accordance with
the historical cost basis except for certain financial
instruments measured at fair value at the end of
each reporting period as explained in the accounting
policies below.

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. Fair value for measurement and
/ or disclosure purposes in these standalone financial
statements is determined on such basis except for
measurements that have some similarities to fair
value but are not fair value such as net realisable
value in Ind AS 2.

(b) Significant accounting judgments estimates and
assumptions

The preparation of the Company's standalone
financial statements in conformity with Ind AS
requires the management to make judgments
estimates and assumptions that affect the
reported amounts of revenues expenses assets and
liabilities and the accompanying disclosures and the
disclosure of contingent liabilities. Uncertainty about
these assumptions and estimates could result in
outcomes that require a material adjustment to the
carrying amount of assets or liabilities affected in
future periods.

The management believes that the estimates used
in preparation of standalone financial statements
are prudent and reasonable.

Estimates and underlying assumptions are reviewed
at each reporting date. Revisions to accounting
estimates are recognised in the period in which the
estimate is revised and future period is effected.

(c) Current/ 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

(i) Expected to be realised or intended to be sold
or consumed in normal operating cycle

(ii) Held primarily for the purpose of trading

(iii) Expected to be realised within twelve months
after the reporting period or

(iv) Cash or cash equivalent 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

(i) It is expected to be settled in normal operating
cycle

(ii) It is held primarily for the purpose of trading

(iii) It is due to be settled within twelve months
after the reporting period or

(iv) 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.

1.2.3A. PROPERTY PLANT AND EQUIPMENT

Freehold land is measured at cost and not
depreciated. All other items of property plant and
equipment (includes Tools and Dies) are stated at
cost less accumulated depreciation and impairment
loss if any.

Cost includes cost of acquisition installation or
construction other direct expenses incurred to bring
the assets to its working condition and finance costs
incurred up to the date the asset is ready for its
intended use and excludes GST eligible for credit /
setoff.

Such cost includes the cost of replacing part of
the plant and equipment costs of dismantling and
removing the item and restoring the site on which
it is located 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 same
were depreciated separately based on their specific
useful lives.

All other repair and maintenance costs are recognised
in the statement of profit or loss as incurred.

The Company records a provision for dismantling
cost towards Plant and Machinery wherever
applicable. Dismantling costs are provided at the
present value of future expenditure using the
current pre-tax rate expected to be incurred to fulfil
dismantling obligation and are recognised as part of
the cost of the underlined asset. Any change in the

present value of expenditure other than unwinding of
discount on the provision is reflected as adjustment
to the provision and the corresponding asset. The
change in the provision due to the unwinding of
discount is recognised in the statement of profit and
loss.

Capital work-in-progress in respect of assets which
are not ready for their intended use are carried at
cost comprising of direct costs related incidental
expenses and attributable interest.

All identifiable Revenue expenses including interest
incurred in respect of various projects / expansion
net of income earned during the project development
stage prior to its intended use are considered as pre
- operative expenses and disclosed under Capital
Work-in-Progress.

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

Advances paid towards the acquisition of fixed
assets outstanding at each balance sheet date are
disclosed as “Capital Advances" under other non¬
current assets.

Property plant and equipment are eliminated from
standalone financial statements either on disposal
or when retired from active use. Losses arising in
the case of the retirement of property plant and
equipment and gains or losses arising from disposal
of property plant and equipment are recognised
in the statement of profit and loss in the year of
occurrence.

Depreciable amount for assets is the cost of an
asset or other amount substituted for cost less
its estimated residual value. Property Plant and
Equipment is provided on straight-line method over
the useful life of the assets as specified in Schedule
II to the Companies Act, 2013. Building constructed
on leasehold land is depreciated based on the useful
life specified in Schedule II to the Companies Act,
2013 where the lease period of the land is beyond
the life of the building. Any Capital Expenditure
costing ' 5,000 or less are treated as a Revenue
Expenditure and recognised in the statement of
profit and loss in the year in which it is incurred.

B. INTANGIBLE ASSETS

Intangible assets are recognised when it is
probable that the future economic benefits that are
attributable to the assets will flow to the Company
and the cost of the assets can be measured reliably.

Intangible assets are stated at cost or acquisition
less accumulated amortisation and impairment loss
if any.

Intangible assets including software is amortised
over their estimated useful life on straight line basis
from the date they are available for intended use
subject to impairment test.

The estimated useful life and the amortisation period
of the intangible assets are reviewed at the end of
each financial year and the amortisation period is
revised to reflect the changed pattern if any.

Development expenditures on an individual product/
project are recognised as an intangible asset when
the Company can demonstrate the technical
feasibility of completing the intangible asset so that
the asset will be available for use or sale its intention
to complete and use or sell the asset its ability to use
or sell the asset how the asset will generate future
economic benefits the availability of resources to
complete the asset and the availability to measure
reliably the expenditure during development.

Product development cost is amortised on a
straight-line basis over a period of 60 months.

Subsequent cost

Subsequent costs incurred for replacement of a
major component of an asset are included in the
asset's carrying cost or recognised as a separate
asset as appropriate. The carrying values of the
replaced components are recognised to statement
of Profit and Loss when replaced.

De-recognition

An item of property plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain
or loss arising on de-recognition of the asset
(calculated as the difference between the net
disposal proceeds and the carrying amount of the
asset) is included in the income statement when the
asset is derecognised.

Gains or losses arising from de-recognition of an
intangible assets are measured as the difference
between the net disposal proceeds and the carrying
amount of the asset and are recognised in the
statement of profit and loss when the asset is
derecognised.

1.2.4 IMPAIRMENT OF NON-FINANCIAL ASSETS

An asset is treated as impaired when the carrying cost of
asset exceeds its recoverable value. An impairment loss is
charged to the Statement of Profit and Loss in the year in
which an asset is identified as impaired. The impairment
loss recognised in prior accounting period is reversed if
there has been a change in the estimate of recoverable
amount.

Assessment of impairment is done at each Balance
Sheet date as to whether there is any indication that
an asset (tangible and intangible) may be impaired. For
assessing impairment, the smallest identifiable group of
assets that generates cash inflows from continuing use
that are largely independent of the cash inflows from
other assets or groups of assets is considered as a cash
generating unit. If any such indication exists an estimate
of the recoverable amount of the individual asset/cash
generating unit is made.

An impairment loss is reversed in the statement of profit
and loss if there has been a change in the estimates
used to determine the recoverable amount. The carrying
amount of the asset is increased to its revised recoverable
amount provided that this amount does not exceed the
carrying amount that would have been determined (net
of any accumulated amortisation or depreciation) had no
impairment loss been recognised for the asset in prior
years.

1.2.5 REVENUE RECOGNITION

Revenue from contracts with customers is recognised
when control of the goods or services is transferred to the
customer at an amount that reflects the consideration
entitled in exchange for those goods or services.

The control is transferred upon shipment of goods to
the customer or when the goods are made available to
the customer, provided transfer of title to the customer
occurs and the Company has not retained any significant
risks of ownership or future obligations with respect to
the goods shipped.

Revenue from rendering services is recognised over time
by measuring progress towards complete satisfaction of
performance obligations in the reporting period. While in
case of Job work services, the same is recognised after
the completion of service.

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 offered by the Company as part of the
contract. Variable considerations are determined based
on the most likely amount. Consideration is due upon
satisfaction of performance obligations and a receivable
is recognised when it becomes unconditional.

Payment terms agreed with a customer are as per
business practice and there is no financing component
involved in the transaction price.

(a) Interest income

Interest Income from financial asset is recognised
when it is probable that the economic benefits flow
to the Company and the amount of income can be
measured reliably. Interest income is accrued on a
time basis by reference to the principal outstanding
and at the effective interest applicable which is the
rate that exactly discounts estimated future cash
receipts through the expected life of the financial
asset to the asset's net carrying amount on initial
recognition.

(b) Dividend income

Dividend income is recognised when the Company's
right to receive the payment is established, which is
generally when shareholders approve the dividend.

(c) Other income

Revenue in respect of other incomes is recognised
when a reasonable certainty as to its realisation
exists.

Income from export incentives under Foreign Trade
Policy relating to Rod Tep, duty drawback premium
on sale of import licenses and lease license fee are
recognised as income when the right to receive
credit as per the terms of the Scheme is established
in respect of the exports made and where there is
no significant uncertainty regarding the ultimate
collection of the relevant export proceeds.

1.2.6INVESTMENTS

The Company has accounted for its investment in
subsidiaries at cost less impairment loss (if any).

All other equity investments are measured at fair value,
with value changes recognised in the Statement of Profit
and Loss, except for those equity investments for which
the Company has elected to present the change in 'Other
Comprehensive Income'.

Investments are classified into current and non-current
investments. Investments that are readily realisable
and intended to be held for not more than a year

from the date of acquisition are classified as current
investments. All other investments are classified as non¬
current investments. However, that part of long term
investments which are expected to be realised within
twelve months from Balance Sheet date is also presented
under “Current Investment" under “Current portion of long
term investments" in consonance with the current / non¬
current classification of Schedule III of the Act.

1.2.7 INVENTORIES

(a) Inventories include raw material, work in progress,
finished goods, scrap and stores, spares and
consumables. Work in progress & finished goods are
carried at the weighted average cost or net realisable
value whichever is lower.

(b) Raw materials including materials in transit, stores
& spares, consumables and additives are valued at
lower of cost or net realisable value. However, these
items are realisable at cost if the finished products
in which they will be used, are expected to be sold
at or above cost. The cost is computed on weighted
average basis and the same is charged off to revenue
on its issue.

(c) The cost of inventories is computed to include all
cost of purchases cost of conversion standard
overheads and other related cost incurred in bringing
the inventories to their present condition.

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

1.2.8CASH AND CASH EQUIVALENTS

Cash and cash equivalents in the balance sheet comprise
cash at Banks and on hand and short-term deposits with
an original maturity of three months or less, which are
subject to an insignificant risk of changes in value.

For the statement of cash flows, cash and cash
equivalents consist of cash and short-term deposits, as
defined above.

1.2.9FOREIGN CURRENCY TRANSACTIONS AND BALANCES

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

Foreign exchange differences arising on foreign currency
borrowings is disclosed under finance cost other than

on 'Borrowing costs' in accordance with Ind AS 23 which
is directly attributable to the acquisition construction or
production of a qualifying asset forming part of the cost
of the asset.

Net gain or loss on foreign currency translations on trade
receivables and trade payables is classified under other
income or other expenses.

(a) Initial Recognition

Foreign currency transactions are translated into the
functional currency using the exchange rates at the
date of the transaction. Exchange differences arising
on foreign currency transactions settled during the
year are recognised in the Statement of Profit and
Loss.

(b) Measurement of foreign currency items at the
Balance Sheet date

Monetary assets and liabilities denominated in
foreign currencies as at the balance sheet date
not covered by forward exchange contracts are
translated at year end rates. The resultant exchange
differences are recognised in the Statement of Profit
and Loss. Non-Monetary assets are recorded at the
rates prevailing on the date of the transaction.

1.2.10.EMPLOYEE BENEFITS

Short-term employee benefits

All employee benefits payable wholly within twelve
months after the end of the annual reporting period in
which the employees render the related services, are
classified as short-term employee benefits. Benefits such
as salaries, wages, short-term compensated absences,
performance incentives etc., and the expected cost of
bonus, ex-gratia are recognised during the period in which
the employee renders related service.

Post-employment benefits
Defined Contribution Plan

Payments to defined contribution retirement benefit
plans are recognised as an expense when employees have
rendered the service entitling them to the contributions.

Contribution as per Employee's Provident Funds and
Miscellaneous Provisions Act, 1952 towards Provident
Fund and Family Pension Fund are provided for and
payments in respect thereof are made to the relevant
authorities on actual basis.

Short term employee benefits are recognised on an
undiscounted basis whereas long term employee benefits
are recognised on a discounted basis.

Defined Benefit Plan

The cost of providing benefits under the defined benefit
plan is determined using the projected unit credit method
with the actuarial valuations being carried out at the end
of each annual reporting period.

Gratuity: In accordance with applicable Indian Laws the
Company provides gratuity, a defined benefit retirement
plan (the Gratuity Plan) covering eligible employees. The
gratuity plan provides a lump sum payment to vested
employees at retirement or termination of employment
an amount based on the respective employees last drawn
salary and the years of employment with the Company.
Liability regarding Gratuity Plan is accrued based on
actuarial valuation at the Balance Sheet date.

Remeasurements comprising of actuarial gains and
losses the effect of the asset ceiling excluding amounts
included in net interest on the net defined benefit
liability and the return on plan assets (excluding amounts
included in net interest on the net defined benefit liability)
are recognised immediately in the balance sheet with a
corresponding debit or credit to retained earnings through
Other Comprehensive Income (OCI) in the period in which
they occur. Remeasurements are not reclassified to profit
or loss in subsequent periods.

Leave Encashment: In accordance with applicable Indian
Laws the Company provides Encashment of Leave a
defined benefit plan (Leave Encashment Plan) covering
all employees. Liability with regard to Leave Encashment
Plan is accrued based on actuarial valuation at the Balance
Sheet date.

Past service costs are recognised in profit or loss on the
earlier of

(i) The date of the plan amendment or curtailment and

(ii) The date that the Company recognises related
restructuring costs

Net interest is calculated by applying the discount rate
to the net defined benefit liability or asset. The Company
recognises the following changes in the net defined
benefit obligation as an expense in the statement of profit
and loss

(i) Service costs comprising current service costs past-
service costs gains and losses on curtailments and
non-routine Settlements; and

(ii) Net interest expense or income
Termination Benefits

When the employee early retirement/termination/
resignation/withdrawal the normal retirement benefit will
be paid based on the service up to the date of exit.

Employee Share based payments

The Company operates equity settled share-based
plan for the employees (Referred to as Employee Stock
Option Plan (ESOP)). ESOP granted to the employees are
measured at fair value of the stock options at the grant
date. Such fair value of the equity settled share-based
payments is expensed on a straight-line basis over the
vesting period, based on the Company's estimate of equity
shares that will eventually vest, with a corresponding
increase in equity (Share option outstanding A/c). At the
end of each reporting period, the Company revises its
estimate of the number of equity shares expected to vest.
The impact of the revision of the original estimates, if any,
is recognised in the Statement of Profit and Loss such
that cumulative expense reflects the revision estimate,
with a corresponding adjustment to the Share option
outstanding reserve.

The Company grants stock options to the employees of
its subsidiaries. The cost of such options, as determined
based on the fair value on the grant date, is accounted
for as an employee benefit expense in the books of the
Company. Since the Company does not recover this cost
from its subsidiaries, the corresponding amount is treated
as a deemed investment in the respective subsidiaries.

Treasury Shares

The Company has established the Pitti Engineering
Limited Employee Welfare Trust for administering its
Employee Stock Option Scheme and provided a loan to
the Trust for acquiring the Company's shares from the
secondary market, of which shares were purchased during
the year. As the Trust is considered an extension of the
Company, all transactions between the Company and the
Trust including the loan and the investment in shares have
been eliminated in the standalone financial statements,
and the shares held by the Trust have been treated as
treasury shares. These shares are recognised at cost and
is disclosed separately as reduction from Other Equity
as Treasury Shares. No gain or loss is recognised in the
Statement of Profit and Loss on purchase, sale, issuance,
or cancellation of Treasury Shares.

1.2.11.BUSINESS COMBINATION

Business combinations involving entities or businesses
under common control are accounted for using the pooling
of interest method. Under pooling of interest method,
the assets and liabilities of the combining entities or
businesses are reflected at their carrying amounts after
adjusting necessary to harmonies the accounting policies.
The financial information in the financial statements
in respect of prior periods is restated as if the business

combination had occurred from the beginning of the
preceding period in the financial statements, irrespective
of the actual date of the combination. The identity of the
reserves is preserved in the same form in which they
appear in the financial statements of the transferor and
the difference, if any, between the amount recorded as
share capital issued plus any additional consideration in
the form of cash or other assets and the amount of share
capital of the transferor is transferred to capital reserve.

1.2.12BORROWING COSTS

Borrowing costs which are directly attributable to the
acquisition/construction or production of a qualifying
asset which are the assets that necessarily takes
substantial period to get ready for intended use or sale
till the time such assets are ready for intended use are
capitalised as part of the costs of such assets. Other
Borrowing costs are recognised as expenses in the year in
which they are incurred.

Borrowing cost includes interest amortisation of ancillary
costs incurred in connection with the arrangement of
borrowings and exchange differences arising from foreign
currency borrowings to the extent they are regarded as an
adjustment to the interest cost if any.

1.2.13LEASES

The Company as a lessee

As per Ind AS-116 the Company has recognised lease
liabilities and corresponding equivalent right-of-use
assets. The Company's lease asset primarily consist of
leases for Land, Buildings, Plant & Machinery and Vehicles.
The Company assesses whether a contract 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 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

At the date of commencement of the lease the
Company recognises a Right-of-Use (ROU) asset and a
corresponding lease liability for all lease arrangements in
which it is a lessee except for leases with a term of 12
months or less (short-term leases) and low value leases.

For these short-term and low-value leases the Company
recognises the lease payments as an operating expense.

Certain lease arrangements include the options to extend
or terminate the lease before the end of the lease term.
ROU assets and lease liabilities includes these options
when it is reasonably certain that they will be exercised.

The lease liability is initially measured at amortised cost
at the present value of the future lease payments. The
lease payments are discounted using the interest rate
implicit in the lease or if not readily determinable using
the incremental borrowing rates in the country of domicile
of these leases.

ROU 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. ROU 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.

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

1.2.14 EARNINGS PER SHARE

The basic Earnings Per Share ('EPS') is computed by
dividing the net profit after tax for the period attributable
to equity shareholders (after deducting preference
dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the year,
adjusted with treasury shares.

For calculating Diluted earnings Per Share the net profit
after tax for the period attributable to equity shareholders
and the weighted average number of shares outstanding
during the year are adjusted for the effects of all dilutive
potential equity shares. The dilutive potential equity
shares are deemed to be converted as of the beginning
of the year unless they have been issued at a later date.
After considering the number of options as per Scheme,
The effect is antidilution, hence there is no change in
diluted earning per share.

Potential equity shares are deemed to be dilutive only if
their conversion to equity shares decrease the net profit
per share from continuing ordinary operations. Potential

dilutive equity shares are deemed to be converted as at
the beginning of the period unless they have been issued
at a later date. The dilutive potential equity shares are
adjusted for the proceeds receivable had the shares been
actually issued at fair value (i.e. average market value of
the outstanding shares). Dilutive potential equity shares
are determined independently for each period presented.
The number of equity shares and potentially dilutive
equity shares are adjusted for share splits / reverse share
splits and bonus shares as appropriate.

1.2.15SEGMENT REPORTING

Operating segments are reported in a manner consistent
with the internal reporting provided to the Chief Operating
Decision Maker. The Founder & Chairman and Managing
Director & Chief Executive Officer have been identified as
the Chief Operating Decision Maker. Refer note 25.6 for
the segment information presented in the Consolidated
Financial Statements.