2 Material Accounting Policies

This note provides a list of the material accounting policies
adopted in the preparation of these financial statements.
These policies have been consistently applied to all the years
presented, unless otherwise stated.

2.1 Revenue recognition

The Company is engaged in designing, developing and
manufacturing products for building high-speed
communication networks that carry voice, data and video
traffic from fixed line, mobile and broadband networks.

2.1.1 Sale of goods and components

Revenue from sale of goods and components are recognised
when control over goods is transferred in accordance with
the contractual terms of sale, being on dispatch/ delivery of
products to customers and there are no unfulfilled
performance obligations that could affect the customer's
acceptance of the products. Revenue is recognised net of
trade discounts, volume discounts and goods and services
tax (GST) in the Statement of Profit and Loss.

Certain contracts with customers provide for variable
consideration based on the due date for delivery. The
Company estimates the amount of variable consideration by
using the most likely outcome method and the revenue
recognised represents the amount of consideration to which
the Company will be entitled in exchange for transferring
the promised goods to the customer.

Refer Note no. 22 relating to revenue from contracts with
customers.

Standard warranty is provided to customers upon sale of
goods and components and the same is accounted in
accordance with Ind AS 37, Provisions, Contingent Liabilities
and Contingent Assets.

2.1.2 Rendering of service

Revenue from installation and commissioning services are
recognised at a point in time when services are rendered.
Revenue from annual maintenance contracts are recognized
on an accrual basis pro-rata over the term of the contract.
Revenue from other services such as repair and return,
managed services, professional services and knowledge
services are recognized as and when the services are
rendered as per the agreed terms of contractual
arrangements.

If the services rendered by the Company exceed the
invoicing to customers, a contract asset (which is referred as
unbilled revenue) is recognised. If the invoicing exceeds the
services rendered, a contract liability is recognised (which is
referred as deferred revenue).

Deferred contract costs are incremental costs of obtaining a
contract which are recognized as contract assets and
amortized over the term of the contract. However, such
incremental costs are recognised as expense if the
amortisation period of the asset that the entity would have
otherwise recognised is one year or less.

The Company presents revenue net of Goods and Services
Tax (GST) in its Statement of Profit and Loss.

2.2 Property, plant and equipment (including Capital
work-in-progress)

2.2.1 Measurement

All items of property, plant and equipment are stated at
historical cost less accumulated depreciation and
impairment losses, if any.

2.2.2 Depreciation method, estimated useful lives and
residual value

Depreciation is calculated using the straight-line method to
allocate their cost, net of their residual values, over their
estimated useful lives.

Leasehold improvements are depreciated over its useful life
or the lease term whichever is lower.

Based on a technical evaluation, the management believes
that the useful lives of the above assets best represent the
period over which the management expects to use these
assets. Hence, the useful lives for these assets are different
from the useful lives as prescribed under Schedule II to the
Companies Act, 2013.

2.3 Intangible Assets

2.3.1 Software

Software is carried at cost less accumulated amortization
and impairment losses, if any.

2.3.2 Product development and intangible assets under
development

Expenditure pertaining to research activities are charged to the
Statement of profit and loss. Development costs of products
are also charged to the Statement of profit and loss unless:

i) Product's technical and marketing feasibility has been
established;

ii) There is likelihood of the product delivering sufficient
future economic benefit; and

iii) The Company has the availability of adequate technical,
financial and other resources to complete and to use or sell
the product, in which case such expenditure is initially
recorded as intangible assets under development and is
subsequently capitalized when the asset is ready for its
intended use. The amount capitalized comprises
expenditure that can be directly attributed or allocated on
a reasonable and consistent basis to creating, producing
and making the asset ready for its intended use. Property,
plant and equipment utilized for research and development
are capitalized and depreciated in accordance with the
policy stated for property, plant and equipment.
Capitalized product development costs are recorded as
intangible assets and amortised from the point at which the
asset is ready for its intended use.

2.3.3 Amortization

The Company amortizes intangible assets with a useful life
using the straight-line method over the estimated duration
of lives as below:

Goodwill, on acquisitions of subsidiaries, is included in
intangible assets. Goodwill is not amortised but it is tested
for impairment annually, or more frequently if events or
changes in circumstances indicate that it might be impaired,
and is carried at cost less accumulated impairment losses.
Goodwill is allocated to cash-generating units for the
purpose of impairment testing. The allocation is made to
those cash-generating units or groups of cash-generating
units that are expected to benefit from the business
combination in which the goodwill arose. The units or
groups of units are identified at the lowest level at which
goodwill is monitored for internal management purposes.

2.3.5 Technical know-how

Technical know-how acquired in a business combination are
recognised at fair value at the acquisition date and other
technical know-how are recognised at cost of acquisition.
The cost of technical know-how acquired (other than in
business combination) comprises its purchase price,
including any import duties and other taxes (other than
those subsequently recoverable from the taxation
authorities), and any directly attributable expenditure on
making the asset ready for its intended use.

Technical know-how are carried at cost less accumulated
amortisation and impairment losses and have a useful life of
three to thirteen years.

2.4 Investments and Other financial assets

2.4.1 Classification of financial assets at amortised cost
The Company classifies its financial assets at amortised cost
only if both the following criteria are met:

(a) the asset is held within a business model whose
objective is to collect the contractual cash flows, and

(b) the contractual terms give rise to cash flows that are
solely payments of principal and interest.

Financial assets at amortised cost comprises of cash and
cash equivalents, trade receivables, other bank balances and
other financial assets (excluding forward exchange contracts).

2.4.2 Classification of financial assets at fair value through
profit or loss (FVTPL)

The Company classifies investments in mutual funds and
forward exchange contracts at FVTPL.

2.4.3 Classification of financial assets at fair value through
other comprehensive income

Forward exchange contracts are only used for economic
hedging purposes and not as speculative investments.
Forward exchange contracts (cash flow hedges) that meet
hedge accounting criteria are accounted at fair value
through other comprehensive income. Where they do not
meet hedge accounting criteria they are accounted at fair
value through profit or loss.

2.4.4 Investment in subsidiaries

Investment in subsidiaries are carried at cost, less
accumulated impairment if any.

2.5 Government grants

Grants from the government relating to product linked,
design linked incentive scheme and export incentives are
recognized where there is a reasonable assurance that the
grant will be received and the Company will comply with all
attached conditions.

Government grants relating to income are grants other than
those related to assets and are recognized in the profit or
loss and presented within other operating revenue.
Government grants related to assets are presented in the
Balance Sheet by deducting the grant in calculating the
carrying amount of the asset.

2.6 Inventories

Cost of inventories are ascertained on weighted average
basis.

2.7 Trade receivables

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

2.8 Leases

Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include
the net present value of the following lease payments:

a) fixed payments

b) amount expected to be payable under residual value
guarantees.

c) the exercise price of a purchase option if it is reasonably
certain that the Company will exercise that option.

Lease payments to be made under reasonably certain
extension options are also included in the measurement of
the liability. The lease payments are discounted using the
interest rate implicit in the lease. If that rate cannot be
readily determined, which is generally the case for lessees,
the lessee's incremental borrowing rate is used, being the

rate that the individual lessee would have to pay to borrow
the funds necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment with
similar terms, security and conditions.

To determine the incremental borrowing rate, the Company:

a) where possible, uses recent third-party financing
received as a starting point, adjusted to reflect changes
in financing conditions since third party financing was
received.

b) uses a build-up approach that starts with a risk free
interest rate adjusted for credit risk for leases held by the
Company, which does not have recent third party
financing, and

c) makes adjustments specific to the lease, e.g. term,
country, currency and security.

Lease payments are allocated between principal and finance
cost. The finance cost is charged in the Statement of profit
and loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the
liability for each period.

Right of use assets are measured at cost comprising the
following:

a) the amount of the initial measurement of lease liability

b) any lease payments made at or before the
commencement date,

c) any initial direct costs, and

d) restoration cost.

Right-of-use assets are generally depreciated over the lower
of the asset's useful life and the lease term on a straight-line
basis. If the Company is reasonably certain to exercise a
purchase option, the right-of-use asset is depreciated over
the underlying asset's useful life.

Payments associated with short term leases and all leases of
low value assets are recognised on a straight-line basis as an
expense in profit and loss. Short term leases are leases where
the lease term is 12 months or less.

2.9 Derivative financial instruments and hedge
accounting

The Company is exposed to foreign currency fluctuations on
foreign currency assets, liabilities and forecasted cash flows
denominated in foreign currency. The Company uses foreign
currency forward contracts to hedge its risks associated with
foreign currency fluctuations relating to certain foreign
currency liabilities and forecasted cash flows denominated
in foreign currency. The Company designates these forward
contracts as hedge instruments and accounts for them
applying the recognition and measurement principles set
out in Ind AS 109.

The use of foreign currency forward contracts is governed by
the Company's risk management policy approved by the
Board of Directors, which provides written principles on the
use of such financial derivatives consistent with the
Company's risk management strategy. The counter party to
the Company's foreign currency forward contracts is
generally a bank. The Company does not use derivative
financial instruments for speculative purposes. Foreign
currency forward contract derivative instruments are re¬
measured at every reporting dates as described below:

a) Cash flow hedges

Changes in the fair value of the derivative hedging
instruments designated as a cash flow hedge are recognised
in other comprehensive income and held in cash flow
hedging reserve, a component of equity, to the extent that
hedge is effective. Amounts previously recognised in other
comprehensive income and accumulated in effective
portion of cash flow hedges are reclassified to the statement
of profit and loss in the same period in which gains/losses on
the item hedged are recognised in the statement of profit
and loss.

Hedge accounting is discontinued when the hedging
instrument expires or is sold, terminated, or exercised, or no
longer qualifies for hedge accounting. Cumulative gain or
loss on the hedging instrument recognised in other
comprehensive income and held in cash flow hedging
reserve is classified to statement of profit and loss when the
forecasted transaction occurs. If a hedged transaction is no
longer expected to occur, the net cumulative gain or loss
recognised in effective portion of cash flow hedges is
transferred to the statement of profit and loss for the
period.

If the cash flow hedge of a firm commitment or forecasted
transaction results in the recognition of a non financial asset
or liability, then, at the time the asset or liability is recognised,
the associated gains or losses on the derivative that had
previously been recognised in equity are included in the
initial measurement of the asset or liability.

b) Others

Changes in fair value of foreign currency derivative
instruments not designated as cash flow hedges are
recognised in the statement of profit and loss.

2.10 Deferred tax

Deferred tax asset on Minimum Alternate Tax (MAT) credit is
recognised only when it is probable that the company will
pay normal income tax during the specified period. Such
asset is reviewed at each Balance Sheet date and the
carrying amount of the deferred tax asset relating to MAT
credit is written down to the extent there is no longer a
convincing evidence that the Company will pay normal
income tax during the specified period. Similarly, the
deferred tax asset relating to MAT credit is adjusted upwards
if the previously unrecognised MAT credit is considered
recoverable due to higher anticipated future taxable profit.

Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in
the financial statements. Deferred income tax is not
accounted for if it arises from initial recognition of an asset
or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting
profit nor taxable profit (tax loss). Deferred income tax is

determined using tax rates (and laws) that have been
enacted or substantially enacted by the end of the reporting
period and are expected to apply when the related deferred
income tax asset is realized or the deferred income tax
liability is settled.

Deferred tax assets are recognized for all deductible
temporary differences and for unused tax losses only if it is
probable that future taxable amounts will be available to
utilize those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the
same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to
offset and intends either to settle on a net basis, or to realize
the asset and settle the liability simultaneously within the
same jurisdiction.

3 Critical estimates and judgments

The preparation of financial statements requires the use of
accounting estimates which, by definition, will seldom equal
the actual results. Management also needs to exercise
judgment in applying the Company's accounting policies.
This note provides an overview of the areas that involved a
higher degree of judgment 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 judgments is included in relevant
notes together with information about the basis of
calculation for each affected line item in the financial
statements.

The areas involving critical estimates and judgments are:

(i) Product Development costs (Capitalisation of product
development costs (including intangible assets under
development), estimate of useful lives of intangible
assets and assessment of its carrying value - [Refer Note
no. 2.3.2, Note no. 2.3.3 and Note no. 4(b)].

(ii) Provision for inventory obsolescence- Refer Note no. 24A

(iii) Recognition of deferred tax assets on tax losses and
MAT credit - Refer Note no. 9(b) and Note no. 16

(iv) Evaluation of tax litigations - Refer Note no. 32.1

(v) Impairment of trade receivables - Refer Note no. 30A

(vi) Provision for warranty- Refer Note no. 15 and Note no. 27

(vii) Assessment of impairment of Goodwill- Refer Note no. 4(b)]
Estimates and judgments 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.

Notes:

(i) Additions to IAUD includes capitalization of employee benefit expense, borrowing costs and other eligible expenses (Refer Note
no. 25, 26 and 27).

(ii) Contractual Obligation: Refer Note no. 32.1(b)(ii) for contractual commitments for the acquisition of intangible assets.

(iii) Management has carried out an impairment evaluation of its IAUD as at March 31, 2025 and concluded that no impairment is
considered necessary as the recoverable amounts of the individual cash generating units (CGUs) are higher than their respective
carrying amounts. The recoverable amounts of the individual CGUs were determined using the value-in-use method. Key
assumptions used in the value-in-use method include revenue growth projections, margin percentage, terminal growth rate and
discount rate. A decrease in projected revenue across individual CGUs by 11% to 16% (March 31, 2024: 15% to 33% ) would result in the
recoverable amount being equal to the carrying amount. No reasonable possible change in other assumptions individually would
result in the recoverable amount of the CGUs being equal to their carrying amount.

(iv) As at March 31, 2025, the net carrying amount of product development is ' 219.40 (March 31, 2024: ' 210.19). The Company
estimates the useful life of product development to be 2 to 3 years based on the expected technical obsolescence of such assets.
However, the actual useful life may be shorter or longer than 2 years, depending on technical innovations and competitor actions.
If it were only 1 year, the carrying amount as at March 31, 2025 would be ' 96.26 (March 31, 2024: ' 153.96). If the useful life were
estimated to be 3 years, the carrying amount as at March 31, 2025 would be ' 299.89 (March 31, 2024: ' 252.61).

The above sensitivity analysis are based on a change in an
assumption while holding all other assumptions constant. In
practice, this is unlikely to occur, and changes in some of the
assumptions may not be correlated. When calculating the
sensitivity of the defined benefit obligation to significant
actuarial assumptions the same method (present value of the
defined benefit obligation calculated with the projected unit
credit method at the end of the reporting period) has been
applied as and when calculating the defined benefit liability
recognised in the balance sheet.

c) Risk Exposure

1. Interest rates risk : The defined benefit obligation is
calculated using a discount rate based on government bonds.
If bond yields fall, the defined benefit obligation will tend to
increase although this will be partially offset by an increase in
value of the plan assets.

2. Salary inflation risk: Higher than expected increases in
salary will increase the defined benefit obligation.

3. Demographic risks: This is the risk in volatility due to
unexpected nature of decrements that include mortality,
attrition, disability and retirement. The effects of these
decrement on the DBO depends upon the combination
of salary increase, discount rate, and vesting criteria and
therefore not very straight forward. It is important not to
overstate withdrawal rate because the cost of retirement
benefit of a short service employees will be less compared to
long service employees.

4. Asset Liability Mismatch: This will come into play unless the
funds are invested with the term of the assets replicating the
term of the liability.

Defined benefit liability and employer contributions
Expected contributions to post-employment benefit plans
(Gratuity) for the year ending March 31, 2026 are ' 5.35.

The weighted average duration of the defined benefit
obligation is 8 years (March 31, 2024: 7 to 8 years). The expected
maturity analysis of undiscounted gratuity is as follows:

(ii) Fair value hierarchy

Level 1: Includes financial instruments measured using quoted
prices. This includes mutual funds and forward contracts that
have quoted price. The mutual funds and forward contracts
are valued using the closing Net Asset Value (NAV).

Level 2: The fair value of financial instruments that are not
traded in an active market (for example traded bonds, over-
the counter derivatives) is determined using valuation
techniques which maximize the use of observable market
data and rely as little as possible on entity-specific estimates.
If all significant inputs required to fair value an instrument are
observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on
observable market data, the instrument is included in level 3.

There are no transfers between levels during the year.

The Company's policy is to recognize transfers into and
transfers out of fair value hierarchy levels as at the end of the
reporting period.

(iii) Valuation Technique

- The fair values of security deposits were calculated based on
cash flows discounted using a current lending rate. They are
classified as level 3 fair values in the fair value hierarchy due to
the inclusion of unobservable inputs including counterparty
credit risk.

- Investment in mutual funds are valued using closing NAV of
the fund.

- Foreign currency forwards are valued based on the forward
exchange rates provided by the bank as at the balance sheet
date.

(iv) Valuation Process

The finance department of the Company includes a team
that performs the valuations of financial assets and liabilities
required for financial reporting purposes, including level 3
fair values. The finance department reports directly to the
chief financial officer (CFO). The significant level 3 inputs for
determining the fair values are discount rates using a long

term bank deposit rate to calculate a risk-free rate (pre-tax)
that reflects the current market assessments of the time
value of money and adjusted for counter-party risk and risks
specific to the asset.

(v) Fair value of financial assets and liabilities measured at
amortised cost

- The fair values of security deposits and non-current trade
receivables approximates their carrying amounts.

- The carrying amounts of trade receivables (current),
borrowings, trade payables, capital creditors, cash and cash
equivalents and other financial assets and liabilities are
considered to be the same as their fair values, due to their
short-term nature.

- For financial assets and liabilities that are measured at fair
value, the carrying amounts are equal to the fair values.

Note no. 30: Financial risk management

The Company's business activities expose it to a variety of
financial risks, namely credit risk, liquidity risk, market risk and
interest rate risk. The Company's senior management has
overall responsibility for the establishment and oversight of the
Company's risk management framework. The risk
management framework is approved by the Board of Directors.
A. Credit Risk

Credit risk refers to the risk of default on its obligation by the
counterparty resulting in a financial loss. The maximum
exposure to the credit risk at the reporting date is primarily
from trade receivables and contract assets. Trade receivables
and contract assets are typically unsecured and are derived
from revenue earned from customers located in various
countries. Credit risk is managed by the Company through
credit approvals, establishing credit limits and continuously
monitoring the credit worthiness of customers to which the
Company grants credit terms in the normal course of
business.

The loss allowances for financial assets are based on
assumptions about risk of default and expected loss rates.
The Company uses judgement in making these assumptions
and selecting the inputs to the impairment calculations,
based on the Company's past history and existing market
conditions as well as forward- looking estimates at the end
of each reporting period.

The Company is also exposed to credit risk in respect of cash
and cash equivalents, deposits with banks and financial
institutions and investment in mutual funds. As a policy, the
Company places its cash and cash equivalents and deposits
with well-established banks and financial institutions and
investment in mutual funds with well-established financial
institutions.

Management has evaluated and determined expected
credit loss for cash and cash equivalents, deposits with
banks, inter-corporate deposits placed with financial
institutions, investment in mutual funds, security deposits
and other financial assets to be immaterial.

(iii) Sensitivity Analysis

The sensitivity of profit or loss to changes in the loss
allowance

B. Liquidity Risk

Liquidity risk is the risk that the Company will not be able to
meet its obligations associated with its financial liabilities.
The Company's principal source of liquidity are cash and
cash equivalents, cash flows that are generated from the
operations and the undrawn borrowing facilities. A material
and sustained shortfall in cash flows could undermine the
Company's credit rating and impair investor confidence.

Hedge effectiveness

Hedge effectiveness is determined at the inception of the
hedge relationship, and through periodic perspective
effectiveness assessments to ensure that an economic
relationship exists between the hedged item and hedging
instrument.

For hedges of foreign currency purchases, the Company
enters into hedge relationships where the critical terms of
the hedging instrument match exactly with the terms of the
hedged item. The Company therefore performs a qualitative
assessment of effectiveness. If changes in circumstances
affect the terms of the hedged item such that the critical
terms no longer match exactly with the critical terms of the
hedging instrument, the Company uses the hypothetical
derivative method to assess effectiveness.

In hedges of foreign currency purchases, ineffectiveness
may arise if the timing of the forecast transaction changes
from what was originally estimated, or if there are changes
in the credit risk of the Company or the derivative
counterparty.

Note no. 31: Capital management

For the purpose of capital management, the Company
considers the following components of its Balance Sheet as
capital:

Issued equity capital, securities premium and all other
equity reserves attributable to the equity holders of the
Company.

The Company aims to manage its capital efficiently so as to
safeguard its ability to continue as a going concern and to
optimize the growth opportunities and return to the
shareholders. The capital structure of the company is based
on management's judgment of the appropriate balance of
key elements in order to meet its strategic and day-to-day
needs. The company consider the amount of capital in
proportion to risk and manage the capital structure in light
of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain
or adjust the capital structure, the company may adjust the
amount of dividends paid to shareholders, return capital to
shareholders or issue new shares.

The Company foresees issue of fresh capital pursuant to
exercise of vested employee stock options. Apart from the
outstanding ESOPs, the Board of Directors have also
approved certain Restricted Stock Units (RSUs), which may
be converted into share capital in the future periods.

The Company's policy is to maintain a stable and strong
capital structure with a focus on total equity so as to maintain
investor, creditors and market confidence and to sustain
future development and growth of its business. The
Company will take appropriate steps in order to maintain, or
if necessary, adjust its capital structure.

Note 2: In July 2017, Income Tax Department initiated
proceedings under section 132 of the Income Tax Act, 1961 for
assessment years (AY) 2012-13 to 2018-19. Subsequently, the
Company received orders disallowing certain expenses
resulting in reduction of brought forward/ carried forward
losses for these assessment years. The Company has filed
appeal against the orders disputing the disallowances.
Certain other agencies sent notices as part of their inquiries,
which were duly responded / attended by the Company and
its officials. The management is of the view that the outcome
of these proceedings/ notices has no material adverse impact
on the Company's financial statements. Pursuant to
proceedings under 132 mentioned above, in March 2018, the
Income Tax Department sent a show cause notice to the
company under Section 276C of the Income Tax Act for AY
2012-13 to 2018-19. The Company and its officials fully co¬
operated with the Department. During FY 2018-19, the
Company and certain officers of the Company had received
summons under various sections of the IT Act from the
Special Court for Economic Offences, to which the Company
has responded. The Company is of the view that the outcome
of these summons/notices will not have any material impact
on the Company's financial statements. Further the company
has appealed against the proceedings under section 276C
and the summons by Special Court of Economic Offences in
the Karnataka High Court. The Company is of the view that
the outcome of these summons/notices will not have any
material impact on the Company's financial statements.
There are cases pending at various forums with the concerned
authorities. Outflows if any, arising out of these claims would
depend on the outcome of the decision of the appellate
authority and the Company's right for future appeals before
judiciary. The Company is eligible for tax refund of ' 0.46 for
the AY 2018-19 and ' 1.48 for the AY 2020-21. However, the
same was withheld against the above orders.

The Company has received demand of ' 0.46 for AY 2016-17
mainly towards incorrect valuation of shares issued, ' 4.80 in
AY 2018-19 towards disallowance of carried forward losses
and of ' 0.90 for AY 2022-23 towards disallowance of TDS
credits. The Company has preferred appeals against these
orders and the same is currently pending with CIT(A).

Note 3: a. In December 2023, GST department has completed
audit for the FY 2017-18 and a demand order dated December
26, 2023 was issued u/s 73 (9) of the GST Act, 2017 demanding
tax, interest and penalty aggregating to ' 4.85. The Company
has made a pre-deposit of ' 0.22 and filed appeal against the
demand order on March 22, 2024.

b. In January 2024, the Company received a demand order
from the Commercial Tax Officer, Vigilance, Bengaluru
demanding penalty of ' 0.23 u/s 129 of CGST Act, 2017. The
Company filed appeal against the demand order and made
a pre-deposit of ' 0.23. In August 2024, the Company received
order from the Joint Commissioner of Commercial Taxes
(Appeals) confirming levy of penalty of ' 0.23. The Company
intends to file an appeal against the said order once the
Appellate Authority is formed.

c. In September 2023, the Company received order from the
Appellate Authority partially allowing their claim and
reduced the total demand from ' 5.72 to ' 0.28 for the F.Y.
2017-18. The Company has made pre-deposit of ' 0.34 in the
FY 2022-23.

d. In August 2024, the Company received demand orders
from the Karnataka and Delhi GST authorities u/s 73 of the
CGST Act, 2017 demanding tax, interest and penalty
aggregating to ' 1.39. The Company filed appeal against
these orders in November, 2024 and made a pre-deposit of
' 0.07.

e. The Company received an order from Appellate Authority
in December 2024 confirming levy of tax, interest and
penalty of ' 0.06 for the FY 2016-17 & 2017-18 related to Service
Tax. The Company has filed appeal before CESTAT in March
2025 against the order.

Note 4: In January, 2025, the Company received a demand
order from the Department of Customs of ' 33.42 including
duty and penalty towards alleged mis-classification of
finished goods. Aggrieved by the said order, subsequent to
year end, the Company has filed an appeal before the High
Court of Karnataka.

Based on the assessment, Management has concluded that
the Company has a strong case to defend its position in the
above matters and accordingly, no provision has been made
in the financial statements.

The Company does not expect any reimbursement in
respect of the above contingent liabilities.

32.2 Dues to Micro, Small and Medium Enterprises
(MSMEs)

The Company has certain dues to suppliers registered under
Micro, Small and Medium Enterprises Development Act,
2006 (‘MSMED Act'). The disclosures pursuant to the said
MSMED Act are as follows:

32.9 Other accounting policies

This note provides a list of the other accounting policies
adopted in the preparation of these financial statements to
the extent they have not been disclosed in the above notes.
These policies have been consistently applied to all the years
presented, unless otherwise stated.

a. Property, plant and equipment (including Capital work-
in-progress)

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 recognized 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.
All other repairs and maintenance are charged to profit or loss
during the reporting period in which they are incurred. Assets
in the course of construction are capitalised under Capital
work-in-progress (CWIP). At the point when the construction
of the asset is completed and it is ready to be operated as
per management's intended use, the cost of construction is
transferred to the appropriate category of property, plant and
equipment and depreciation commences.

On transition to Ind AS, the Company has elected to continue
with the carrying value of all of its property, plant and
equipment measured as per the previous GAAP and use that
carrying value as the deemed cost of the property, plant and
equipment.

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.

Gains and losses on disposals are determined by comparing
proceeds with carrying amount. Net gains and losses are
included in the statement of profit and loss within other
income/ other expenses.

b. Intangible assets - Software

The cost of software comprises its purchase price, including
any import duties and other taxes (other than those
subsequently recoverable from the taxation authorities), and
any directly attributable expenditure on making the asset
ready for its intended use and net of any trade discounts
and rebates. Subsequent expenditure on software after its
purchase is recognized as an expense when incurred unless
it is probable that such expenditure will enable the asset to
generate future economic benefits in excess of its originally
assessed standards of performance and such expenditure
can be measured and attributed to the asset reliably, in which
case such expenditure is added to the cost of the asset.

On transition to Ind AS, the Company has elected to continue
with the carrying value of all of its intangible assets measured
as per the previous GAAP and use that carrying value as the
deemed cost of the intangible assets.

c. Impairment of Non - financial assets

Assets are tested for impairment whenever events or changes
in circumstances indicate that the carrying amount may not
be recoverable. Intangible assets under development are
tested for impairment on an annual basis. An impairment loss
is recognized 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 cost of
disposal and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of
assets (cash-generating units). Non-financial assets that have
suffered an impairment are reviewed for possible reversal of
the impairment at the end of each reporting period.

d. Financial instruments

Financial assets and financial liabilities are recognized when
a Company becomes a party to the contractual provisions of
the instruments.

Financial assets and financial liabilities are initially measured
at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities
at fair value through profit or loss) are added to or deducted
from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognized
immediately in profit or loss.

e. Investments and Other financial assets

(i) Classification

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 entity's business model for
managing the financial assets and the contractual terms of
the cash flow.

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) Recognition

Regular way purchases and sales of financial assets are
recognised on trade-date, the date on which the Company
commits to purchase or sale the financial asset.

(iii) Subsequent Measurement
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 Company classifies
its debt instruments:

Amortized 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 amortized
cost. Interest income from these financial assets is included
in other income using the effective interest rate method. Any
gain or loss arising on derecognition is recognised directly in
profit or loss. Impairment losses are presented as a separate
line item in statement of profit and loss.

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
flow 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 recognized in profit and loss. When the
financial asset is derecognized, the cumulative gain or loss
previously recognized in OCI is reclassified from equity to
the statement of profit and loss and recognised under other
income/ other expenses. 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 amortized 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 recognized in profit or loss and presented net in the
statement of profit and loss in the period in which it arises.
Interest income from these financial assets is included in
other income.

Equity instruments

The Company subsequently measures all equity investments
at fair value. Where the Company 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
following the derecognition of the investment. Dividends
from such investments are recognized 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 recognized 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.

(iv) Impairment of financial assets

The Company recognizes a loss allowance for expected credit
losses on financial assets that are measured at amortised
cost. 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 information
including that which is forward-looking.

The losses arising from impairment are recognized in the
Statement of Profit and Loss.

(v) Derecognition

A financial asset is derecognized 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 derecognized. Where the entity has not
transferred substantially all risks and rewards of ownership of
the financial asset, the financial asset is not derecognized.

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 derecognized 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 recognized to the extent of
continuing involvement in the financial asset.

(vi) Income recognition
Interest income

Interest income from a financial asset at fair value through
profit or loss is disclosed as interest income within other
income. Interest income on financial assets at amortised cost
and financial assets at FVOCI is calculated using effective
interest method and is recognised in statement of profit and
loss as part of other income.

Interest income is calculated by applying the effective
interest rate to the gross carrying amount of a financial asset
except for financial assets that subsequently become credit-
impaired. For credit-impaired financial asset the effective
interest rate is applied to the net carrying amount of the
financial asset (after deduction of the loss allowance).

Dividend income

Dividends are recognized in profit or loss only when the
right to receive payment is established, 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.

f. Financial liabilities

(i) Classification as liability or equity

Financial liability 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 a financial liability and
an equity instrument.

(ii) Subsequent Measurement

Financial liabilities are subsequently measured at amortised
cost using the effective interest rate method unless at initial
recognition, they are classified as fair value through profit or
loss.

(iii) Derecognition

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

g. Trade 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 usually unsecured. Trade
payables are presented as current liabilities unless payment is
not due within twelve months after the reporting period. They
are recognized initially at their fair value and subsequently
measured at amortised cost using the effective interest
method.