2 MATERIAL ACCOUNTING POLICIES

2.1 Basis of preparation and measurement

a. Basis of preparation

The financial statements ("financial statements"
or "standalone financial statements") have
been prepared in accordance with the Indian
Accounting Standards (Ind AS), notified under
the Companies (Indian Accounting Standards)
Rules, 2015 (as amended from time to time)
and presentation requirements of Division II of
Schedule III to the Companies Act, 2013 (the
Act) (as amended from time to time), (Ind AS
compliant Sch III), as applicable to the standalone
financial statements.

The preparation of the standalone financial
statements requires the use of certain critical
accounting judgements, estimates and
assumptions. It also requires the management
to exercise judgement in the process of applying
the Company’s accounting policies. The areas
involving a higher degree of judgement or
complexity, or areas where assumptions and
estimates are critical to the standalone financial
statements are disclosed in note 3.

The employee welfare trusts (including an ESOP
Trust) being separate legal entities, are not
considered for the purpose of consolidation in
the standalone financial statements. However,
these trusts have been consolidated in the
consolidated financial statements under Ind AS
110 - "Consolidated Financial Statements".

b. Basis of measurement

The standalone financial statements have been
prepared on the accrual and going concern
basis under historical cost convention except
the following:

• Certain financial assets and liabilities
(including derivative instruments) is measured
at fair value;

• Assets held for sale measured at fair value less
cost to sell;

• Defined benefit plans whereby the plan assets
are measured at fair value; and

• Equity settled ESOP at grant date fair value at
each reporting date.

2.2 Summary of material accounting policies

a. Current and non-current classification

An entity shall classify an asset as current when:

(i) it expects to realise the asset, or intends
to sell or consume it, in its normal
operating cycle

(ii) it holds the asset primarily for the purpose
of trading

(iii) it expects to realise the asset within
twelve months after the reporting period
(other than for long-term projects), or

(iv) the asset is cash or a cash equivalent
(as defined in Ind AS 7) unless the asset is
restricted from being exchanged or used to
settle a liability for at least twelve months
after the reporting period.

All other assets shall be classified as
non-current.

An entity shall classify a liability as current when:

(i) it expects to settle the liability in its normal
operating cycle

(ii) it holds the liability primarily for the purpose
of trading

(iii) the liability is due to be settled within twelve
months after the reporting period (other than
for long-term projects), or

(iv) it does not have the right at the end of the
reporting period to defer settlement of the
liability for at least twelve months after the
reporting period.

All other liabilities shall be classified as
non-current.

Deferred tax assets and liabilities are classified
as non-current assets and liabilities.

During the year ended March 31,2026, the
Company has reassessed the period of its
normal operating cycle based on the nature of its
business, the time required for procurement of
inputs, execution of operations, delivery of goods
and services, and realisation of receivables in
the ordinary course of business. Based on this
assessment, management has concluded that
the Company’s normal operating cycle for the
purpose of classification of assets and liabilities
under Ind AS in case of long term projects is
contract specific.

Accordingly, the classification of assets and
liabilities as current and non-current in these
financial statements has been revised to reflect
the updated operating cycle in accordance with
Ind AS 1, Presentation of Financial Statements,
and Schedule III to the Companies Act, 2013.

In the case of long-term projects, operating
cycle of the Company exceeds one year covering

the duration of the contract and extends
upto the realisation of receivables (including
retention monies) within the credit period
normally applicable to the respective contract.
Accordingly, for classification of assets and
liabilities related to such contracts as current,
duration of each individual contract is considered
as its operating cycle.

b. Foreign currencies

The Company’s standalone financial statements
are prepared in Indian Rupees (Rs.), which is also
the functional currency of the Company.

Transactions and balances

Transactions in foreign currencies are initially
recorded at the functional currency spot rates
at the date the transaction first qualifies for
recognition. Monetary assets and liabilities
denominated in foreign currencies are translated
at the functional currency spot rates of exchange
at the reporting date. Exchange differences
arising on settlement or translation of monetary
items are recognised in the Standalone
Statement of Profit and Loss.

Non-monetary items that are measured in
terms of historical cost in a foreign currency are
translated using the exchange rates at the dates
of the initial transactions.

c. Fair value measurement

The Company measures financial instruments,
such as, derivatives at fair value at each balance
sheet date. The Company applies fair value
measurement when an Ind AS requires or permits
fair value measurement for disclosures about
fair value measurements except for Ind AS which
prescribe measurement and disclosures such as:

a) Share based payment transactions covered
by Ind AS 102 - "Share based payments";

b) Leasing transactions covered by
Ind AS 116 - "Leases".

In such cases, 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. In addition
or further, fair value measurement is based on the
presumption that the transaction to sell the asset
or transfer the liability takes place either:

• In the principal market for the asset or
liability; or

• In the absence of a principal market, in the
most advantageous market for the asset
or liability.

The principal or the most advantageous market
must be accessible by the Company. The fair
value of an asset or a liability is measured using
the assumptions that market participants would
use when pricing the asset or liability, assuming
that market participants act in their economic
best interest.

A fair value measurement of a non-financial asset
takes into account a market participant’s ability to
generate economic benefits by using the asset in
its highest and best use or by selling it to another
market participant that would use the asset in its
highest and best use.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is
measured or disclosed in the standalone financial
statements are categorised within the fair value
hierarchy, described as follows, based on the
lowest level input that is significant to the fair
value measurement as a whole:

• Level 1 - Quoted (unadjusted) market prices in
active markets for identical assets or liabilities;

• Level 2 - Valuation techniques for which
the lowest level input that is significant to
the fair value measurement is directly or
indirectly observable;

• Level 3 - Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable.

For the purpose of fair value disclosures, the
Company has determined classes of assets
and liabilities on the basis of the nature,
characteristics and risks of the asset or liability
and the level of the fair value hierarchy as
explained above.

This note summarises accounting policy for fair
value. Other fair value related disclosures are
given in the relevant notes:

• Quantitative disclosures of fair value
measurement hierarchy (Refer note 34);

• Financial instruments (including those carried
at amortised cost) (Refer note 34).

For assets and liabilities that are recognised
in the standalone financial statements on a
recurring basis, the Company determines
whether transfers have occurred between levels
in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant
to the fair value measurement as a whole) at the
end of each reporting period.

d. Financial Instruments

A financial instrument is any contract that
gives rise to a financial asset of one entity
and a financial liability or equity instrument of
another entity.

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)

• those to be 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
equity instruments that are not held for trading,

this will depend on whether the Company has
made an irrevocable election at the time of initial
recognition to present subsequent changes in fair
value in other comprehensive income.

At initial recognition, the Company measures a
financial asset (excluding trade receivables which
do not contain a significant financing component)
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.

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 two
measurement categories into which the Company
classifies its instruments:

(i) Debt instruments at amortised cost

A ’debt instrument’ is measured at the
amortised cost if both the following
conditions are met:

(a) The asset is held within a business
model whose objective is to hold
assets for collecting contractual cash
flows; and

(b) Contractual terms of the asset give
rise on specified dates to cash flows
that are solely payments of principal
and interest (SPPI) on the principal
amount outstanding.

After initial measurement, such financial
assets are subsequently measured at
amortised cost using the effective interest
rate (EIR) method. Amortised cost is
calculated by taking into account any
discount or premium on acquisition and
fees or costs that are an integral part of EIR.
The EIR amortisation is included in income

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

(ii) Debt instrument at 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 instrument that is subsequently
measured at fair value through profit or loss
is recognised in profit or loss and presented
net within other gains/(losses) in the period
in which it arises. Interest income from these
financial assets is included in other income.

Equity investments:

All equity investments in scope of Ind AS 109
- "Financial Instruments", are subsequently
measured at fair value. Equity instruments which
are held for trading are classified as at FVTPL. For
all other equity instruments, the Company may
make an irrevocable election to present in other
comprehensive income subsequent changes in
the fair value. The Company makes such election
on an instrument-by-instrument basis. The
classification is made on initial recognition and
is irrevocable.

Derecognition

A financial asset (or, where applicable, a part
of a financial asset or part of a group of similar
financial assets) is primarily derecognised when:

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

• The Company has transferred its rights
to receive cash flows from the asset or
has assumed an obligation to pay the
received cash flows in full without material
delay to a third party under a "pass-
through"arrangement; and either (a) the
Company has transferred substantially all
the risks and rewards of the asset, or (b) the
Company has neither transferred nor retained
substantially all the risks and rewards of the
asset, but has transferred control of the asset.

Impairment of financial assets

Further disclosures relating to impairment
of financial assets are provided in the
following notes:

• Trade receivables and Contract assets -

Refer note 7;

• Investments - Refer note 6;

• Loans and other financial assets -

Refer note 8 and 35(A)(ii).

Financial liabilities

All financial liabilities are recognised initially at fair
value and, in the case of loans and borrowings
and payables, net of directly attributable
transaction costs. The Company’s financial
liabilities include trade and other payables,
loans and borrowings including bank overdrafts,
financial guarantee contracts and derivative
financial instruments.

Subsequent measurement of financial liabilities
depends on their classification as fair value
through profit and loss or at amortised cost.

All changes in fair value of financial liabilities
classified as FVTPL is recognised in the
Standalone Statement of Profit and Loss.
Amortised cost category is applicable to loans
and borrowings, trade and other payables.

After initial recognition the financial liabilities
are measured at amortised cost using the EIR
method. Gains and losses are recognised in profit
and loss when the liabilities are derecognised
as well as through the EIR amortisation process.
Amortised cost is calculated by taking into
account any discount or premium on acquisition
and fees or cost that are integral part on EIR. The
EIR amortisation is included as finance cost in the
Standalone Statement of Profit and Loss.

Derecognition

A financial liability is derecognised when the
obligation under the liability is discharged or

cancelled or expires when an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the
terms of an existing liability are substantially
modified, such an exchange or modification is
treated as derecognition of the original liability
and the recognition of a new liability. The
difference in the respective carrying amounts is
recognised in the Standalone Statement of Profit
and Loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset
and the net amount is reported in the balance
sheet if there is a currently enforceable legal right
to offset the recognised amounts and there is an
intention to settle on a net basis, to realise the
assets and settle the liabilities simultaneously.

e. Derivative financial instruments and hedge
accounting

Initial recognition and
subsequent measurement

The Company uses derivative financial
instruments, such as forward currency
contracts, to hedge its foreign currency risks.
Such derivative financial instruments are
initially recognised at fair value on the date
on which a derivative contract is entered into
and is subsequently re-measured at fair value.
Derivatives are carried as financial assets when
the fair value is positive and as financial liabilities
when the fair value is negative.

Any gains or losses arising from changes in the
fair value of derivatives are taken directly to the
Standalone Statement of Profit and Loss, except
for the effective portion of cash flow hedges,
which is recognised in OCI in cash flow hedge
reserve within other equity and later reclassified
to profit or loss when the hedge item affects profit
or loss or treated as basis adjustment if a hedged
forecast transaction subsequently results in the
recognition of a non-financial asset or non¬
financial liability.

For the purpose of hedge accounting, hedges
are classified as "Cash flow hedges" when
hedging the exposure to variability in cash flows

that is either attributable to a particular risk
associated with a recognised asset or liability
or a highly probable forecast transaction or
the foreign currency risk in an unrecognised
firm commitment.

At the inception of a hedge relationship, the
Company formally designates and documents
the hedge relationship to which the Company
wishes to apply hedge accounting and the
risk management objective and strategy for
undertaking the hedge. The documentation
includes the Company’s risk management
objective and strategy for undertaking hedge,
the hedging / economic relationship, the
hedged item or transaction, the nature of the
risk being hedged and how the entity will assess
the effectiveness of changes in the hedging
instrument’s fair value in offsetting the exposure
to changes in the hedged item’s fair value or
cash flows attributable to the hedged risk. Such
hedges are expected to be highly effective in
achieving offsetting changes in fair value or cash
flows and are assessed on an ongoing basis to
determine that they actually have been highly
effective throughout the financial reporting
periods for which they were designated hedges
that meet the strict criteria for hedge accounting
and are accounted for, as cash flow hedges.

Cash flow hedges

The effective portion of the gain or loss on
the hedging instrument is recognised in OCI
in the cash flow hedge reserve, while any
ineffective portion is recognised immediately
in the Standalone Statement of Profit and
Loss. The Company uses forward currency
contracts as hedges of its exposure to foreign
currency risk in forecast transactions and firm
commitments. The ineffective portion relating
to foreign currency contracts is recognised in
the Standalone Statement of Profit and Loss.
Amounts recognised in OCI are transferred to the
Standalone Statement of Profit and Loss when
the hedged transaction affects profit or loss, such
as when the hedged financial income or financial
expense is recognised or when a forecast sale

occurs. When the hedged item is the cost of a
non-financial asset or non-financial liability, the
amounts recognised in OCI are transferred to
the initial carrying amount of the non-financial
asset or liability. If the hedging instrument expires
or is sold, terminated or exercised without
replacement or rollover (as part of the hedging
strategy), or if its designation as a hedge is
revoked, or when the hedge no longer meets the
criteria for hedge accounting, any cumulative
gain or loss previously recognised in OCI remains
separately in equity until the forecast transaction
occurs or the foreign currency firm commitment
is met.

f. Share based payments

In respect of stock options granted pursuant
to the Company’s Employee Stock Option
Scheme, the Company recognises employee
compensation expense, using the grant date
fair value in accordance with Ind AS 102 -
"Share Based Payment (SBP)", over the period
over which the employees provide services.
Employees (senior executives) of the Company
receive remuneration in the form of share-based
payments, whereby employees render services
as consideration for equity instruments.

The Company initially measures the cost of
transactions with employees using fair value of
option granted using black scholes option pricing
model to measure the cost of
service received .

Estimating fair value for share-based payment
transactions requires determination of the most
appropriate valuation model and the performance
of the Company, which is dependent on the terms
and conditions of the grant. This estimate also
requires determination of the most appropriate
inputs to the valuation model including the
expected life of the share option, volatility
and dividend yield and making assumptions
about them.

The assumptions and models used for estimating
fair value for share-based payment transactions
are disclosed in note 38.

2.3 Changes in accounting policies
and disclosures

New and amended standards

The Company applied for the first-time certain
standards and amendments, which are effective for
annual periods beginning on or after April 01, 2025.
The Company has not early adopted any standard,
interpretation or amendment that has been issued but
is not yet effective.

The Ministry of Corporate Affairs vide notification
dated May 07, 2025 and August 13, 2025 notified
the Companies (Indian Accounting Standards)
Amendment Rules, 2025 and Companies (Indian
Accounting Standards) Second Amendment
Rules, 2025, respectively, which amended certain
accounting standards (see below), and are effective
for annual reporting periods beginning on or after April
01,2025:

(a) Classification of Liabilities as Current or

Non-current and Non-current Liabilities with
Covenants - Amendments to Ind AS 1

As a result of the adoption of the amendments to
Ind AS 1, the Company changed its accounting
policy for the classification of borrowings:

“Borrowings are classified as current liabilities
unless, at the end of the reporting period, the
Company has a right to defer settlement of the
liability for at least 12 months after the reporting
period. Covenants that the Company is required
to comply with, on or before the end of the
reporting period, are considered in classifying
loan arrangements with covenants as current
or non-current. Covenants that the Company is
required to comply with after the reporting period
do not affect the classification.”

This new policy did not result in a change in
the classification of the Company’s borrowings.
The Company did not make retrospective
adjustments as a result of adopting the
amendments to Ind AS 1.

This amendment also includes specific
provisions that will take effect for reporting
periods beginning on or after 1 April 2026, as
outlined below:

Under the existing Ind AS 1, where there is a
breach of a material provision of a long-term
loan arrangement on or before the end of the
reporting period with the effect that the liability
becomes payable on demand on the reporting
date, the entity does not classify the liability as
current, if the lender agreed, after the reporting
period and before the approval of the financial
statements for issue, not to demand payment
as a consequence of the breach. However, the
amended requirements stipulate that entities
will no longer be permitted to consider lender
waivers that are granted after the reporting
date but before the financial statements are
approved for the purpose of classification
of loans. This amendment is required to be
applied retrospectively in accordance with
Ind AS 8. The Company does not expect this
amendment to have an impact on its operations
or financial statements.

(b) International Tax Reform - Pillar Two Model
Rules - Amendments to Ind AS 12

The Company is not within the scope of the
OECD Pillar Two Model Rules, as Pillar Two
legislation has not yet been enacted in any of the
jurisdictions in which the Company operates.

(c) Lack of Exchangeability - Amendments to
Ind AS 21

The amended Ind AS 21 have added requirements
to help entities to determine whether a currency
is exchangeable into another currency, and the
spot exchange rate to use where it is not.

These amendments did not have any material
impact on the amounts recognised in prior
periods and are not expected to significantly
affect the current or future periods.

2.4 Climate-related matters

The Company considers climate-related matters
in estimates and assumptions, where appropriate.

This assessment includes a wide range of possible
impacts on the Company due to both physical and

transition risks. Even though the Company believes
its business model and products will still be viable
after the transition to a low-carbon economy, climate-
related matters increase the uncertainty in estimates
and assumptions underpinning several items in the
standalone financial statements. Even though climate-
related risks might not currently have a significant
impact on measurement, the Company is closely
monitoring relevant changes and developments, such
as new climate-related legislation.

3 CRITICAL ACCOUNTING ESTIMATES
AND JUDGEMENTS

In the application of the Company's accounting
policies and preparation of financial statements,
the Management is required to make judgements,
estimates and assumptions about the carrying
amounts 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. Actual results may differ from
these estimates.

The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period
in which the estimate is revised if the revision affects
only that period, or in the period of the revision and
future periods if the revision affects both current
and future periods. 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
standalone financial statements.

The areas involving critical estimates or
judgements are:

a. Estimates and assumptions related to useful lives
and impairment of Property, Plant and Equipment
(PPE) (Refer note 4);

b. Estimations and assumptions used for
impairment of investments in subsidiaries (Refer
note 5);

c. Estimations and judgements used for impairment
of financial assets and contract assets

(Refer note 7);

d. Estimates and assumptions for income taxes
(Refer note 10);

e. Estimates and assumptions related to provisions
(Refer note 18);

f. Estimates, judgments and assumptions used for
revenue from operations (Refer note 21);

g. Judgements used for contingent liabilities (Refer
note 30);

h. Estimations used for fair value measurement
(Refer note 34)

4 PROPERTY, PLANT AND EQUIPMENT
(PPE)

Accounting policy

Property, plant and equipment (PPE) are stated
at cost of acquisition or construction net of
accumulated depreciation and impairment loss, if
any. All costs directly attributable to the acquisition
and installation of PPE are capitalised. Subsequent
costs/replacement 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 the
replaced part is derecognised. All other repairs and
maintenance expenses are charged to the Standalone
Statement of Profit and Loss during the financial year
in which they are incurred.

Gains or losses arising from derecognition of PPE are
measured as the difference between the net disposal
proceeds and the carrying amount of the asset and
are recognised in the Standalone Statement of Profit
and Loss when the asset is derecognised.

Depreciation on PPE is calculated on a straight-line
basis using the rates arrived at, based on the useful
lives estimated by the management. The Company
depreciates each part of an item of property, plant and
equipment separately if cost of the part is significant

in relation to the total cost of the item or principle
asset and useful life is materially different from the
principle asset.

The management has estimated the useful lives of
certain classes of assets in order to reflect the actual
usage of the assets. The useful lives have been
determined based on technical evaluation done by
the management's expert which are higher than those
specified by Schedule II to the Companies Act, 2013,
in order to reflect the actual usage of the assets. The
residual values are not more than 5% of the original
cost of the asset. The following useful lives are
estimated by the management:

The assets residual value, useful lives and method
of depreciation of PPE are reviewed on a regular
basis and changes in estimates, when relevant, are
accounted for on a prospective basis.

Estimates and assumptions:

The Company determines, based on technical
assessment, the estimated useful lives of its
property, plant and equipment and intangible assets
for calculating depreciation and amortisation.

This estimate is determined after considering the
expected usage of the asset or physical wear and tear.
Management reviews the useful lives periodically and
future depreciation and amortisation charge would be
adjusted where the management believes the useful
lives differ from previous estimates.

Accounting policy
Impairment of assets

The Company assesses, at each reporting date,
whether there is an indication that an asset may be
impaired. If any indication exists, or when annual
impairment testing for an asset is required, the
Company estimates the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an
asset’s or Cash Generating Unit’s (CGU) fair value less
costs of disposal and its value in use. Recoverable
amount is determined for an individual asset, unless
the asset does not generate cash inflows that are
largely independent of those from other assets or
groups of assets. When the carrying amount of an
asset or CGU exceeds its recoverable amount, the
asset is considered impaired and is written down to its
recoverable amount.

Impairment losses are recognised in the Standalone
Statement of Profit or Loss.

For assets, an assessment is made at each reporting
date to determine whether there is an indication that
previously recognised impairment losses no longer
exist or have decreased. If such indication exists, the
Company estimates the asset’s or CGU’s recoverable
amount. A previously recognised impairment
loss is reversed only if there has been a change
in the assumptions used to determine the asset’s
recoverable amount since the last impairment loss was
recognised. The reversal is limited so that the carrying
amount of the asset does not exceed its recoverable
amount, nor exceed the carrying amount that would
have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior
years. Such reversal is recognised in the Statement of
Profit and Loss unless the asset is carried at a revalued

amount, in which case, the reversal is treated as a
revaluation increase, if applicable.

The Company assesses where climate risks could
have a significant impact, such as the introduction
of emission-reduction legislation that may increase
manufacturing costs. These risks in relation
to climate-related matters are included as key
assumptions where they materially impact the
measure of recoverable amount. These assumptions
have been included in the cash-flow forecasts in
assessing value-in-use amounts.

Estimates and assumptions

Impairment exists when the carrying value of an asset
or cash generating unit (CGU) exceeds its recoverable
amount, which is the higher of its fair value less costs

of disposal and its value in use. The fair value less
costs of disposal calculation is based on available data
from binding sales transactions, conducted at arm’s
length, for similar assets or observable market prices
less incremental costs for disposing of the asset.

The value in use calculation is based on a Discounted
Cash Flow (DCF) model. The cash flows are derived
from the budget for the next five years as approved
by the Management and do not include restructuring
activities that the Group is not yet committed to or
significant future investments that will enhance the
asset’s performance of the CGU being tested. The
recoverable amount is sensitive to the discount rate
used for the DCF model as well as the expected future
cash-inflows and the terminal growth rate used.

(c) INTANGIBLE ASSETS

Accounting policy

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets
acquired in a business combination is their fair value at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.

Development costs for internally generated intangibles that are directly attributable to the design and testing
of identifiable and unique intangible controlled by the Company are recognised as intangible assets where the
following criteria are met:

• it is technically feasible to complete the intangible asset so that it will be available for use

• management intends to complete the intangible asset and use or sell it

• there is an ability to use or sell the intangible asset

• it can be demonstrated how the intangible asset will generate probable future economic benefits

• adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset are available, and

• the expenditure attributable to the intangible asset during its development can be reliably measured.

The cost may also include transfers from equity of any gains or losses on qualifying cash flow hedges of
foreign currency purchases of intangible assets. Intangible assets with finite lives are amortised over the useful
economic life and assessed for impairment whenever there is an indication that the intangible asset may be
impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are
reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern
of consumption of future economic benefits embodied in the asset are considered to modify the amortisation
period or method, as appropriate, and are treated as changes in accounting estimates.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognised in the Standalone Statement of Profit
and Loss when the asset is derecognised.

Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised
on a straight-line basis over the period of expected future benefit from the related project, i.e., the estimated
useful life subject to a maximum of ten years. amortisation is recognised in the Standalone Statement of
Profit and Loss unless such expenditure forms part of carrying value of another asset. During the period of
development, the asset is tested for impairment annually.

(e) CAPITALISATION OF EXPENSES

Accounting policy

Salaries and wages, interest expenses, and other expenses are capitalised when directly attributable to the
acquisition, construction, or production of a qualifying asset. These costs are capitalised during the development
or construction phase and subsequently amortised or depreciated over the asset’s useful life once the asset is
ready for use.

During the year, the Company has capitalised the following expenses of revenue nature to the cost of Property,
plant and equipment/intangible assets. Consequently, expenses disclosed under the respective notes are net of
amounts capitalised by the Company:

(a) INVESTMENT IN SUBSIDIARIES
Accounting policy

Investments in subsidiaries are carried at cost less accumulated impairment losses in the Company’s balance
sheet. On disposal of such investments, the difference between disposal proceeds and the carrying amounts of
the investments are recognised in the Standalone Statement of Profit and Loss.

Impairment

Investment in subsidiaries 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.

Estimates and assumptions

The Company performs impairment assessment of investments by making an estimate of the recoverable
amount, being the higher of fair value less costs to sell and its value in use which is then compared with the
carrying value. An impairment loss is recognised in the Standalone Statement of Profit and Loss to the extent the
carrying value of an asset exceeds the recoverable amount. The value in use of these investments is determined
using discounted cash flow model (DCF model) requiring various assumptions and judgements. These include
future cashflows and growth rate assumptions, discount rate, terminal growth rate and other economic and
entity specific factors which are incorporated in the DCF model. The estimated cash flows are developed using
internal forecasts.

*The Company had acquired 16.67% share in Covacsis Technologies Private Limited (Covacsis) on July 22, 2022, which is involved in
the business of developing digital enabled service solutions with respect to process improvement, through-put enhancement, specific
energy consumption reduction. Subsequently, the Company had entered into an agreement dated March 26, 2025 to dispose of its
entire investment in Covacsis Technologies Private Limited (Covacsis). This sale was expected to be completed within the next 12
months and was considered highly probable. Accordingly, the investment in Covacsis had been classified as non-current assets held
for sale in accordance with Ind AS 105 - "Non-current Assets Held for Sale and Discontinued Operations” in the previous year.

The sale has been completed on April 8, 2025.

"The Company acquired 15.17% share in ExactSpace Technologies Private Limited (ExactSpace) on January 25, 2022, which is
involved in business of developing artificial intelligence solutions.

The Company has right to participate in policy-making decision and has nominated its representative as a Director on the Board of
Directors of ExactSpace. As a result, the Company holds significant influence and interest in ExactSpace.

Also, the Company has entered into a Share Subscription and Share Purchase Agreement and a Shareholders’ Agreement with
ExactSpace Technologies Private Limited (ExactSpace), its Promoters and existing investors to acquire an additional 35.83% stake
(on a fully diluted basis) in ExactSpace. The transaction was completed on April 9, 2026, and effective from that date, ExactSpace has
become a subsidiary of the Company.

(a) TRADE RECEIVABLES - AT AMORTISED COST

Accounting policy

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course
of business and reflect the Company’s unconditional right to consideration (that is, payment is due only on
the passage of time). Trade receivables are recognised initially at the transaction price as they do not contain
significant financing components. The Company holds the trade receivables with the objective of collecting the
contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest
method, less loss allowance.

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

(c) EXPECTED CREDIT LOSS (ECL)

Accounting policy

To measure the expected credit losses,
trade receivables and contract assets have
been grouped based on shared credit risk
characteristics and the days past due. A contract
asset represents the Company’s right to
consideration in exchange for goods or services
that the entity has transferred to a customer
where that right is conditioned on something
other than the passage of time; and have
substantially the same risk characteristics as the
trade receivables for the same types of contracts.
The Company has therefore concluded that the
expected loss rates for trade receivables are a
reasonable approximation of the loss rates for the
contract assets.

Credit risk on trade receivables and contract
assets are managed by the Company subject to
it’s established policy, procedures and control
relating to customer credit risk management.
Credit quality of a customer is assessed and
credit limits are defined in accordance with this
assessment. Moreover, given the diverse nature
of the Company’s businesses, trade receivables
and contract assets are spread over a number of
customers with no significant concentration of
credit risk.

For trade receivables and contract assets, as
a practical expedient, the Company computes
credit loss allowance based on a provision
matrix. The provision matrix is prepared based
on historically observed default rates over
the expected life of trade receivables and
contract assets and is adjusted for forward¬
looking estimates.

Trade receivables and contract assets are written
off where there is no reasonable expectation of
recovery. Indicators that there is no reasonable
expectation of recovery include, amongst others,
the failure of a debtor to engage in a repayment
plan with the Company, and a failure to make
contractual payments for a period of greater than
3 years past due.

Impairment losses on trade receivables and
contract assets are presented as expected
credit loss in the Standalone Statement of Profit
and Loss. Subsequent recoveries of amounts
previously written off are credited against the
same line item.

Estimates and Judgements

The impairment provisions for financial assets
are based on assumptions about risk of default,
expected loss rates and timing of cash flows.

The Company uses judgment in making these
assumptions and selecting the inputs to the
impairment calculation, based on the Company’s
past history, existing market conditions as well
as forward looking estimates at the end of each
reporting period.

As a practical expedient, the Company uses a
provision matrix to determine ECL impairment
allowance on portfolio of its trade receivables and
contract assets. The provision matrix is based
on its historically observed default rates over
the expected life of the trade receivables 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. The Company
follows provisioning norms based on ageing of
receivables to estimate the impairment allowance
under ECL.

10 INCOME TAXES

Accounting policy

Tax expense comprises of current tax expense and deferred tax.

Current tax

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

Current income tax relating to items recognised outside profit or loss is recognised either in OCI or in equity, in
correlation to the underlying transaction.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets are
recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax
losses. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax
losses can be utilised. 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) and does not give rise to equal taxable and deductible temporary differences.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient future taxable profit will be available to allow all or part of the deferred tax asset to be
utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent
that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset
is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted
at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in OCI or in
equity), in correlation to the underlying transaction.

Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets
and liabilities and where 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 realise the asset and settle the liability simultaneously.

The Company applies significant judgement in identifying uncertainties over income tax treatments.

Estimates and assumptions
Recoverability of Deferred tax assets:

At each balance sheet date, the Company assesses whether the realisation of future tax benefits is sufficiently
probable to recognise deferred tax assets. This assessment requires the use of significant estimates with respect to
assessment of future taxable income. The recorded amount of total deferred tax assets could change if estimates of
projected future taxable income or if changes in current tax regulations are enacted.

12 INVENTORIES

Accounting policy

Raw materials and components, stores and spares, work in progress, stock-in-trade and finished goods are stated at
the lower of cost and net realisable value. Cost of raw materials and components and stores and spares and stock-in¬
trade comprises cost of purchases. Cost of work-in-progress and finished goods comprises direct materials, direct
labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the
basis of normal operating capacity. Cost of inventories also include all other costs incurred in bringing the inventories
to their present location and condition. Costs of purchased inventory are determined after deducting rebates and
discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated
costs of completion and the estimated costs necessary to make the sale. Costs of all classes of inventories are
determined on weighted average basis. Write down of inventories is calculated based on an analysis of foreseeable
changes in demand, technology, market conditions and ageing of inventories.

(a) CASH AND CASH EQUIVALENTS
Accounting policy

Cash and cash equivalents in the balance sheet comprises 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 purpose of presentation in the statement of cash flows, cash and cash equivalents consists of cash on
hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value, and bank overdrafts as they are considered an integral part of
the Company’s cash management. Bank overdrafts are shown within borrowings in current liabilities in the
balance sheet.

(f) The Company has several trusts (73 nos) set up for welfare of employees and an ESOP Trust named Thermax
Employee ESOP and Welfare Trust. Such trusts together hold 6,507,629 (March 31,2025: 6,516,354) equity
shares representing 5.46% (March 31,2025: 5.47%) of equity share in the Company.

(g) There were no issue of bonus shares/buy back of shares/issue of shares for consideration other than cash during
the period of five years immediately preceding the reporting date.

Nature and purpose of reserves
Capital redemption reserve

Pertains to reserve created towards redemption of debentures and can be utilised in accordance with the
provisions of the Act.

Capital reserve

Pertains to reserve arising on amalgamations in the past which is required to be maintained as per statute and is
not available for distribution to shareholders.

General reserve

Represents amounts transferred from retained earnings.

Retained earnings

Retained earnings are the profits or (loss) that the Company has earned or incurred till date, less any transfers
to general reserve, dividends or other distributions paid to shareholders. Retained earnings also include re¬
measurement loss or (gain) on defined benefit plans, net of taxes that will not be reclassified to Standalone
Statement of Profit and Loss.

Securities premium

Securities premium account is used to record the premium on issue of shares. The reserve can be utilised in
accordance with the provisions of the Act.

Share options outstanding account

The Company has established equity-settled share-based payment plan for certain categories of employees of
the Company. Refer note 38 for further details.

Cash flow hedge reserve

This reserve comprises the effective portion of the cumulative net change in the fair value of the cash flow hedge
instruments related to hedged transactions that have not yet occurred.

Defined benefit obligation

Following is the movement of amounts recognised in other comprehensive income on account of defined
benefit obligation:

(b) DISTRIBUTION MADE AND PROPOSED DIVIDEND

Accounting policy

Dividend to equity shareholders is recognised as a liability in the period in which the dividends are approved by
the equity shareholders. Interim dividends that are declared by the Board of Directors without the need for equity
shareholders’ approvals are recognised as a liability and deducted from shareholders’ equity in the year in which
the dividends are declared by the Board of Directors.