A. MATERIAL ACCOUNTING POLICIES

1. CORPORATE INFORMATION

Tata Elxsi Limited ("the Company”) is a public
limited company incorporated under the
provisions of the Companies Act applicable in
India in the year 1989 and domiciled in India. The
Company has its registered office in Bengaluru,
Karnataka, India. The shares of the Company are
listed on the BSE and National Stock Exchange
in India.

The Company provides product design and
engineering services to the consumer electronics,
communications & transportation industries and
systems integration and support services for
enterprise customers. It also provides digital
content creation for media and entertainment
industry.

The Company is head quartered in Bengaluru and
operates through delivery centers in Bengaluru,
Chennai, Delhi, Hyderabad, Kozhikode, Pune,
Mumbai and Thiruvananthapuram.

The Company’s operations are located in multiple
cities in India, and in multiple international
locations including United Kingdom (UK), United
States of America (USA), France, Germany,
Japan, Ireland, Netherlands, South Africa,
Canada, Spain, Dubai, Poland, Italy and Romania.

2. BASIS OF PREPARATION OF FINANCIAL
STATEMENTS

2.1 Statement of compliance

These financial statements are prepared in
accordance with Indian Accounting Standards
("Ind AS”), the provisions of the Companies
Act, 2013 ("the Companies Act”), as applicable.
The Ind AS are prescribed under Section 133 of
the Companies Act read with the Companies
(Indian Accounting Standards) Rules as
amended from time to time.

These financial statements are authorized
for issue by the Board of Directors on April
17, 2025.

2.2 Basis of preparation and presentation

These financial statements have been
prepared on the historical cost basis and on
an accrual basis of accounting, except for
certain financial instruments and defined
benefit plans which are measured at fair
values at the end of each reporting period, as
explained in the accounting policies below.
Historical cost is generally based on the fair
value of the consideration given in exchange
for goods and services. Fair value is the
price that would be received to sell an asset
or paid to transfer a liability in an orderly
transaction between market participants at
the measurement date.

All assets and liabilities have been classified
as current and non-current as per the
Company’s normal operating cycle. Based on
the nature of services rendered to customers
and time elapsed between deployment of
resources and the realization in cash and
cash equivalents of the consideration for
such services rendered, the Company has
considered an operating cycle of 12 months.

The statement of cash flows have been
prepared under the indirect method.
Accounting policies have been applied
consistently to all periods presented in
these financial statements.

All amounts included in the financial
statements are reported in lakhs of Indian
rupees except share and per share data,
unless otherwise stated. Due to rounding
off, the numbers presented throughout the
document may not add up precisely to the
totals and percentages may not precisely
reflect the absolute figures.

2.3 Use of estimates and judgement

The preparation of these financial statements
in conformity with the recognition and
measurement principles of Ind AS requires
the management of the Company to make
estimates and assumptions that affect the
reported balances of assets and liabilities,

disclosures relating to contingent liabilities
as at the date of the financial statements
and the reported amounts of income and
expense for the periods presented.
Estimates and underlying assumptions are
reviewed on an ongoing basis. Appropriate
change in estimates are made as management
become aware of changes in circumstances
surrounding the estimates. Revisions to
accounting estimates are recognized in the
period in which the estimates are revised and
future periods are affected.

The Company uses the following critical
accounting estimates in preparation of its
financial statements:

Revenue recognition

The Company uses the percentage of
completion method using the input (cost
expended) method to measure progress
towards completion in respect of fixed
price contracts. Percentage of completion
method relies on estimates of total expected
contract revenue and costs. This method
is followed where reasonable dependable
estimate of the revenue and costs applicable
to various elements of the contract can be
made. Key factors reviewed to estimate the
future costs to complete include estimates
of future manpower costs and productivity
efficiency. These estimates are assessed
continually during the term of the contracts
and the recognized revenue and profit
are subject to revision as the contract
progresses to completion. When estimates
indicate that a loss will be incurred, the loss
is provided for in the period in which the
loss becomes probable (Refer Note 2.4).
Fair value measurement of financial
instruments

When the fair value of financial assets and
financial liabilities recorded in the balance
sheet cannot be measured based on quoted
prices in active markets, their fair value is
measured using valuation techniques including
the Discounted Cash Flow model. The inputs

to these models are taken from observable
markets where possible, but where this is not
feasible, a degree of judgement is required in
establishing fair values. Judgements include
considerations of inputs such as liquidity
risk, credit risk and volatility. Changes in
assumptions about these factors could affect
the reported fair value of financial instruments
(Refer Note 2.10).

Provision for income tax and deferred tax
assets

The Company uses estimates and
judgements based on the relevant rulings
in the areas of allocation of revenue, costs,
allowances and disallowances which is
exercised while determining the provision
for income tax. A deferred tax asset is
recognised to the extent that it is probable
that future taxable profit will be available
against which the deductible temporary
differences and tax losses can be utilised.
The Company’s major tax jurisdictions are
India, UK and the USA. The Company also
files tax returns in other foreign jurisdictions.
Significant judgment is involved in
determining the provision for income taxes,
including the amount expected to be paid
or recovered in connection with uncertain
tax positions.

The Company reviews the carrying amount
of deferred tax assets at the end of each
reporting period. The policy for the same
has been explained under Note 2.8.