2. Material accounting policies

2.1. Statement of compliance

These standalone financial statements of the Company have been prepared in accordance with Indian Accounting
Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended for rules
issued thereafter, the provisions of the Companies Act, 2013 (“the Act") and guidelines issued by the Securities and
Exchange Board of India.

Accounting policies have been consistently applied except where a newly issued accounting standard is initially
adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
Further, in accordance with the amendments to the Companies (Indian Accounting Standards) Rules, 2023, the
company has disclosed material accounting policies as against the significant accounting policies. Considering the
nature of transactions and business operation of the Company, accounting policies related to discontinued
operations, investment property and share capital are not forming part of material accounting policies.

2.2. Basis of preparation and presentation

These standalone financial statements have been prepared on the historical cost convention and on accrual basis
except for the following assets and liabilities which have been measured at fair value:

i. Certain financial assets and liabilities (including derivative instruments);

ii. Defined benefit plans - plan assets;

iii. Equity Settled Share based payments;

iv. Assets held for sale

The financial statements are in accordance with Division II of Schedule III to the Act, as applicable to the Company.

2.3. Current and non-current classification

All assets and liabilities are presented in the Balance Sheet based on current or non-current classification as per
Company's normal operating cycle and other criteria set out in the Division II of Schedule III of the Act.

Based on the nature of products and the time between the acquisition of assets for processing and their realisation,
the Company has ascertained its operating cycle as twelve months for the purpose of current / non-current
classification of assets and liabilities.

2.4. Functional currency and presentation of currency

Items included in the financial statements of the Company are measured using the currency of the primary economic
environment in which the Company operates ('the functional currency'). The financial statements are presented in
Indian Rupee, which is the Company's functional and presentation currency. All amounts are rounded off to the
nearest rupees in crores.

2.5. Use of significant accounting estimates, judgements and assumptions

The preparation of the financial statements requires the management to make estimates, judgements and
assumptions that affect the application of accounting policies and the reported balances of assets and liabilities,
disclosure of contingent assets and liabilities as on the date of financial statements and reported amounts of income
and expenses during the period. Accounting estimates could change from period to period. Actual results could differ
from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in
circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period
in which changes are made and, if material, their effects are disclosed in the notes to the financial statements. The
application of accounting policies that require critical accounting estimates involving complex and subjective
judgments and the use of assumptions in these financial statements have been disclosed below:

i) Estimation of useful life of Property, plant and equipment (refer note no. 2.8 and 3)

ii) Impairment of Property, plant and equipment and Capital work-in-progress (refer note no. 2.11 and 3)

iii) Estimation of provisions and contingent liabilities (refer note no. 2.16, 21,28, 36, 37 and 38, 39)

iv) Estimation of defined benefit plan and other long-term benefits (refer note no. 2.17, 21,28 and 45)

v) Fair value measurement and impairment of financial instruments (refer note no. 2.26 and 53)

vi) Recognition of“Right of use" of assets as per the requirement of I nd AS 116. (refer note no. 2.14, 4, 20, 47)

2.6. Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the
revenue can be reliably measured. Revenue is recognised on satisfaction of performance obligation as per contract
and upon transfer of control of products to customers.

Revenue is measured at the transaction price that is allocated to that performance obligation. Amounts disclosed as
revenue are net of indirect taxes, discounts, rebates, expiry claims and sales returns.

Income from services including commission income, product development revenue and licence fees income is
recognised when the services are rendered or when contracted milestones have been achieved and is recorded net of
indirect taxes.

Export benefits are recognised as income when right to receive credit as per the terms of the scheme is established in
respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the
relevant export proceeds.

Interest income on financial assets is recognised using the effective interest rate.

Dividend income is recognised when the Company's right to receive the payment is established, it is probable that the
economic benefits associated with the dividend will flow to the Company and the amount of dividend can be
measured reliably.

Revenue includes commission recognised on guarantee / corporate guarantee given to banks on behalf of the
subsidiaries of the Company.

2.7. Taxes

I ncome Tax expenses for the year comprises of current tax, deferred tax charge or credit and adjustments of taxes for
earlier years that may become necessary due to certain developments or reviews during the relevant period. In
respect of amounts adjusted outside the statement of profit or loss (i.e. in other comprehensive income or equity), the
corresponding tax effect, if any, is also adjusted in other comprehensive income or in equity and not in the statement
of profit and loss.

Current tax

Provision for current tax is made as per the provisions of Income Tax Act, 1961. Management periodically evaluates
positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to
interpretation and establishes provisions where applicable.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised
amounts and there is an intention to settle the asset and the liability on a net basis.

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 liabilities are
recognised for all taxable temporary differences, and deferred tax assets are recognised for all deductible temporary
differences, carry forward tax losses and allowances to the extent that it is probable that future taxable profits will be
available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised.
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. The effect of changes in tax rates on deferred income tax assets and liabilities is recognised as
income or expense in the period that includes the enactment or the substantive enactment date.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate to the same taxation authority.

Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available
against which such deferred tax assets can be utilized. In situations where the Company has unused tax losses and
unused tax credits, deferred tax assets are recognised only if it is probable that they can be utilized against future
taxable profits. Deferred tax assets are reviewed for the appropriateness of their respective carrying amounts at each
Balance Sheet date.

At each reporting date, the Company re-assesses unrecognised deferred tax assets. It recognises previously
unrecognised deferred tax assets to the extent that it has become probable that future taxable profit allows deferred
tax assets to be recovered.

2.8. Property, plant and equipment (tangible assets) and depreciation

Property, plant and equipment are stated at cost of acquisition less accumulated depreciation and accumulated
impairment losses, if any. Gross carrying amount of all property, plant and equipment are measured using cost model.
Cost of an item of property, plant and equipment includes purchase price including non - refundable taxes and duties,
borrowing cost directly attributable to the qualifying asset, any costs directly attributable to bringing the asset to the
location and condition necessary for its intended use and the present value of the expected cost for the dismantling /
decommissioning of the asset.

Cost for subsequent additions comprises the purchase price and any other attributable cost of bringing the asset to its
working condition for its intended use. Subsequent expenditures are added to its gross book value only if it increases
the future benefits from the existing asset beyond its previously assessed standard of performance.

The Company identifies and determines cost of each component / part of the plant and equipment separately, if the
component / part has a cost which is significant to the total cost of the plant and equipment and has useful life that is
materially different from that of the remaining plant and equipment.

Pre-operation expenses and trial runs (net of revenue) and borrowing cost directly attributable to the cost of
construction of the qualifying asset are treated as part of the project cost and are capitalized / allocated to the cost of
asset in the year in which the project is completed. Administrative and other expenses which are not directly related to
construction are charged to statement of profit and loss.

Gains or losses arising from de-recognition of tangible property, plant and equipment are recognised in the
statement of profit and loss.

During the year ended 31st March 2024, the Company had changed its method of depreciation to straight- line
method for all the class of assets which were previously being depreciated on written down value method. This
change was made to align the method of depreciation with that of its Parent Company.

Consequent to this change, depreciation is provided on all assets (other than free hold land and capital work-in¬
progress), on pro-rata basis, using Straight-Line method based on the respective estimate of useful lives.

The management believes that useful lives currently used is as prescribed under Part C of Schedule II to the
Companies Act, 2013, fairly reflect its estimate of the useful lives and residual values of property, plant and equipment.
Estimated useful lives of Property, plant and equipment are as follows:

The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting
period, with the effect of any changes in estimates accounted for on a prospective basis.

Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date is
classified as capital advances under ''Other non-current assets". Cost of assets under construction / acquisition / not
put to use at the Balance sheet date are disclosed under ''Capital work-in-progress".

2.9. Intangible assets and amortisation

Intangible assets acquired separately are measured at cost of acquisition. Following initial recognition, intangible
assets are carried at cost less accumulated amortization and impairment losses, if any. Intangible assets comprise
computer software/ licenses [other than standalone software / licenses] which are fully amortised during the year of
capitalisation. The estimated useful life of intangible assets is reviewed at the end of each reporting period and
change in estimates if any are accounted for on a prospective basis.

Other standalone software / licenses cost are fully charged off to statement of profit and loss in the year of
expenditure. These software /licenses are for administrative purposes.

The management has estimated the economic useful life for intangible assets as follows:

2.10.Non-Current assets / liabilities held for sale

Non-current assets / liabilities are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use and a sale is considered highly probable. They are
measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax
assets, assets arising from employee benefits and financial assets which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value
less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal
group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously
recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of de¬
recognition.

Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are
classified as held for sale.

Non-current assets and liabilities classified as held for sale are presented separately from the other assets and
liabilities in the balance sheet.

2.11.Impairment of non-financial assets

The carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on
internal / external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount is the higher of a) fair value of assets less cost of disposal and b) its value
in use. Value in use is the present value of future cash flows expected to derive from an asset or Cash-Generating Unit
(CGU).

Based on the assessment done at each balance sheet date, recognised impairment loss is further provided or reversed
depending on changes in circumstances. After recognition of impairment loss or reversal of impairment loss as
applicable, the depreciation charge for the asset is adjusted in future periods to allocate the asset's revised carrying
amount, less its residual value (if any), on a systematic basis over its remaining useful life. If the conditions leading to
recognition of impairment losses no longer exist or have decreased, impairment losses recognised are reversed to the
extent it does not exceed the carrying amount that would have been determined after considering depreciation /
amortisation had no impairment loss been recognised in earlier years.

2.12. Research and development expenditure

Revenue expenditure pertaining to research is charged to the statement of profit and loss. Development costs of
products are also charged to the statement of profit and loss unless a product's technical feasibility has been
established, in which case such expenditure is capitalized.

Development expenditures on an individual project are recognised as an intangible asset when the Company can
demonstrate:

• The technical feasibility of completing the intangible asset so that the asset will be available for use or sale.

• Its intention to complete and its ability and intention to use or sell the asset.

• How the asset will generate future economic benefits.

• The availability of resources to complete the asset.

• The ability to measure reliably the expenditure during development.

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 policies
stated for Property, plant and equipment and depreciation.

2.13. Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the
transaction. As at the Balance Sheet date, foreign currency monetary items are translated at closing exchange rate.
Exchange difference arising on settlement or translation of foreign currency monetary items are recognised as
income or expense in the year in which they arise.

Foreign currency non-monetary items which are carried at historical cost are reported using the exchange rate at the
date of transaction. Foreign currency non-monetary items which are measured at fair value are reported using the
exchange rate at the date when the fair value is determined. Exchange difference arising on fair valuation of non¬
monetary items is recognised in line with the gain or loss of item that give rise to such exchange difference (i.e.
translation differences on items whose gain or loss is recognised in statement of profit and loss or other
comprehensive income is also recognised in statement of profit and loss or other comprehensive income
respectively).

2.14. Leases

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. The Company has elected not to recognise right of use assets and lease liabilities for leases of low-value
assets and short-term leases. The Company recognises the lease payments associated with these leases as an expense
on a straight-line basis over the lease term.

At commencement or on modification of a contract that contains a lease component, the Company allocates the
consideration in the contract to each lease and non-lease component on the basis of their relative stand-alone prices.
The Company recognises a right of use asset and a lease liability at the lease commencement date. The right of use
asset is initially measured at cost, which comprises of the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date net of lease incentive received, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or
the site on which it is located.

The right of use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment
losses, if any and adjusted for any remeasurement of the lease liability. The right of use asset is depreciated using the
straight-line method from the commencement date over the shorter of lease term or useful life of right of use asset
unless the lease transfers ownership of the underlying asset to the Company by the end of the lease term or the cost of
the right of use asset reflects that the Company will exercise a purchase option. In that case the right of use asset will be
depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property,
plant and equipment. The estimated useful lives of right of use assets are determined on the same basis as those of
property, plant and equipment.

The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Company's incremental borrowing rate. The lease liability is measured at amortised cost using the
effective interest method. Lease liabilities are remeasured with a corresponding adjustment to the related right of use
asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease
term (including anticipated renewals) and the applicable discount rate. The Company determines the lease term as
the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the
Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the
Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to
exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and
circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to
exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non¬
cancellable period of a lease.

2.15. Inventories

Inventories consists of raw materials, packing materials, stores and spares, stock-in-trade, work-in-progress and
finished goods. Inventories of raw material, packing material and stores and spares are valued at cost and other
inventories are valued at lower of cost and net realisable value after providing for obsolete / slow moving items. Cost is
determined on weighted average basis.

Cost includes cost of purchase, non-refundable taxes and other costs / overheads incurred in bringing the inventories
to their present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and
estimated costs necessary to make the sale. However, materials and other items held for use in the production of inventories
are not written down below cost if the finished products in which they will be used are expected to be sold at or above cost.