1. CORPORATE INFORMATION

Zen Technologies Limited is a Public Limited Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The address of its corporate office is at B-42, Industrial Estate, Sanathnagar, Hyderabad-500018, Telangana, India. The Equity Shares of the Company are listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) in India.

The Company is principally engaged in design, development and manufacture of Training Simulators, Anti Drone Systems and operations for Para-military Forces, Armed Forces, Security Forces, Police and Government Departments. The Company caters to both domestic and international market. The Company's manufacturing unit is located at Hardware Park, Maheswaram Mandal, Telangana, India.

The standalone financial statements for the year ended 31 March 2025, were approved by the Board of Directors and authorised for issue on 17 May 2025.

2. MATERIAL ACCOUNTING POLICIES

(i) Statement of compliance & Basis for preparation

These standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (referred to as Ind AS) as notified under the Companies (Indian Accounting Standards Rules), 2015 read with Section 133 of the Companies Act, 2013 ("the Act") as amended from time to time.

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.

(ii) Functional and presentation currency

These standalone financial statements are presented in Indian Rupees (INR), which is also the Company's functional currency. All financial information presented in Indian rupees have been rounded-off to two decimal places to the nearest lakhs unless otherwise stated.

(iii) Basis of measurement

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

- Certain financial assets and liabilities: Measured at fair value

- Net defined benefit (asset)/liability: Fair value of plan assets less present value of defined benefit obligations

- Borrowings: Amortised cost using effective interest rate method

(iv) Use of estimates and judgements

The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates, judgments

and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and reported amounts of revenues and expenses during the period and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statement. Accounting estimates could change from period to period. Actual results could differ from those estimates.

Estimates and underlying assumptions are reviewed by the Management on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Judgements

Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the standalone financial statements is included in the following notes:

- Note 3(K): Lease classification.

- Note 3(K): Leases: whether an arrangement contains a lease and lease classification

Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes:

- Note 3(J): measurement of defined benefit obligations: key actuarial assumptions;

- Note 3(M): recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources;

- Note 3(I): impairment of financial assets;

- Note 7 & 3(L): Recoverability/recognition of deferred tax assets;

- Note 3(F): determining an asset's expected useful life and the expected residual value at the end of its life.

(v) Measurement of fair values

Accounting polices and disclosures require measurement of fair value for both financial and non-financial assets.

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. The 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 is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

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

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Further information about the assumptions made in the measuring fair values is included in the following notes:

- Note 42: Financial instruments

(vi) Current and non-current classification

The Schedule III to the Act requires assets and liabilities to be classified as either current or non-current. The Company presents assets and liabilities in the balance sheet based on current/non-current classification.

Assets

An asset is classified as current when:

- it is expected to be realised in, or is intended for sale or consumption in, the Company's normal operating cycle;

- it is expected to be realised within twelve months from the reporting date;

- it is held primarily for the purposes of being traded; or

- it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.

All other assets are classified as non current.

Liabilities

A liability is classified as current when:

- it expects to settle the liability in its normal operating cycle;

- it is due to be settled within twelve months from the reporting date;

- it is held primarily for the purposes of being traded;

- the Company does not have an unconditional right to defer settlement of liability for at least twelve months from the reporting date.

All other liabilities are classified as non-current.

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

Operating Cycle

Operating cycle is the time between the acquisition of assets for processing and realisation in cash or cash equivalents. The Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.

3. SUMMARY OF MATERIAL ACCOUNTING POLICY

A. Revenue from contracts with customers

Revenue from contracts with customers is recognised when the Company satisfies a performance obligation by transferring control of a promised good or service to the customer. Control is transferred when the customer has the ability to direct the use of and obtain substantially all of the benefits from the good or service.

Revenue from sale of products

Revenue from the sale of products is recognised at a point in time when control of the goods is transferred to the customer, which typically occurs upon delivery in accordance with the terms of the contract. The indicators for transfer of control include:

- the Company has transferred the physical possession of the product

- the customer has a legal title to the product

- the customer has accepted the product

- when the Company has a present right to payment for the product

- the significant risks and rewards of ownership of the product has been transferred to the customer.

Revenue is measured at the transaction price, which is the amount of consideration the Company expects to be entitled to in exchange for transferring goods or services.

Multiple performance obligations

In case where the contracts involve multiple performance obligations, the Company allocates the transaction price to each performance obligation on the relative stand-alone selling price basis. In case of a contract, where separate fee for Annual Maintenance Contracts (AMC) or any other separately identifiable component is not stipulated, the Company applies

the recognition criteria to separately identifiable components (sale of goods and AMC, etc.) of the transaction and allocates the revenue to those separate components based on standalone selling price.

In cases where the AMC or any other separately identifiable component is stipulated and price for the same agreed separately, the Company applies the recognition criteria to separately identified components (sale of goods and installation and commissioning, etc.) of the transaction and allocates the revenue to those separate components based on their standalone selling price.

If the stand-alone selling price is not available the Company estimates the stand alone selling price.

Revenue from rendering of services

As outlined above, in cases where contracts include multiple performance obligations, such as the sale of goods and Annual Maintenance Contracts (AMC), the transaction price is allocated to each component based on their relative standalone selling prices.

Revenue attributable to AMC services is recognised over time, as the customer simultaneously receives and consumes the benefits of the service throughout the contract period. The Company applies the output method to measure progress towards complete satisfaction of the performance obligation, as the passage of time provides a reliable basis for depicting the transfer of services to the customer.

Measurement of Trade Receivables

Trade receivables arising from such contracts are recognised at the transaction price as determined above, consistent with the Company's accounting policy on financial assets (refer Note 3(E) - Financial Instruments).

B. Recognition of other income

i) Interest income

Interest Income mainly comprises of interest on Margin money deposit relating to bank guarantee, Deposits against Bank Overdraft with banks and other fixed deposits.Interest income should be recorded using the effective interest rate (EIR). However, the amount of margin money deposits relating to bank guarantee and Over draft are purely current in nature, hence effective interest rate has not been applied. Interest is recognized using the time proportion method, based on rates implicit in the transactions.

ii) Export Incentives

The Company receives export incentives which do not fall under the scope of Ind AS 115 and are accounted for in accordance with the provisions of Ind AS 20 considering such incentives as Government Assistance. Accordingly government grant relating to Income is recognised on accrual basis when the relevant expense has been charged to statement of Profit and Loss.

iii) Other Income

Other income not specifically stated above is recognised on accrual basis.

Except for trade receivables that do not contain a significant financing component, financial assets are initially measured at fair value, plus, in the case of financial assets not at FVTPL, transaction costs directly attributable to their acquisition. Trade receivables are initially recognised at the transaction price as determined in accordance with the Company's revenue recognition policy (refer Note [A] - Revenue from Contracts with Customers).

ii) Classification and subsequent measurement

The subsequent measurement of financial assets depends on their classification, as follows:

(i) Financial Assets at Amortised Cost

Financial assets are measured at amortised cost if both of the following conditions are met:

(a) The asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

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

These assets are subsequently measured at amortised cost using the effective interest rate (EIR) method, less any impairment loss. Interest income and impairment are recognised in profit or loss.

(ii) Financial Assets Measured at Fair Value through Other Comprehensive Income (FVTOCI) - Debt Instruments

Financial assets are classified at FVTOCI when they are held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets, and the SPPI test is met.

Subsequent to initial recognition, these financial assets are measured at fair value, with changes in fair value recognised in other comprehensive income (OCI). Upon derecognition, the cumulative gain or loss recognised in OCI is reclassified to profit or loss.

(iii) Financial Assets Measured at Fair Value through Other Comprehensive Income (FVTOCI) - Equity Instruments

For equity investments not held for trading, the Company may make an irrevocable election at initial recognition to present changes in fair value in OCI. This election is made on an instrument-by-instrument basis.

Subsequent changes in fair value are recognised in OCI. Unlike debt instruments, there is no recycling of cumulative gains or losses to profit or loss on derecognition. Dividends from such investments are recognised in profit or loss when the right to receive payment is established, provided they represent a return on investment and not a recovery of cost.

(iv) Financial Assets at Fair Value through Profit or Loss

(fvtpl)

Financial assets are classified as FVTPL if they:

(a) Do not meet the criteria for amortised cost or FVTOCI; or

(b) Are designated at FVTPL at initial recognition to eliminate an accounting mismatch.

Subsequent changes in fair value are recognised in profit or loss.

Reclassification

Financial assets are not reclassified subsequent to their initial recognition, except when the Company changes its business model for managing the assets. Any such reclassification is applied prospectively from the reclassification date; prior periods are not restated.

SPPI Test

The SPPI test is performed at the instrument level to determine whether the contractual cash flows represent solely payments of principal and interest. For this purpose, "interest" is defined as consideration for the time value of money, credit risk, and other basic lending risks and costs, along with a profit margin.

Business Model Assessment

The Company's business model refers to how financial assets are managed to generate cash flows—whether through collecting contractual cash flows, selling financial assets, or both. This assessment is determined at a portfolio level and reflects how groups of financial assets are collectively managed to achieve a specific business objective.

iii) De-recognition

A financial asset is derecognised when:

(a) The contractual rights to receive the cash flows from the asset have expired, or

(b) The Company has transferred its contractual rights to receive the cash flows from the asset, and either:

(i) it has transferred substantially all the risks and rewards of ownership of the asset; or

(ii) it has neither transferred nor retained substantially all the risks and rewards of ownership, but has relinquished control of the asset.

If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the asset continues to be recognised on the balance sheet.

Where the Company neither transfers nor retains substantially all the risks and rewards of ownership but retains control of the transferred asset, the asset is recognised to the extent of the Company's continuing involvement.

Financial Liabilities

i) Initial Recognition and measurement

Financial liabilities are classified at initial recognition as:

- Financial liabilities at fair value through profit or loss (FVTPL),

- Financial liabilities measured at amortised cost (e.g., loans and borrowings, trade and other payables), or

- Derivatives designated as hedging instruments in an effective hedge, where applicable.

All financial liabilities are initially recognised at fair value. In the case of financial liabilities measured at amortised cost, initial recognition includes transaction costs that are directly attributable to the issue. The Company's financial liabilities primarily include trade and other payables, loans and borrowings, including bank overdrafts.

ii) Subsequent measurement:

Subsequent to initial recognition, financial liabilities are measured as follows:

(a) Financial Liabilities at Fair Value through Profit or Loss (FVTPL)

This category includes:

- Financial liabilities held for trading (e.g., derivatives not designated as hedging instruments); and

- Financial liabilities designated as FVTPL at initial recognition to eliminate or significantly reduce an accounting mismatch.

Gains and losses on financial liabilities held for trading are recognised in the statement of profit and loss. For designated liabilities, changes in fair value attributable to the Company's own credit risk are recognised in OCI. These amounts are not subsequently reclassified to profit or loss. All other changes in fair value are recognised in profit or loss. The Company has not designated any financial liability as measured at FVTPL.

(b) Financial Liabilities at Amortised Cost

This category includes interest-bearing loans and borrowings that are subsequently measured using the effective interest rate (EIR) method. Gains and losses are recognised in profit or loss upon derecognition or through the amortisation process. Amortised cost is calculated by considering any premium or discount on acquisition and fees or costs that are an integral part of the EIR. The amortisation is recognised under finance costs in the statement of profit and loss.

iii) Derecognition

A financial liability is derecognised when the obligation under the liability is discharged, cancelled, or expires. If 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 accounted for as a derecognition of the original liability and recognition of a new one. The difference in the carrying amounts is recognised in profit or loss.

iv) Offsetting

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if there is a currently and legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

v) Compulsorily Convertible Debentures

Compulsorily Convertible Debentures are separated into liability and equity components based on the terms of the instrument in accordance with Ind AS 32. At initial recognition:

- The liability component is measured at the fair value of a comparable instrument without a conversion option and classified as a financial liability measured at amortised cost.

- The residual amount is allocated to the equity component and recognised in equity, provided it meets the "fixed-for-fixed" conversion criterion.

Transaction costs are allocated to liability and equity components in proportion to their respective initial carrying amounts. The conversion option is not remeasured subsequently.

vi) Reclassification of financial Instruments

The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. If the Company reclassifies financial assets, it applies the reclassification prospectively.

F. Property, plant and equipment

i) Recognition and initial measurement

Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses, if any. Historical cost includes:

- Purchase price (net of trade discounts and rebates),

- Import duties and non-refundable taxes,

- Directly attributable costs necessary to bring the asset to its intended working condition for its intended use, and

- Estimated costs of dismantling, removing the item, and restoring the site, where an obligation exists (measured at present value in accordance with Ind AS 37).

Freehold land is not depreciated and is carried at historical cost. Where significant components of an item of property, plant and equipment have different useful lives, they are accounted for separately. If an item of PPE is acquired on deferred credit terms (i.e. with a significant financing benefit), it is recognised at its cash price equivalent. The difference between the total payment and cash price is recognised as interest over the deferred period.

ii) Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost can be measured reliably. All other repairs and maintenance are charged to profit or loss as incurred. If a component accounted for separately is replaced, the carrying amount of the replaced component is derecognised.

iii) Depreciation

Depreciation is provided on a straight-line basis over the estimated useful lives of the respective assets. The useful lives are determined in accordance with the manner prescribed under Schedule II to the Companies Act, 2013. Depreciation is charged from the date the asset is available for use and is calculated on a pro-rata basis for assets acquired or disposed of during the year.

The Company, based on technical evaluation and management judgement, has determined useful lives for certain assets that are different from those prescribed in Schedule II. These useful lives reflect the period over which the assets are expected to be used and are reviewed at least annually. Depreciation is not provided on freehold land.

Depreciation on buildings constructed on leasehold land is charged over the shorter of the lease term or the estimated useful life of the building. For leasehold improvements, depreciation is charged over the shorter of the useful life, typically 10 years, or the lease term including expected renewals.

iv) Capital Work in Progress (CWIP) and Capital advances

Capital Work-in-Progress includes tangible assets that are under construction or development and are not yet ready for their intended use at the balance sheet date. These include expenditure incurred on assets that are in the course of construction, installation, testing, or commissioning. CWIP is carried at cost, which comprises:

- directly attributable acquisition and construction costs,

- borrowing costs eligible for capitalisation under Ind AS 23, and

- other expenses directly attributable to bringing the asset to its intended use.

No depreciation is charged on such assets until they are available for use. Once the asset is ready for its intended use, the accumulated cost is transferred to the appropriate category of property, plant and equipment and depreciation commences from the date the asset is available for use.

Advances paid towards the acquisition of property, plant and equipment outstanding at each reporting date is disclosed as capital advances under other non-current assets.

v) Impairment of assets

The Company assesses at each reporting date whether there is any indication that an asset, or a group of assets (cashgenerating unit), may be impaired in accordance with Ind AS 36. If such indication exists, the recoverable amount of the asset is estimated. An impairment loss is recognised when the carrying amount exceeds the recoverable amount. The recoverable amount is the higher of:

- Fair value less costs of disposal, and

- Value in use (present value of future expected cash flows).

Impairment losses are recognised in the Profit and Loss Account. Reversal of impairment losses is recognised only if there has been a change in the estimates used to determine the recoverable amount.

vi) Derecognition

An item of property, planty and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising on derecognition is recognised in the Profit and Loss Account in the period of derecognition. The gain or loss is measured as the difference between the net disposal proceeds and the carrying amount of the asset.

G. Intangible assets

i) Recognition and intial measurement

Intangible assets are recognised only if:

- it is probable that the expected future economic benefits attributable to the asset will flow to the Company, and

- the cost of the asset can be measured reliably.

Intangible assets that are acquired separately are initially measured at cost. The cost comprises the purchase price and any directly attributable cost of preparing the asset for its intended use. Internally generated intangible assets, including research costs, are expensed as incurred, except for development costs which are capitalised if the recognition criteria under Ind AS 38 are met.

ii) Subsequent measurement

After initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Subsequent expenditure is capitalised only when it enhances the future economic benefits embodied in the specific asset. All other expenditure is expensed as incurred.

iii) Amortisation

Amortisation of intangible assets is recognised in the Profit and Loss Account on a straight-line basis over the asset's estimated useful life. The method and useful life are reviewed at each financial year-end and adjusted if necessary.

The estimated useful lives are as follows:

- Software - 3 years

Amortisation begins when the asset is available for use and continues until the asset is derecognised or fully amortised, whichever is earlier.

iv) Derecognition

An intangible asset is derecognised on disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset is recognised in the Profit and Loss account in the period the asset is derecognised.

H. Inventories

Inventories consist of raw materials, stores and spares, work-inprogress, and finished goods, and are measured at the lower of cost or net realisable value. However, raw materials that are used in the production process are not written down below cost if the finished goods resulting from their use are expected to be sold at or above cost.

The cost of all categories of inventories is determined using the weighted average method. Cost includes expenditures incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing the inventories to their existing location and condition. In the case of finished goods and work-in-progress, cost includes an appropriate share of overheads, allocated based on normal operating capacity.

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.

I. Impairment of assets

i) Impairment of financial instruments

The Company recognises loss allowances for expected credit losses (ECLs) on financial assets measured at amortised cost, including trade receivables, in accordance with Ind AS 109 -Financial Instruments. At each reporting date, the Company assesses whether a financial asset is credit-impaired, which is defined as a situation where one or more events have a detrimental impact on the estimated future cash flows of the asset.

Objective evidence of credit impairment includes:

- significant financial difficulty of the borrower or issuer,

- breach of contract (e.g., default or delay in payments),

- high probability of bankruptcy or financial reorganisation of the borrower,

- disappearance of an active market due to financial distress."

ECL measurement

The Company measures expected credit losses (ECLs) on financial assets based on the extent of credit risk at the reporting date. For trade receivables, the Company always recognises loss allowances based on lifetime expected credit losses. This approach does not require tracking changes in credit risk after initial recognition. For other financial assets measured at amortised cost, the Company assesses credit risk at each reporting date and recognises loss allowances based on either:

- 12-month expected credit losses, if there has not been a significant increase in credit risk since initial recognition, or

- Lifetime expected credit losses, if credit risk has increased significantly or if the asset is credit-impaired.

The Company evaluates whether credit risk has increased significantly using reasonable and supportable information,

including forward-looking indicators, historic loss patterns, and internal risk ratings.

Measurement of expected credit losses

ECLs are probability-weighted estimates of credit losses, calculated as the present value of expected shortfalls between contractual cash flows and those the Company expects to receive.

Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company's procedures for recovery of amounts due.

Presentation in the balance sheet

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

ii) Impairment of non-financial assets

The Company's non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.

The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company's CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year. To estimate cash flow projections beyond periods covered by the most recent budgets/forecasts, the Company extrapolates cash flow projections in the budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the long-term average growth rate for the products, industries, or country or countries in which the Company operates, or for the market in which the asset is used.

The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU (or the asset).

The Company's corporate assets (e.g., central office building for providing support to various CGUs) do not generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is determined for the CGUs to which the corporate asset belongs.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit and loss.

In respect of assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss has been recognised.

J. Employee benefits

(i) Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting period and are measured on an undiscounted basis at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.

(ii) Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions towards Government administered provident fund scheme and other funds. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in statement of profit and loss in the periods during which the related services are rendered by employees.

(iii) Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The liability or asset recognised in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by a qualified actuary using the projected unit credit method.

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

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

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

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.

(iv) Termination Benefits

Termination benefits are recognized as an expense when the Company is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognized as an expense if the Company has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.

(v) Other long-term employee benefits

The Company's net obligation in respect of other long term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and previous periods. That benefit is discounted to determine its present value. Re-measurements are recognized in the statement of profit and loss in the period in which they arise.

(vi) Employee Share Based Payments Equity Settled Transactions

The Company provides share-based payment benefits to employees through stock option plans governed by employee stock option schemes.

Equity-settled share-based payments are accounted for in accordance with Ind AS 102 - Share-Based Payment. The fair value of stock options granted is determined on the grant date using an appropriate option pricing model (such as the Black-Scholes model) and is recognised as an employee benefit expense in the Statement of Profit and Loss over the vesting period, with a corresponding credit to Share-Based Payment Reserve under equity.

The expense is recognised based on the Company's estimate of the number of equity instruments that will ultimately vest. This estimate is revised at each reporting date, and any impact of the revision is recognised in the Statement of Profit and Loss, with a corresponding adjustment to equity.

If the terms of an equity-settled award are modified, the incremental fair value, if any, is recognised over the remaining vesting period. In case of forfeiture (i.e., if the employee leaves before vesting), the cumulative expense recognised is reversed in the Statement of Profit and Loss. If the options lapse or expire unexercised after vesting, the corresponding balance in Share-Based Payment Reserve is transferred within equity (e.g., to Retained Earnings or General Reserve).

ESOP Trust and Treasury Shares

The Company has formed an Employee Welfare Trust (EWT) for providing share-based payment to its employees. The Company uses EWT as a vehicle for distributing shares to employees under the Employee Stock Option Plan-2021. The EWT purchase shares of the Company from the secondary market, for giving shares to employees.

The Company treats EWT as its extension and shares held by EWT are treated as treasury shares. Own equity instruments that are re-acquired (treasury shares) are recognised at cost and deducted from other equity. No gain or loss is recognised on consolidation of the ESOP Trust in the Standalone statement of profit and loss of the Company on the purchase, sale, issue, or cancellation of the Company's own equity instruments. Share

options whenever exercised, would be settled from such treasury shares.

K. Leases

The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Company as a Lessor

Leases for which the Company is a lessor are classified as a finance or operating lease. When ever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. Rental income from operating leases are recognised on straight line basis over the term of relevant lease.

Company as a Lessee

The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

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 noncancellable period of a lease.

Right of use asset

The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or 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 assets 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. The estimated useful lives of right-of use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.

Lease Liability

The Company measures the lease liability at present value of the future lease payments at the commencement date of the lease.

In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable.. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. The Company recognises the amount of the re-measurement of lease liability due to modification as an adjustment to the right-of-use asset and statement of profit and loss depending upon the nature of modification. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss.

Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition exemption to its short-term leases of buildings, machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on shortterm leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

L. Income taxes

Taxes comprises Current Tax, Deferred tax and MAT credit. It is recognised in profit or loss except to the extent that it relates to an item recognised directly in equity or in other comprehensive income. The Company recognises interest levied and penalties relating to income tax assessments in interest expenses.

(i) Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.

Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretations and considers whether it is probable that a taxation authority will accept an uncertain tax treatment.

Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.

(ii) Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is not recognised for:

- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business

combination and that affects neither accounting nor taxable profit or loss at the time of the transaction; and

- temporary differences related to investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future;

Deferred tax assets are recognised for deductible temporary differences, the carry forwards of unused tax credits and unused tax losses. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, in case of a history of recent losses, the Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised. Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised/reduced to the extent that it is probable/no longer probable respectively that the related tax benefit will be realised.

Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(iii) Minimum Alternate Tax (MAT) Credit

Minimum alternate tax (MAT) credit is recognised in accordance with tax laws in India as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. The Company reviews the MAT credit at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.

M. Provision, contingent liabilities and

contingent assets

Provision

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure

required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised under finance costs. Expected future operating losses are not provided for. Provision in respect of loss contingencies relating to claims, litigations, assessments, fines and penalties are recognised when it is probable that a liability has been incurred and the amount can be estimated reliably.

Contingent liabilities and contingent assets

A contingent liability exists when there is a possible but not probable obligation, or a present obligation that may, but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably. Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote.

Contingent assets are not recognised in financial statement. However, when the realisation of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognised as an asset.

Contingent Liabilities/Assets to the extent the Management is aware, are disclosed by way of notes to the financial statements.

N. Government grants

Recognition and measurement

Grants & Subsidies received from the Governments are recognised only when there is reasonable assurance that:

a. The Company will comply with the conditions attached to the grant.

b. There is a reasonable certainty that the grant will be received.

Government grants related to assets are treated as deferred income and are recognized in net profit in the statement of Profit & Loss on a systematic and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic basis in net profit in the Statement of Profit & Loss over the periods necessary to match them with the related costs which they are intended to compensate.

When loans or similar assistance are provided by Governments or related institutions, with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as a Government grant. The loan or assistance is initially recognized and measured at fair value and the Government grant is measured as the difference between the fair value of the loan and the proceeds received. It is recognized as deferred income and released to statement of Profit & Loss in proportionate over the loan tenure and presented within other income. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.

O. Earnings per share

Basic Earnings Per Share ('EPS') is computed by dividing the net profit attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period excluding the treasury shares in accordance with Ind AS 33 Earnings per share.

Diluted earnings per share is computed by dividing the net profit by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless issued at a later date. In computing diluted earnings per share, only potential equity shares that are dilutive and that either reduces earnings per share or increases loss per share are included. The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for the share splits.

P. Statement of cash flow

Cash flows are reported using the indirect method, whereby net profit/(loss) before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from regular revenue generating (operating activities), investing and financing activities of the Company are segregated. The Company considers all highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value to be cash equivalents.

Q. Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes 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.

Bank overdrafts and Cash Credit that are repayable on demand and form an integral part of our cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Whereas they are classified as borrowings under current liabilities in the balance sheet.

R. Investments in subsidiaries and associates

In the standalone financial statements, investments in subsidiaries and associates are carried at cost, less any accumulated impairment losses.

These investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If such indications exist, the investments are tested for impairment in accordance with Ind AS 36 - Impairment of Assets. Any impairment loss is recognised in the Statement of Profit and Loss.

Upon disposal of an investment, the difference between the net disposal proceeds and the carrying amount of the investment is recognised in the Statement of Profit and Loss.

S. Research and development costs (product development):

Research expenditure is recognized as an expense when it is incurred. Development expenditure on an individual project are recognised as an intangible asset when the Company can demonstrate:

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

b) Its intention to complete and its ability and intention to use or sell the product.

c) How the asset will generate future economic benefits.

d) The availability of resources to complete the asset.

e) The ability to measure reliably the expenditure during development.

Expenditure on development which does not meet the criteria for recognition as an intangible asset is recognized as an expense when it is incurred.

Items of property, plant and equipment and acquired Intangible Assets utilized for Research and Development are capitalized and depreciated in accordance with the policies stated for Property, Plant and Equipment and Intangible Assets.

T. Events after reporting date

Where events occurring after the balance sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the balance sheet date of material size or nature are only disclosed.

U. Cash dividend to equity holders

The Company recognises a liability to make cash distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in other equity.

V. Errors and estimates

The Company revises it's accounting policies if the change is required due to a change in Ind AS or if the change will provide more relevant and reliable information to the users of the financial statements. Changes in accounting policies are applied retrospectively, unless it is impracticable to apply.

A change in an accounting estimate that results in changes in the carrying amounts of recognised assets or liabilities or to statement of profit and loss is applied prospectively in the period(s) of change.

X. Recent pronouncements

Ministry of Corporate Affairs ('MCA') notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31^st March, 2025, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.