Note 2 Significant Accounting Policies

A. Basis of presentation of Financial Statements

The financial statements are prepared in accordance
with Indian Accounting Standards (Ind AS)
notified under the Companies (Indian Accounting
Standards) Rules, 2015 (as amended). These
financial statements are prepared in accordance
with Indian Accounting Standards (Ind AS) under
the historical cost convention on the accrual basis
except for certain financial instruments which
are measured at fair values, the provisions of the
Companies Act, 2013 (Act) (to the extent notified).
The Ind AS are prescribed under Section 133 of
the Act read with Rule 3 of the Companies (Indian
Accounting Standards) Rules, 2015 and Companies
(Indian Accounting Standards) Amendment
Rules, 2016.

The financial statements are presented in INR, the
functional currency of the Company.

B. Use of Estimates

The preparation offinancial statements requires the
use of accounting estimates which, by definition, will
seldom equal the actual results. This note provides
an overview of the areas that involved a higher
degree of judgement or complexity, and of items
which are more likely to be materially adjusted due
to estimates and assumptions turning out to be
different than those originally assessed. Detailed
information about each of these estimates and
judgements is included in relevant notes together
with information about the basis of calculation for
each affected line item in the financial statements.

Estimates and judgements are continually
evaluated. They are based on historical experience
and other factors, including expectations of future
events that may have a financial impact on the
Company and that are believed to be reasonable
under the circumstances.

C. Critical accounting judgements and key source
of estimation uncertainty

The Company is required to make judgements,
estimates and assumptions about the carrying
amount of assets and liabilities that are not readily
apparent from other sources. The estimates and
associated assumptions are based on historical
experience and other factors that are considered
to be relevant. The estimates and underlying
assumptions are reviewed on an on-going basis.

(a) Recognition and measurement of defined
benefit obligations, key actuarial assumptions

(b) Estimation of current tax expenses
and payable

D. Property, plant and equipment

Property, plant and equipment are stated at
historical cost less depreciation. Historical
cost includes expenditure that is directly
attributable to the acquisition of the items.
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 any
component accounted for as a separate asset is
de-recognised when replaced. All other repairs and
maintenance are charged to profit or loss during
the reporting period in which they are incurred.
Depreciation methods, estimated useful lives and
residual value are as follows:

Depreciation for the year ended March 31, 2025
has been provided on the basis of useful lives as
prescribed in the Schedule II of the Companies
Act, 2013.

Depreciation on Property, Plant and Equipments
purchased / sold during the year is provided for
pro-rata basis, for period during which the assets
are put to use. Where there is a revision of the
estimated useful life of an asset, the unamortized

depreciable amount is charged over the revised
remaining useful life of the said asset.

Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
are included in the Statement of Profit and Loss.

Property, plant and equipment which are not ready
for intended use as on the date of Balance Sheet
are disclosed as "Capital working-progress".

E. Intangible assets

Costs associated with maintaining software
programs are recognised as an expense as incurred.
Development costs that are directly attributable to
the design and testing of identifiable and unique
software products controlled by the Company are
recognised as intangible assets when the following
criteria are met:

i. it is technically feasible to complete the
software so that it will be available for use

ii. management intends to complete the
software and use or sell it

iii. there is an ability to use or sell the software

iv. it can be demonstrated how the software will
generate probable future economic benefits

v. adequate technical, financial and other
resources to complete the development and
to use or sell the software are available, and

vi. the expenditure attributable to the
software during its development can be
reliably measured.

Directly attributable costs that are capitalised
as part of the software cost includes employee
costs and an appropriate portion of relevant
overheads. Intangible Assets are stated at cost less
accumulated amortisation and impairment loss, if
any. Computer Software is amortised over a period
of ten years, as per revised useful lives prescribed
in the Schedule II.

F. Intangible Assets under Development

As per IND AS 38, an intangible asset under
development shall be recognized if, and only if, the
company if the following six criteria are met:

i. There is technical feasibility of completing the
intangible asset so that it will be available for
use or sale.

ii. The entity has the intention to complete the
development of the intangible asset and to
use or sell it.

iii. The entity has the ability to use or sell the
intangible asset once the development
is completed

iv. There is a probable future economic benefit
from the asset, which may include:

a. The existence of a market for the output

b. The usefulness of the asset internally

v. The entity has adequate technical, financial,
and other resources to complete the
development and to use or sell the
intangible asset.

vi. The entity can reliably measure the
expenditure attributable to the intangible
asset during its development.

G. Impairment of Assets

Intangible assets that have an indefinite useful
life are not subject to amortisation and are tested
annually for impairment or more frequently if
events or changes in circumstances indicate that
they might be impaired. Other assets are tested
for impairment whenever events or changes in
circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is
recognised for the amount by which the asset's
carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's
fair value less costs of disposal and value in use.
Value in use is the present value of estimated
future cash flows expected to arise from the
continuing use of the asset and from its disposal
at the end of its useful life. Net selling price is the
amount obtainable from sale of the asset in an
arm's length transaction between knowledgeable,
willing parties, less the costs of disposal.

H. Leases

The company recognises a right-of-use asset and
a lease liability at the lease commencement date.
The right-of-use asset is initially measured at cost,
which comprises the initial amount of the lease
liability adjusted for any lease payments made at
or before the commencement date, plus any initial
direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it
is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated
using the straight-line method from the
commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end
of the lease term. The estimated useful lives of
right of-use assets are determined on the same
basis as those of property, plant and equipment.
In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted
for certain remeasurements of the lease liability.

The lease liability is initially measured at the
present value of the lease payments that are not
paid at the commencement date, discounted using
the interest rate implicit in the lease or, if that
rate cannot be readily determined, company's
incremental borrowing rate. Generally, the
company uses its incremental borrowing rate as
the discount rate.

Lease payments included in the measurement of
the lease liability comprise the following: -

• Fixed payments, including in-substance
fixed payments;

• Variable lease payments that depend on an
index or a rate, initially measured using the
index or rate as at the commencement date;

• Amounts expected to be payable under a
residual value guarantee; and

• The exercise price under a purchase option
that the company is reasonably certain to
exercise, lease payments in an optional
renewal period if the company is reasonably
certain to exercise an extension option, and
penalties for early termination of a lease
unless the company is reasonably certain not
to terminate early.

The lease liability is measured at amortised
cost using the effective interest method. It is
remeasured when there is a change in future lease
payments arising from a change in an index or
rate, if there is a change in the company's estimate
of the amount expected to be payable under a
residual value guarantee, or if company changes its
assessment of whether it will exercise a purchase,
extension or termination option.

When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in
profit or loss if the carrying amount of the right-of
use asset has been reduced to zero.

The company presents right-of-use assets that do
not meet the definition of investment property in
'property, plant and equipment' and lease liabilities
in 'loans and borrowings' in the statement of
financial position.

Short-term leases and leases of low-value assets.

An underlying asset can be of low value only if

• The company can benefit from use of the
underlying asset on its own or together with
other resources that are readily available to
the lessee; and

• the underlying asset is not highly dependent
on, or highly interrelated with, other assets

The company has elected not to recognise right-
of-use assets and lease liabilities for short term
leases of real estate properties that have a lease
term of 12 months. The company recognises the
lease payments associated with these leases as an
expense on a straight-line basis over the lease term.

I. Inventory

Inventories are valued at the lower of cost and
net realisable value. Cost is computed on a FIFO
basis. Cost of finished goods and work-in-progress

include all costs of purchases, conversion costs and
other costs incurred in bringing the inventories
to their present location and condition. The net
realisable value is the estimated selling price in
the ordinary course of business less. the estimated
costs of completion and estimated costs necessary
to make the sale.

J. Cash and Cash Equivalents

For the purpose of presentation in the statement
of cash flows, cash and cash equivalents includes
cash on hand, other short-term, highly liquid
investments that are readily convertible to known
amounts of cash and which are subject to an
insignificant risk of changes in value. Cash and cash
equivalents consist of balances with banks which
are unrestricted for withdrawal and usage.

K. Financial Instruments

(i) Classification of Financial Assets

The Company classifies its financial assets in
the following measurement categories:

• those to be measured subsequently
at fair value (either through other
comprehensive income, or through profit
or loss), and

• those measured at amortised cost.

The classification depends on the entity's
business model for managing the financial
assets and the contractual terms of the
cash flows.

For assets measured at fair value, gains and
losses will either be recorded in profit or
loss or other comprehensive income. For
investments in debt instruments, this will
depend on the business model in which the
investment is held. For investments in equity
instruments, this will depend on whether the
Company has made an irrevocable election at
the time of initial recognition to account for
the equity investment at fair value through
other comprehensive income.

The Company reclassifies debt investments
when and only when its business model for
managing those assets changes.

(ii) Measurement

At initial recognition, the Company measures
a financial asset at its fair value plus, in the
case of a financial asset not at fair value
through profit or loss, transaction costs that
are directly attributable to the acquisition of
the financial asset.

Transaction costs of financial assets carried at
fair value through profit or loss are expensed
in profit or loss.

(iii) Debt Instruments

Subsequent measurement of debt
instruments depends on the Company's
business model for managing the asset and
the cash flow characteristics of the asset. There
are three measurement categories into which
the group classifies its debt instruments:

• Amortised Cost: Assets that are held
for collection of contractual cash flows
where those cash flows represent solely
payments of principal and interest are
measured at amortised cost. A gain
or loss on a debt investment that is
subsequently measured at amortised cost
and is not part of a hedging relationship
is recognised in profit or loss when the
asset is de-recognised or impaired.
Interest income from these financial
assets is included in finance income using
the effective interest rate method.

• Fair Value through Other Comprehensive
Income (FVOCI): Assets that are held for
collection of contractual cash flows and
for selling the financial assets, where
the assets' cash flows represent solely
payments of principal and interest,
are measured at fair value through
other comprehensive income (FVOCI).
Movements in the carrying amount
are taken through OCI, except for the
recognition of impairment gains or losses,
interest revenue and foreign exchange
gains and losses which are recognised in
profit and loss. When the financial asset
is de-recognised, the cumulative gain
or loss previously recognised in OCI is
reclassified from equity to profit or loss
and recognised in other gains/ (losses).
Interest income from these financial
assets is included in other income using
the effective interest rate method.

• Fair Value through Profit or Loss (FVTPL):
Assets that do not meet the criteria for
amortised cost or FVOCI are measured
at fair value through profit or loss. A
gain or loss on a debt investment that
is subsequently measured at fair value
through profit or loss and is not part of
a hedging relationship is recognised
in profit or loss and presented net in
the statement of profit and loss within
other gains/(losses) in the period in
which it arises. Interest income from
these financial assets is included in
other income.

(iv) Equity Instruments

The Company subsequently measures all
equity investments at fair value. Where the

Company's management has elected to
present fair value gains and losses on equity
investments in other comprehensive income,
there is no subsequent reclassification of
fair value gains and losses to profit or loss.
Dividends from such investments continue
to be recognised in profit or loss as other
income when the Company's right to receive
payments is established.

Changes in the fair value of financial assets
at fair value through profit or loss are
recognised in other gain/ (losses) in the
statement of profit and loss. Impairment
losses (and reversal of impairment losses) on
equity investments measured at FVOCI are
not reported separately from other changes
in fair value.

(v) Impairment of Financial Assets

The Company recognises a loss allowance
for Expected Credit Losses (ECL) on financial
assets that are measured at amortised cost
and at FVOCI. The credit loss is difference
between all contractual cash flows that
are due to an entity in accordance with the
contract and all the cash flows that the entity
expects to receive (i.e. all cash shortfalls),
discounted at the original effective interest
rate. This is assessed on an individual
or collective basis after considering all
reasonable and supportable including that
which is forward looking.

The Company's trade receivables or contract
revenue receivables do not contain significant
financing component and loss allowance on
trade receivables is measured at an amount
equal to life time expected losses i.e. expected
cash shortfall, being simplified approach for
recognition of impairment loss allowance.

Under simplified approach, the Company
does not track changes in credit risk. Rather it
recognizes impairment loss allowance based
on the lifetime ECL at each reporting date right
from its initial recognition. The Company uses
a provision matrix to determine impairment
loss allowance on the portfolio of trade
receivables. The provision matrix is based on
its historically observed default rates over
the expected life of the trade receivable and
is adjusted for forward looking estimates. At
every reporting date, the historical observed
default rates are updated and changes in the
forward-looking estimates are analysed.

For financial assets other than trade
receivables, the Company recognises
12-months expected credit losses for all
originated or acquired financial assets if at the
reporting date the credit risk of the financial
asset has not increased significantly since
its initial recognition. The expected credit

losses are measured as lifetime expected
credit losses if the credit risk on financial
asset increases significantly since its initial
recognition. If, in a subsequent period, credit
quality of the instrument improves such that
there is no longer significant increase in
credit risks since initial recognition, then the
Company reverts to recognizing impairment
loss allowance based on 12 months ECL.
The impairment losses and reversals are
recognised in Statement of Profit and Loss.
For equity instruments and financial assets
measured at FVTPL, there is no requirement
of impairment testing.

The Company assesses on a forward looking
basis the expected credit losses associated
with its assets carried at amortised cost and
FVOCI debt instruments. The impairment
methodology applied depends on whether
there has been a significant increase in
credit risk.

For trade receivables only, the Company
applies the simplified approach permitted
by Ind AS 109, which requires expected
lifetime losses to be recognised from initial
recognition of the receivables.

(vi) De-recognition of financial assets

A financial asset is de-recognised only when:

• The Company has transferred the rights
to receive cash flows from the financial
asset or;

• Retains the contractual rights to receive
the cash flows of the financial asset, but
assumes a contractual obligation to pay
the cash flows to one or more recipients.

Where the entity has transferred an asset, the
Company evaluates whether it has transferred
substantially all risks and rewards of
ownership of the financial asset. In such cases,
the financial asset is de-recognised. Where
the entity has not transferred substantially all
risks and rewards of ownership of the financial
asset, the financial asset is not de-recognised.
Where the entity has neither transferred a
financial asset nor retains substantially all
risks and rewards of ownership of the financial
asset, the financial asset is de-recognised if
the Company has not retained control of the
financial asset. Where the Company retains
control of the financial asset, the asset is
continued to be recognised to the extent of
continuing involvement in the financial asset.

(vii) Income recognition
Interest income

Interest income from debt instruments is
recognised using the effective interest rate
method. The effective interest rate is the

rate that exactly discounts estimated future
cash receipts through the expected life of
the financial assets to the gross carrying
amount of a financial asset. When calculating
the effective interest rate, the Company
estimates the expected cash flows by
considering all the contractual terms of the
financial instrument but does not consider
the expected credit losses.

L. Financial Liabilities

(i) Initial recognition and measurement

Financial liabilities are recognised when the
Company becomes a party to the contractual
provisions of the instrument. Financial
liabilities are initially measured at the
amortised cost unless at initial recognition,
they are classified as fair value through profit
and loss.

(ii) Subsequent measurement

Financial liabilities are subsequently measured
at amortised cost using the effective interest
rate method. Financial liabilities carried at
fair value through profit or loss are measured
at fair value with all changes in fair value
recognised in the statement of profit and loss.

(iii) De-recognition

A financial liability is de-recognised when
the obligation specified in the contract is
discharged, cancelled or expires.

(iv) 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 recognised amounts and
there is an intention to settle on a net basis
or realise 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.

M. Fair Value Measurement
Fair Value Hierarchy

The fair value hierarchy is based on inputs to
valuation techniques that are used to measure fair
value that are either observable or unobservable
and consist of following three levels:

Level 1: Inputs are quoted prices in active markets
for identical assets or liabilities.

Level 2: Inputs are other than quoted prices
included within Level 1 that are observable asset
or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).

Level 3: Inputs are unobservable inputs for the
asset or liability.

N. Borrowing Cost

General and specific borrowing costs that
are directly attributable to the acquisition,
construction or production of qualifying assets are
capitalized as a part of Cost of that assets, during
the period till all the activities necessary to prepare
the Qualifying assets for its intended use or sale
are complete during the period of time that is
required to complete and prepare the assets 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.

Other borrowing costs are recognized as an
expense in the period in which they are incurred.

O. Revenue Recognition

Revenue is measured at the fair value of the
consideration received or receivable. Amounts
disclosed as revenue are net of allowances,
incentives, service taxes and amounts collected on
behalf of third parties.

The Company recognises revenue when the amount
of revenue can be reliably measured, it is probable
that future economic benefits will flow to the
entity and specific criteria have been met for each
of the Company's activities as described below.
Revenue is recognised in the period when
the service is provided as per arrangements/
agreements with the customers.

Sale of Goods

Revenue from sale of goods is recognised when
all the significant risks and rewards of ownership
in the goods are transferred to the buyer as per
the terms of the contract, there is no continuing
managerial involvement with the goods and the
amount of revenue can be measured reliably. The
performance obligation in case of sale of goods is
satisfied at the point of time i.e. when the material
is shift to the customer on delivery to the customer
as may be specified in the contract.

Rendering of Services

Revenue from services rendered are generally
recognized in proportion to the stage of completion
of the transaction at reporting date. The stage of
the completion of the contract is determined based
on the actual service provided as a proportion to
the total service provided. Revenue from contracts
priced on a time and material basis are recognised
when services are rendered and related costs
are incurred.

Export Incentives

Duty Drawback, MEIS benefits are recognized at
the time and exports and benefits in respect of
licenses received by the company against exports
made by it are recognized as and when goods are
imported against them.

Dividend and Interest

Dividend are recognized as Income when
shareholder's right to receive payment has
been established

Interest Income is recognised on accrued basis on
proportion basis taking into account the amount
outstanding and the interest rate applicable and
based on Effective interest rate method.

P. Employee Benefits

(i) Gratuity Obligations

The Company has maintained a Group
Gratuity Cum Life Assurance Scheme with
the Life Insurance Corporation of India (LIC)
towards which it annually contributes a sum
determined by LIC. The liability or asset
recognised in the balance sheet in respect of
defined benefit gratuity plans is the present
value of the defined benefit obligation at the
end of the reporting period less the fair value
of plan assets. The defined benefit obligation
is calculated annually by actuaries using the
projected unit credit method.

The present value of the defined benefit
obligation is determined by discounting the
estimated future cash outflows by reference
to market yields at the end of the reporting
period on government bonds that have
terms approximating to the terms of the
related obligation. 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

• Re-measurement.

The net interest cost is calculated by applying the
discount rate to the net balance of the defined
benefit obligation and the fair value of plan assets.
This cost is included in employee benefit expense
in the statement of profit and loss.

Re-measurement gains and losses arising from
experience adjustments and changes in actuarial
assumptions are recognised in the period in
which they occur, directly in other comprehensive
income. They are included in retained earnings
in the statement of changes in equity and in the
balance sheet.

(ii) Defined Contribution Plans
Provident fund and Family Pension Fund

The Company contributes towards Provident
Fund and Family Pension Fund. Liability
in respect thereof is determined on the
basis of contribution as required under the
Statute/ Rules.

Compensated Absences

The Company does not have a policy of
encashing unavailed leave for its employees.
The provision is based on an independent
external actuarial valuation at the balance
sheet date, which includes assumptions
about demographics, early retirement, salary
increases and interest rates.

Q. Foreign Currency Transactions:

Initial Recognition

Transactions in foreign currency are recorded
at the exchange rate prevailing on the date of
the transaction. Exchange differences arising on
foreign exchange transactions settled during the
year are recognized in the Statement of Profit and
Loss of the year.

Measurement of Foreign Currency Items at the
Balance Sheet Date

Foreign currency monetary items of the Company
are restated at the closing exchange rates. Non
monetary items are recorded at the exchange rate
prevailing on the date of the transaction. Exchange
differences arising out of these transactions are
charged to the Statement of Profit and Loss.

R. Income Taxes

The income tax expense or credit for the period
is the tax payable on the current period's taxable
income based on the applicable income tax rate
adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences
and to unused tax losses.

Income tax provision is made based on the
estimated tax liability as computed after taking
credit for allowances and exemptions in accordance
with the Income Tax Laws prevalent at the time of
the relevant assessment year.

Deferred tax assets are recognised only if it is
probable that future taxable amounts will be
available to utilise those temporary differences
and losses.

Current and deferred tax is recognised in profit or
loss, except to the extent that it relates to items
recognised in other comprehensive income or
directly in equity.