HPL Electric & Power Ltd. कंपली की लेखा नीति

Mar 31, 2025

SIGNIFICANT ACCOUNTING POLICIES

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

A) Basis of Preparation

i) Compliance with Ind AS

The financial statements have been prepared on accrual
and going concern basis and comply in all material aspects
with Indian Accounting Standards (Ind AS) notified
under Section 133 of the Companies Act, 2013 (the Act)
[Companies (Indian Accounting Standards) Rules, 2015]
and other relevant provisions of the Act.

ii) Historical cost convention

The financial statements have been prepared on a historical
cost basis, except for certain financial assets and liabilities
that are measured at fair value.

B) Property plant and equipment

Freehold land is carried at cost. All other items of property, plant
and equipment are stated at cost less accumulated depreciation
and accumulated impairment, if any. The cost comprises of
purchase price, taxes, duties, freight and other incidental
expenses directly attributable and related to acquisition and
installation of the concerned assets and are further adjusted

by the amount of CENVAT /GST/VAT credit availed wherever
applicable. The present value of the expected cost for the
decommissioning of an asset after its use is included in the cost
of the respective asset if the recognition criteria for a provision
are met.

Subsequent 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 any component
accounted for as a separate asset is derecognised when
replaced. All other repairs and maintenance are charged to
profit or loss during the reporting period in which they are
incurred.

Depreciation methods, estimated useful lives and residual
value

Depreciation on buildings, machinery and equipments has been
provided on straight-line basis over the estimated useful lives
of the respective assets. Intangible assets are amortised over
their estimated useful economic lives on straight line basis.
Freehold land and work in progress are not depreciated. The
estimated useful lives considered for providing depreciation on
other substantial assets are as follows:

Building- 35-45 years

Plant & Machinery-15-25 years

Computers-3-5 years

Furniture & Fixtures-10-15 years

Office Equipments-5-10 years

Vehicles-8-10 years

The residual values, useful lives and methods of depreciation of
property, plant and equipment are reviewed at each financial
year end and adjusted prospectively, if appropriate.

C) Intangible assets

Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible
assets are carried at costless accumulated amortization and
accumulated impairment losses, if any. Internally generated
intangibles, excluding capitalized development cost, are
not capitalized and the related expenditure is reflected
in Statement of Profit and Loss in the period in which the
expenditure is incurred. Cost comprises the purchase price
and any attributable cost of bringing the asset to its working
condition for its intended use.

Research and development cost

expenditure and development expenditure that do not meet
the criteria as given in Ind AS-38 “Intangible Assets” are
recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised as an
asset in a subsequent period.

Amortisation methods and periods

The Company amortises intangible assets with a finite useful
life using the straight-line method over their estimated useful
life of 3-6 years.

The amortization period and the amortization method for an
intangible asset with a finite useful life is 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 is accounted for by changing
the amortization period or method, as appropriate and are
treated as changes in accounting estimates. The amortization
expense on intangible assets with finite lives is recognised in
the Statement of Profit and Loss.

Gains or losses arising from disposal of the intangible assets are
measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognised in the
Statement of Profit and Loss when the assets are disposed off.

D) Impairment of non-financial assets

The carrying amounts of the assets are reviewed at each
Balance sheet date for any indication of impairment based
on internal/external factors. If any such 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. Where 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.

In assessing value in use, the estimated future cash flows are
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 asset. In determining fair
value less costs of disposal, recent market transactions are
taken into account, if available. If no such transactions can
be identified, an appropriate valuation model is used. After
impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.

Impairment losses including impairment on inventories are
recognised in the Statement of Profit and Loss.

E) Financial Instruments
i) Financial Assets

A) Initial recognition and measurement

All financial assets and liabilities are initially
recognised at fair value. Transaction costs that are
directly attributable to the acquisition or issue of
financial assets and financial liabilities, which are not
at fair value through profit or loss, are adjusted to the
fair value on initial recognition.

B) Subsequent measurement

a) Financial assets carried at amortised cost

A financial asset is measured at amortised cost if
it is held within a business model whose objective
is to hold the asset in order to collect contractual
cash flows and the contractual terms of the
financial asset give rise on specified dates to cash
flows that are solely payments of principal and
interest on the principal amount outstanding.

b) Financial assets carried at fair value through
other comprehensive income (FVTOCI)

A financial asset is measured at FVTOCI if it is
held within a business model whose objective is
achieved by both collecting contractual cash flows
and selling financial assets and the contractual
terms of the financial asset give rise on specified
dates to cash flows that are solely payments of
principal and interest on the principal amount
outstanding.

c) Financial assets carried at fair value through
profit or loss (FVTPL)

A financial asset which is not classified in any of
the above categories are measured at FVTPL.

C) Investment in subsidiaries

The investment in subsidiary and Joint venture are
carried at cost as per IND AS 27. The Company
regardless of the nature of its involvement with an
entity (the investee), determines whether it is a parent
by assessing whether it controls the investee. The
Company controls an investee when it is exposed, or
has rights, to variable returns from its involvement
with the investee and has the ability to affect those
returns through its power over the investee. Thus, the
Company controls an investee if and only if it has all
the following:

(a) power over the investee;

(b) exposure, or rights, to variable returns from its
involvement with the investee and

(c) Investments are accounted in accordance with
IND AS 105 when they are classified as held for
sale. On disposal of investment, the difference
between its carrying amount and net disposal
proceeds is charged or credited to the statement
of profit and loss

(d) Investments are accounted in accordance with
IND AS 105 when they are classified as held for
sale. On disposal of investment, the difference
between its carrying amount and net disposal
proceeds is charged or credited to the statement
of profit and loss

D) Other Equity Investments

All other equity investments are measured at fair value
with changes in fair value recognised in statement of
profit and loss except for those equity investments for
which the Company has elected to present the value
changes in ''Other Comprehensive Income.

E) Impairment of financial assets

In accordance with Ind AS 109, the Company uses
''Expected Credit Loss'' (ECL) model, for evaluating
impairment of financial assets other than those
measured at fair value through profit and loss (FVTPL).

Expected credit losses are measured through a loss
allowance at an amount equal to:

• The 12 months expected credit losses(expected
credit losses that result from those default events
on the financial instrument that are possible
within 12 months after the reporting date; or

• Full lifetime expected credit losses (expected
credit losses that result from all possible default
events over the life of the financial instrument).

For trade receivables Company applies ''simplified
approach'' which requires expected lifetime losses
to be recognised from initial recognition of the
receivables. The Company uses historical default rates
to determine impairment loss on the portfolio of trade
receivables. At every reporting date these historical
default rates are reviewed and changes in the forward
looking estimates are analysed.

For other assets, the Company uses 12 month ECL
to provide for impairment loss where there is no
significant increase in credit risk. If there is significant
increase in credit risk full lifetime ECL is used.

ii) Financial Liabilities

A) Initial recognition and measurement

All financial liabilities are recognised at fair value
and in case of loans net of directly attributable cost.
Fees of recurring nature are directly recognised in the
Statement of Profit and Loss as finance cost.

B) Subsequent measurement

Financial liabilities are carried at amortised cost using
the effective interest rate method (EIR). 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
as finance costs in the Statement of Profit and Loss.
For trade and other payables maturing within one year
from the balance sheet date, the carrying amounts
approximate fair value due to the short maturity of
these instruments.

F) Income recognition
Interest income

Interest income from debt instruments is recognised using the
effective interest rate method. The effective interest rate is
the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to the gross
carrying amount of a financial asset. When calculating the
effective interest rate, the Company estimates the expected
cash flows by considering all the contractual terms of the
financial instrument (for example, prepayment, extension, call
and similar options) but does not consider the expected credit
losses.

Dividends

Dividends are recognised in profit or loss only when the right to
receive payment is established, it is probable that the economic
benefits associated with the dividend will flow to the Company,
and the amount of the dividend can be measured reliably.

G) Inventories

Raw materials and stores, work in progress, traded and finished
goods are stated at the lower of cost and net realisable value.
Cost of raw materials and traded goods 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 are assigned to individual items of inventory on the basis
of weighted average cost basis. 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.

H) Revenue Recognition

Effective April 1, 2018, the Company has applied Ind AS 115
which establishes a comprehensive framework for determining
whether, how much and when revenue is to be recognised. Ind
AS 115 replaces Ind AS 18 Revenue and Ind AS 11 Construction
Contracts. The Company has adopted Ind AS 115 using the
cumulative effect method. The effect of initially applying this
standard is recognised at the date of initial application (i.e.
April 1, 2018). The standard is applied retrospectively only
to contracts that are not completed as at the date of initial
application and the comparative information in the statement of
profit and loss is not restated - i.e. the comparative information
continues to be reported under Ind AS 18 and Ind AS 11. The
impact of adoption of the standard on the financial statements
of the Company is insignificant.

Revenue is recognised upon transfer of control of promised
products or services to customer in an amount that reflects
the consideration which the Company expects to receive in
exchange for those products or services, which is usually at the
time of delivery of products or services to the customer. Revenue
from sale of product is measured at fair value of consideration

received /receivable, net of returns, trade allowances, rebates,
value added taxes, Goods and Service Tax (GST) and amounts
collected on behalf of third parties. Revenue is recognised
when it is probable that economic benefits associated with
the transaction will flow to the entity, amount of revenue can
be measured reliably and entity retains neither continuing
managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold.

Contract assets are recognised when there is excess of revenue
earned over billings on contracts. Contract assets are classified
as unbilled receivables (only act of invoicing is pending) when
there is unconditional right to receive cash, and only passage of
time is required, as per contractual terms.

I) Contract Balances

A contract asset is the right to consideration in exchange for
goods or services transferred to the customer. If the Company
performs by transferring goods or services to a customer
before the customer pays consideration or before payment is
due, a contract asset is recognised for the earned consideration
that is conditional. A receivable represents the Company''s right
to an amount of consideration that is unconditional.

A contract liability is the obligation to transfer goods or
services to a customer for which the Company has received
consideration (or an amount of consideration is due) from the
customer. If a customer pays consideration before the Company
transfers goods or services to the customer, a contract liability
is recognised when the payment is made or the payment is
due (whichever is earlier). Contract liabilities are recognised as
revenue when the Company performs under the contract.

A trade receivable is recognised if an amount of consideration
that is unconditional (i.e., only the passage of time is required
before payment of the consideration is due). Refer to accounting
policies of financial assets in section (Financial instruments -
initial recognition and subsequent measurement).

J) Employee Benefits

(i) Short-term obligations

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 at the amounts expected to be paid
when the liabilities are settled.

(ii) Post-Employment Benefits

Defined Contribution Plan: A defined contribution plan is a
post-employment benefit plan under which the Company
pays specified contributions to a separately entity. The
Company has defined contribution plans for the post¬
employment benefits namely provident fund scheme. The
Company''s contribution in the above plans is recognised as
an expense in the Statement of Profit and Loss during the
year in which the employee renders the related service.

Defined Benefit Plans: The Company has defined benefit
plan namely Gratuity for employees. The liability in respect
of gratuity plans is calculated annually by independent
actuary using the projected unit credit method. The

Company recognises the following changes in the net
defined benefit obligation under Employee benefits
expense in statement of profit or loss:

• Service costs comprising current service costs, past service
costs , gains and losses on curtailment and non-routine-
settlements

• Net Interest expense

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. Remeasurements are not
reclassified to profit or loss in subsequent periods.

Termination benefits are recognized as an expense
immediately.

K) Borrowing Cost

General and specific borrowing costs that are directly
attributable to the acquisition, construction or production of
a qualifying asset are capitalised during the period of time that
is required to complete and prepare the asset for its intended
use or sale. Qualifying assets are assets that necessarily take a
substantial period of time to get ready for their intended use or
sale.

Investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for
capitalisation.

Other borrowing costs are expensed in the period in which
they are incurred.

L) Income Tax

The income tax expense or credit for the period is the tax
payable on the current period''s taxable income based on the
applicable income tax rate adjusted by changes in deferred tax
assets and liabilities attributable to temporary differences and
to unused tax losses.

The current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the end of
the reporting period. Management periodically evaluates
positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the
financial statements. Deferred income tax is also not accounted
for if it arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time
of the transaction affects neither accounting profit nor taxable
profit (tax loss). Deferred income tax is determined using
tax rates (and laws) that have been enacted or substantially
enacted by the end of the reporting period and are expected to
apply when the related deferred income tax asset is realised or
the deferred income tax liability is settled.

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

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

Current and deferred tax is recognised in profit or loss, except
to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity, respectively.

M) Lease

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 lessee

The Company''s lease asset classes primarily comprise of lease
for land and building. The Company assesses whether a contract
contains a lease, at inception of a contract. 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. To assess whether a contract conveys the right
to control the use of an identified asset, the Company assesses
whether: (i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits
from use of the asset through the period of the lease and (iii)
the Company has the right to direct the use of the asset.

The Company applies a single recognition and measurement
approach for all leases, except for short-term leases and leases
of low-value assets. For these short-term and low value leases,
the Company recognizes the lease payments as an operating

expense on a straight-line basis over the term of the lease. The
Company recognises lease liabilities to make lease payments
and right-of-use assets representing the right to use the
underlying assets as below:

Right-of-use assets

The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the underlying
asset is available for use). Right-of-use assets are measured
at cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities.
The cost of right-of-use assets includes the amount of lease
liabilities recognised, initial direct costs incurred, and lease
payments made at or before the commencement date less any
lease incentives received. Right-of-use assets are depreciated
on a straight-line basis over the shorter of the lease term and
the estimated useful lives of the underlying assets (i.e. 30 and
60 years)

If ownership of the leased asset transfers to the Company at
the end of the lease term or the cost reflects the exercise of a

purchase option, depreciation is calculated using the estimated
useful life of the asset. The right-of-use assets are also subject
to impairment. Refer to the accounting policies in section
''Impairment of nonfinancial assets''.

Lease Liabilities

At the commencement date of the lease, the Company
recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease
payments include fixed payments (including in substance fixed
payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. The
lease payments also include the exercise price of a purchase
option reasonably certain to be exercised by the Company and
payments of penalties for terminating the lease, if the lease
term reflects the Company exercising the option to terminate.

Variable lease payments that do not depend on an index or
a rate are recognised as expenses (unless they are incurred
to produce inventories) in the period in which the event or
condition that triggers the payment occurs.

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. After the commencement
date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease payments
made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in the lease
term, a change in the lease payments (e.g., changes to future
payments resulting from a change in an index or rate used to
determine such lease payments) or a change in the assessment
of an option to purchase the underlying asset.

Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition
exemption to its short-term leases (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 that
are considered to be low value. Lease payments on short-term
leases and leases of low-value assets are recognised as expense
on a straight-line basis over the lease term.

Company as a lessor

Leases for which the Company is a lessor is classified as finance
or operating lease. Leases in which the Company does not
transfer substantially all the risks and rewards incidental to
ownership of an asset are classified as operating leases. Rental
income arising is accounted for on a straight-line basis over
the lease terms. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount
of the leased asset and recognised over the lease term on the
same basis as rental income. Contingent rents are recognised as
revenue in the period in which they are earned.

N) Foreign Currency Transactions

Items included in the financial statements of the Company
are measured using the currency of the primary economic
environment in which the entity operates (''the functional
currency''). The financial statements are presented in Indian

rupee (INR), which is the Company''s functional and presentation
currency.

Foreign currency transactions are translated into the functional
currency using the exchange rates at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates are generally recognised
in profit or loss.

O) Earnings Per Share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the Company

• by the weighted average number of equity shares
outstanding during the financial year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account:

• the after income tax effect of interest and other
financing costs associated with dilutive potential
equity shares, wherever applicable, and

• the weighted average number of additional equity
shares that would have been outstanding assuming
the conversion of all dilutive potential equity shares.

---

Mar 31, 2024

Note-1COMPANY OVERVIEW

HPL Electric & Power Limited (CIN : L74899DL1992PLC048945) (‘the Company'') is a limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956 having its registered office at 1/20, Asaf Ali Road, New Delhi. The Company is one of the leading players and India’s fastest growing electrical and power distribution equipment manufacturer with products ranging from Industrial and Domestic Circuit Protection Switchgears, Cables, Energy Saving Meters, LED Lamps and Luminaries for Domestic, Commercial and Industrial applications, Modular Switches covering the entire range of household, commercial and industrial electrical needs. The Company’s manufacturing facilities are located at 6 locations, 2 units at Gurgaon, 1 unit at village Bastara, Tehsil Gharaunda, Karnal, 1 unit at village Bhigan, Ganauar, Sonipat, 1 unit at Kundli in Haryana and 1 unit at village Shavela, Jabli in Himachal Pradesh.

The Company has R&D facilities located at Gurgaon and Kundli in Haryana, approved by Department of Scientific & Industrial Research (DSIR), Ministry of Science & Technology.

The Financial statements were approved by the Board of Directors for issue in accordance with resolution passed on May 15, 2024.

Note-2SIGNIFICANT ACCOUNTING POLICIES

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

A) Basis of Preparation

i) Compliance with Ind AS

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act)[Companies(Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

ii) Historical cost convention

The financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities that are measured at fair value.

B) Property plant and equipment

Freehold land is carried at cost. All other items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment, if any. The cost

comprises of purchase price, taxes, duties, freight and other incidental expenses directly attributable and related to acquisition and installation of the concerned assets and are further adjusted by the amount of CENVAT /GST/VAT credit availed wherever applicable. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.

Subsequent 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 any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Depreciation methods, estimated useful lives and residual value

Depreciation on buildings, machinery and equipments has been provided on straight-line basis over the estimated useful lives of the respective assets. Intangible assets are amortised over their estimated useful economic lives on straight line basis. Freehold land and work in progress are not depreciated. The estimated useful lives considered for providing depreciation on other substantial assets are as follows:

Building - 35-45 years

Plant & Machinery -15-25 years

Computers -3-5 years

Furniture & Fixtures -10-15 years

Office Equipments -5-10 years

Vehicles -8-10 years

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

C) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at costless accumulated amortization and accumulated impairment losses, if any. Internally generated intangibles, excluding capitalized development cost, are not capitalized and the related expenditure is reflected in Statement of Profit and Loss in the period in which the expenditure is incurred. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

Research and development cost

Expenditure and development expenditure that do not meet the criteria as given in Ind AS-38 “Intangible Assets” are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Amortisation methods and periods

The Company amortises intangible assets with a finite useful life using the straight-line method over their estimated useful life of 3-6 years.

The amortization period and the amortization method for an intangible asset with a finite useful life is 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 is accounted for by changing the amortization period or method, as appropriate and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognised in the Statement of Profit and Loss.

Gains or losses arising from disposal of the intangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the assets are disposed off.

D) Impairment of non-financial assets

The carrying amounts of the assets are reviewed at each Balance sheet date for any indication of impairment based on internal/external factors. If any such 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. Where 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.

In assessing value in use, the estimated future cash flows are 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 asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. After impairment, depreciation is provided on the revised carrying amount of the asset over

its remaining useful life.

Impairment losses including impairment on inventories are recognised in the Statement of Profit and Loss.

E) Financial Instruments

i) Financial Assets

A) Initial recognition and measurement

All financial assets and liabilities are initially recognised at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition.

B) Subsequent measurement

a) Financial assets carried at amortised cost

A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

b) Financial assets carried at fair value through other comprehensive income (FVTOCI)

A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

c) Financial assets carried at fair value through profit or loss (FVTPL)

A financial asset which is not classified in any of the above categories are measured at FVTPL.

C) Investment in subsidiaries

The investment in subsidiary and Joint venture are carried at cost as per IND AS 27. The Company regardless of the nature of its involvement with an entity (the investee), determines whether it is a parent by assessing whether it controls the

investee. The Company controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Thus, the Company controls an investee if and only if it has all the following:

(a) power over the investee;

(b) exposure, or rights, to variable returns from its involvement with the investee and

(c) Investments are accounted in accordance with IND AS 105 when they are classified as held for sale. On disposal of investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss

(d) Investments are accounted in accordance with IND AS 105 when they are classified as held for sale. On disposal of investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss

D) Other Equity Investments

All other equity investments are measured at fair value with changes in fair value recognised in statement of profit and loss except for those equity investments for which the Company has elected to present the value changes in ‘Other Comprehensive Income''.

E) Impairment of financial assets

In accordance with Ind AS 109, the Company uses ‘Expected Credit Loss'' (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).

Expected credit losses are measured through a loss allowance at an amount equal to:

• The 12 months expected credit losses(expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date; or

• Full lifetime expected credit losses (expected credit losses that result from all possible

default events over the life of the financial instrument).

For trade receivables Company applies ‘simplified approach'' which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed.

For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.

ii) Financial Liabilities

A) Initial recognition and measurement

All financial liabilities are recognised at fair value and in case of loans net of directly attributable cost. Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.

B) Subsequent measurement

Financial liabilities are carried at amortised cost using the effective interest rate method (EIR). 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 as finance costs in the Statement of Profit and Loss. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

F) Income recognition

Interest income

Interest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.

Dividends

Dividends are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.

G) Inventories

Raw materials and stores, work in progress, traded and finished goods are stated at the lower of cost and net realisable value. Cost of raw materials and traded goods 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 are assigned to individual items of inventory on the basis of weighted average cost basis. 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.

H) Revenue Recognition

Effective April 1, 2018, the Company has applied Ind AS 115 which establishes a comprehensive framework for determining whether, how much and when revenue is to be recognised. Ind AS 115 replaces Ind AS 18 Revenue and Ind AS 11 Construction Contracts. The Company has adopted Ind AS 115 using the cumulative effect method. The effect of initially applying this standard is recognised at the date of initial application (i.e. April 1, 2018). The standard is applied retrospectively only to contracts that are not completed as at the date of initial application and the comparative information in the statement of profit and loss is not restated - i.e. the comparative information continues to be reported under Ind AS 18 and Ind AS 11. The impact of adoption of the standard on the financial statements of the Company is insignificant.

Revenue is recognised upon transfer of control of promised products or services to customer in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services, which is usually at the time of delivery of products or services to the customer. Revenue from sale of product is measured at fair value of consideration received /receivable, net of returns, trade allowances, rebates, value added taxes, Goods and Service Tax (GST) and amounts collected on behalf of third parties. Revenue is recognised when it is probable that economic benefits associated with the transaction will flow to the entity, amount of revenue can be measured reliably and

entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.

Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.

I) Contract Balances

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. A receivable represents the Company''s right to an amount of consideration that is unconditional.

A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.

A trade receivable is recognised if an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section (Financial instruments - initial recognition and subsequent measurement).

J) Employee Benefits

(i) Short-term obligations

Liabilities for wages and salaries, including nonmonetary 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 at the amounts expected to be paid when the liabilities are settled.

(ii) Post-Employment Benefits

Defined Contribution Plan: A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions to a separately

entity. The Company has defined contribution plans for the post-employment benefits namely provident fund scheme. The Company''s contribution in the above plans is recognised as an expense in the Statement of Profit and Loss during the year in which the employee renders the related service.

Defined Benefit Plans: The Company has defined benefit plan namely Gratuity for employees. The liability in respect of gratuity plans is calculated annually by independent actuary using the projected unit credit method. The Company recognises the following changes in the net defined benefit obligation under Employee benefits expense in statement of profit or loss:

• Service costs comprising current service costs, past service costs , gains and losses on curtailment and non-routine-settlements

• Net Interest expense

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. Remeasurements are not reclassified to profit or loss in subsequent periods.

Termination benefits are recognized as an expense immediately.

K) Borrowing Cost

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

Other borrowing costs are expensed in the period in which they are incurred.

L) Income Tax

The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

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

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

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

M) Lease

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 lessee

The Company''s lease asset classes primarily comprise of lease for land and building. The Company assesses whether a contract contains a lease, at inception of a contract. 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. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.

The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets as below:

Right-of-use assets

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the underlying assets (i.e. 30 and 60 years)

If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. Refer to the accounting policies in section ‘Impairment of nonfinancial assets''.

Lease Liabilities

At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be

exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate.

Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

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. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition exemption to its short-term leases (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 that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

Company as a lessor

Leases for which the Company is a lessor is classified as finance or operating lease. Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

N) Foreign Currency Transactions

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency''). The financial statements are presented in Indian rupee (INR), which is the Company''s functional and presentation currency.

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss.

O) Earnings Per Share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the Company

• by the weighted average number of equity shares outstanding during the financial year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

• the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, wherever applicable, and

• the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

P) Provisions and Contingent liabilities

Provisions for legal claims, service warranties, volume discounts and returns are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

A contingent liability is possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain

future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases, where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but disclose its existence in the financial statements unless the probability of outflow of resource is remote.

Q) Other Operating Revenues

i) Government Grant

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.

Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.

Government grants relating to the purchase of property, plant and equipment are included in noncurrent liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and presented within other income.

ii) Export Benefit

Revenue from export benefits arising from Duty entitlement pass book (DEPB scheme), duty drawback scheme, merchandise export incentive scheme are recognised on export of goods in accordance with their respective underlying scheme at fair value of consideration received or receivable.

R) Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief operating decision maker (CODM). CODM monitors the operating results of all strategic business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit and loss and is measured consistently with profit and loss in the financial statements.

S) Contributed equity

Equity shares are classified as equity.

Incremental costs directly attributable to the issue of new

shares or options are shown in equity as a deduction, net of tax, from the proceeds.

T) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

U) 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, 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. Bank overdrafts are shown within borrowings in current liabilities in the Balance Sheet.

V) Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

W) Rounding of amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.

X) Changes in significant accounting policies

The Company has not been required to apply any new standard, interpretation or amendment that has been issued and therefore there were no significant changes in the accounting policies.

Y) Significant accounting judgements, estimates and assumptions

The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the assets or liabilities affected in future periods.

Judgements, Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

a) Defined benefit plan-Gratuity

The cost of defined benefit plans (i.e. Gratuity benefit) is determined using actuarial valuations. An actuarial valuation involves making various assumptions which may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. In determining the appropriate discount rate, management considers the interest rates of long term government bonds with extrapolated maturity corresponding to the expected duration of the defined benefit obligation. The mortality rate is based on publicly available mortality tables for the specific countries. Future salary increases and pension increases are based on expected future inflation rates for the respective countries. Further details about the assumptions used, including a sensitivity analysis, are given in Note 37.

b) Impairment of Financial assets

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

c) Warranty provision

Warranty Provisions are measured at discounted present value using pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the liability. Warranty provisions is determined based on the historical percentage of warranty expense to sales for the same types of goods for which the warranty is currently

being determined. The same percentage to the sales is applied for the current accounting period to derive the warranty expense to be accrued. It is adjusted to account for unusual factors related to the goods that were sold, such as defective inventory lying at the depots. It is very unlikely that actual warranty claims will exactly match the historical warranty percentage, so such estimates are reviewed annually for any material changes in assumptions and likelihood of occurrence.

d) Depreciation/amortisation and useful lives of property plant and equipment/intangible assets

Property, plant and equipment / Intangible assets are depreciated /amortised over their estimated useful lives, after taking into account estimated residual values. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation / amortisation

to be recorded during any reporting period. The useful lives and residual values are based on the Company''s historical experience with similar assets and take into account anticipated technological changes. The depreciation/amortisation for future period is revised if there are significant changes from previous estimates.

e) Provisions

Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgment to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.

---

Mar 31, 2023

SIGNIFICANT ACCOUNTING POLICIES

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

A) Basis of Preparation

i) Compliance with Ind AS

The financial statements comply in all material aspects
with Indian Accounting Standards (Ind AS) notified
under Section 133 of the Companies Act, 2013 (the Act)
[Companies(Indian Accounting Standards) Rules, 2015]
and other relevant provisions of the Act.

ii) Historical cost convention

The financial statements have been prepared on a historical
cost basis, except for certain financial assets and liabilities
that are measured at fair value.

B) Property plant and equipment

Freehold land is carried at cost. All other items of property, plant
and equipment are stated at cost less accumulated depreciation
and accumulated impairment, if any. The cost comprises of
purchase price, taxes, duties, freight and other incidental
expenses directly attributable and related to acquisition and
installation of the concerned assets and are further adjusted
by the amount of CENVAT /GST/VAT credit availed wherever

applicable. The present value of the expected cost for the
decommissioning of an asset after its use is included in the cost
of the respective asset if the recognition criteria for a provision
are met.

Subsequent 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 any component
accounted for as a separate asset is derecognised when
replaced. All other repairs and maintenance are charged to
profit or loss during the reporting period in which they are
incurred.

Depreciation methods, estimated useful lives and residual value

Depreciation on buildings, machinery and equipments has been
provided on straight-line basis over the estimated useful lives
of the respective assets. Intangibale assets are amortised over
their estimated useful economic lives on straight line basis.
Freehold land and work in progress are not depreciated. The
estimated useful lives considered for providing depreciation on
other substantial assets are as follows:

Building- 35-45 years

Plant & Machinery-15-25 years

Computers-3-5 years

Furniture & Fixtures-10-15 years

Office Equipments-5-10 years

Vehicles-8-10 years

The residual values, useful lives and methods of depreciation of
property, plant and equipment are reviewed at each financial
year end and adjusted prospectively, if appropriate.

C) Intangible assets

Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible
assets are carried at costless accumulated amortization and
accumulated impairment losses, if any. Internally generated
intangibles, excluding capitalized development cost, are
not capitalized and the related expenditure is reflected
in Statement of Profit and Loss in the period in which the
expenditure is incurred. Cost comprises the purchase price
and any attributable cost of bringing the asset to its working
condition for its intended use.

Research and development cost

expenditure and development expenditure that do not meet
the criteria as given in Ind AS-38 “Intangible Assets” are
recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised as an
asset in a subsequent period.

Amortisation methods and periods

The Company amortises intangible assets with a finite useful
life using the straight-line method over their estimated useful
life of 3-6 years.

The amortization period and the amortization method for an
intangible asset with a finite useful life is 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 is accounted for by changing
the amortization period or method, as appropriate and are
treated as changes in accounting estimates. The amortization
expense on intangible assets with finite lives is recognised in
the Statement of Profit and Loss.

Gains or losses arising from disposal of the intangible assets are
measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognised in the
Statement of Profit and Loss when the assets are disposed off.

D) Impairment of non-financial assets

The carrying amounts of the assets are reviewed at each
Balance sheet date for any indication of impairment based
on internal/external factors. If any such 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. Where 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.

In assessing value in use, the estimated future cash flows are
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 asset. In determining fair
value less costs of disposal, recent market transactions are
taken into account, if available. If no such transactions can
be identified, an appropriate valuation model is used. After
impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.

Impairment losses including impairment on inventories are
recognised in the Statement of Profit and Loss.

E) Financial Instruments
i) Financial Assets

A) Initial recognition and measurement

All financial assets and liabilities are initially
recognised at fair value. Transaction costs that are
directly attributable to the acquisition or issue of
financial assets and financial liabilities, which are not
at fair value through profit or loss, are adjusted to the
fair value on initial recognition.

B) Subsequent measurement

a) Financial assets carried at amortised cost

A financial asset is measured at amortised cost if
it is held within a business model whose objective
is to hold the asset in order to collect contractual
cash flows and the contractual terms of the
financial asset give rise on specified dates to cash
flows that are solely payments of principal and
interest on the principal amount outstanding.

b) Financial assets carried at fair value through
other comprehensive income (FVTOCI)

A financial asset is measured at FVTOCI if it is
held within a business model whose objective is
achieved by both collecting contractual cash flows
and selling financial assets and the contractual
terms of the financial asset give rise on specified
dates to cash flows that are solely payments of
principal and interest on the principal amount
outstanding.

c) Financial assets carried at fair value through
profit or loss (FVTPL)

A financial asset which is not classified in any of
the above categories are measured at FVTPL.

C) Investment in subsidiaries

The investment in subsidiary and Joint venture are
carried at cost as per IND AS 27. The Company
regardless of the nature of its involvement with an
entity (the investee), determines whether it is a parent
by assessing whether it controls the investee. The
Company controls an investee when it is exposed, or
has rights, to variable returns from its involvement
with the investee and has the ability to affect those
returns through its power over the investee. Thus, the
Company controls an investee if and only if it has all
the following:

(a) power over the investee;

(b) exposure, or rights, to variable returns from its
involvement with the investee and

(c) Investments are accounted in accordance with
IND AS 105 when they are classified as held for
sale. On disposal of investment, the difference
between its carrying amount and net disposal
proceeds is charged or credited to the statement
of profit and loss

(d) Investments are accounted in accordance with
IND AS 105 when they are classified as held for
sale. On disposal of investment, the difference
between its carrying amount and net disposal
proceeds is charged or credited to the statement
of profit and loss

D) Other Equity Investments

All other equity investments are measured at fair value
with changes in fair value recognised in statement of
profit and loss except for those equity investments for
which the Company has elected to present the value
changes in ''Other Comprehensive Income''.

E) Impairment of financial assets

In accordance with Ind AS 109, the Company uses
''Expected Credit Loss'' (ECL) model, for evaluating
impairment of financial assets other than those
measured at fair value through profit and loss (FVTPL).

Expected credit losses are measured through a loss
allowance at an amount equal to:

• The 12 months expected credit losses(expected
credit losses that result from those default events
on the financial instrument that are possible
within 12 months after the reporting date; or

• Full lifetime expected credit losses (expected
credit losses that result from all possible default
events over the life of the financial instrument).

For trade receivables Company applies ''simplified
approach'' which requires expected lifetime losses
to be recognised from initial recognition of the
receivables. The Company uses historical default rates
to determine impairment loss on the portfolio of trade
receivables. At every reporting date these historical
default rates are reviewed and changes in the forward
looking estimates are analysed.

For other assets, the Company uses 12 month ECL
to provide for impairment loss where there is no
significant increase in credit risk. If there is significant
increase in credit risk full lifetime ECL is used.

ii) Financial Liabilities

A) Initial recognition and measurement

All financial liabilities are recognised at fair value
and in case of loans net of directly attributable cost.
Fees of recurring nature are directly recognised in the
Statement of Profit and Loss as finance cost.

B) Subsequent measurement

Financial liabilities are carried at amortised cost using
the effective interest rate method (EIR). 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
as finance costs in the Statement of Profit and Loss.
For trade and other payables maturing within one year
from the balance sheet date, the carrying amounts
approximate fair value due to the short maturity of
these instruments.

F) Income recognition
Interest income

Interest income from debt instruments is recognised using the
effective interest rate method. The effective interest rate is
the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to the gross
carrying amount of a financial asset. When calculating the
effective interest rate, the Company estimates the expected
cash flows by considering all the contractual terms of the
financial instrument (for example, prepayment, extension, call
and similar options) but does not consider the expected credit
losses.

Dividends

Dividends are recognised in profit or loss only when the right to
receive payment is established, it is probable that the economic
benefits associated with the dividend will flow to the Company,
and the amount of the dividend can be measured reliably.

G) Inventories

Raw materials and stores, work in progress, traded and finished
goods are stated at the lower of cost and net realisable value.
Cost of raw materials and traded goods 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 are assigned to individual items of inventory on the basis
of weighted average cost basis. 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.

H) Revenue Recognition

Effective April 1, 2018, the Company has applied Ind AS 115
which establishes a comprehensive framework for determining
whether, how much and when revenue is to be recognised. Ind
AS 115 replaces Ind AS 18 Revenue and Ind AS 11 Construction
Contracts. The Company has adopted Ind AS 115 using the
cumulative effect method. The effect of initially applying this
standard is recognised at the date of initial application (i.e.
April 1, 2018). The standard is applied retrospectively only
to contracts that are not completed as at the date of initial
application and the comparative information in the statement of
profit and loss is not restated - i.e. the comparative information
continues to be reported under Ind AS 18 and Ind AS 11. The
impact of adoption of the standard on the financial statements
of the Company is insignificant.

Revenue is recognised upon transfer of control of promised
products or services to customer in an amount that reflects
the consideration which the Company expects to receive in
exchange for those products or services, which is usually at the
time of delivery of products or services to the customer. Revenue
from sale of product is measured at fair value of consideration
received /receivable, net of returns, trade allowances, rebates,

value added taxes, Goods and Service Tax (GST) and amounts
collected on behalf of third parties. Revenue is recognised
when it is probable that economic benefits associated with
the transaction will flow to the entity, amount of revenue can
be measured reliably and entity retains neither continuing
managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold.

Contract assets are recognised when there is excess of revenue
earned over billings on contracts. Contract assets are classified
as unbilled receivables (only act of invoicing is pending) when
there is unconditional right to receive cash, and only passage of
time is required, as per contractual terms.

I) Contract Balances

A contract asset is the right to consideration in exchange for
goods or services transferred to the customer. If the Company
performs by transferring goods or services to a customer
before the customer pays consideration or before payment is
due, a contract asset is recognised for the earned consideration
that is conditional. A receivable represents the Company''s right
to an amount of consideration that is unconditional.

A contract liability is the obligation to transfer goods or
services to a customer for which the Company has received
consideration (or an amount of consideration is due) from the
customer. If a customer pays consideration before the Company
transfers goods or services to the customer, a contract liability
is recognised when the payment is made or the payment is
due (whichever is earlier). Contract liabilities are recognised as
revenue when the Company performs under the contract.

A trade receivable is recognised if an amount of consideration
that is unconditional (i.e., only the passage of time is required
before payment of the consideration is due). Refer to accounting
policies of financial assets in section (Financial instruments -
initial recognition and subsequent measurement).

J) Employee Benefits

(i) Short-term obligations

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 at the amounts expected to be paid
when the liabilities are settled.

(ii) Post-Employment Benefits

Defined Contribution Plan: A defined contribution plan is a
post-employment benefit plan under which the Company
pays specified contributions to a separately entity. The
Company has defined contribution plans for the post¬
employment benefits namely provident fund scheme. The
Company''s contribution in the above plans is recognised as
an expense in the Statement of Profit and Loss during the
year in which the employee renders the related service.

Defined Benefit Plans: The Company has defined benefit
plan namely Gratuity for employees. The liability in respect
of gratuity plans is calculated annually by independent

actuary using the projected unit credit method. The
Company recognises the following changes in the net
defined benefit obligation under Employee benefits
expense in statement of profit or loss:

• Service costs comprising current service costs, past
service costs , gains and losses on curtailment and
non-routine-settlements

• Net Interest expense

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. Remeasurements are not
reclassified to profit or loss in subsequent periods.

Termination benefits are recognized as an expense
immediately.

K) Borrowing Cost

General and specific borrowing costs that are directly
attributable to the acquisition, construction or production of
a qualifying asset are capitalised during the period of time that
is required to complete and prepare the asset for its intended
use or sale. Qualifying assets are assets that necessarily take a
substantial period of time to get ready for their intended use or
sale.

Investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for
capitalisation.

Other borrowing costs are expensed in the period in which
they are incurred.

L) Income Tax

The income tax expense or credit for the period is the tax
payable on the current period''s taxable income based on the
applicable income tax rate adjusted by changes in deferred tax
assets and liabilities attributable to temporary differences and
to unused tax losses.

The current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the end of
the reporting period. Management periodically evaluates
positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.

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

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

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

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

Current and deferred tax is recognised in profit or loss, except
to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity, respectively.

M) Lease

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 lessee

The Company''s lease asset classes primarily comprise of lease
for land and building. The Company assesses whether a contract
contains a lease, at inception of a contract. 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. To assess whether a contract conveys the right
to control the use of an identified asset, the Company assesses
whether: (i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits
from use of the asset through the period of the lease and (iii)
the Company has the right to direct the use of the asset.

The Company applies a single recognition and measurement
approach for all leases, except for short-term leases and leases
of low-value assets. For these short-term and low value leases,
the Company recognizes the lease payments as an operating

expense on a straight-line basis over the term of the lease. The
Company recognises lease liabilities to make lease payments
and right-of-use assets representing the right to use the
underlying assets as below:

Right-of-use assets

The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the underlying
asset is available for use). Right-of-use assets are measured
at cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities.
The cost of right-of-use assets includes the amount of lease
liabilities recognised, initial direct costs incurred, and lease
payments made at or before the commencement date less any

lease incentives received. Right-of-use assets are depreciated
on a straight-line basis over the shorter of the lease term and
the estimated useful lives of the underlying assets (i.e. 30 and
60 years)

If ownership of the leased asset transfers to the Company at
the end of the lease term or the cost reflects the exercise of a
purchase option, depreciation is calculated using the estimated
useful life of the asset. The right-of-use assets are also subject
to impairment. Refer to the accounting policies in section
''Impairment of nonfinancial assets''.

Lease Liabilities

At the commencement date of the lease, the Company
recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease
payments include fixed payments (including in substance fixed
payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. The
lease payments also include the exercise price of a purchase
option reasonably certain to be exercised by the Company and
payments of penalties for terminating the lease, if the lease
term reflects the Company exercising the option to terminate.

Variable lease payments that do not depend on an index or
a rate are recognised as expenses (unless they are incurred
to produce inventories) in the period in which the event or
condition that triggers the payment occurs.

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. After the commencement
date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease payments
made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in the lease
term, a change in the lease payments (e.g., changes to future
payments resulting from a change in an index or rate used to
determine such lease payments) or a change in the assessment
of an option to purchase the underlying asset.

Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition
exemption to its short-term leases (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 that
are considered to be low value. Lease payments on short-term
leases and leases of low-value assets are recognised as expense
on a straight-line basis over the lease term.

Company as a lessor

Leases for which the Company is a lessor is classified as finance
or operating lease. Leases in which the Company does not
transfer substantially all the risks and rewards incidental to
ownership of an asset are classified as operating leases. Rental
income arising is accounted for on a straight-line basis over
the lease terms. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount
of the leased asset and recognised over the lease term on the

same basis as rental income. Contingent rents are recognised as
revenue in the period in which they are earned.

N) Foreign Currency Transactions

Items included in the financial statements of the Company
are measured using the currency of the primary economic
environment in which the entity operates (''the functional
currency''). The financial statements are presented in Indian
rupee (INR), which is the Company''s functional and presentation
currency.

Foreign currency transactions are translated into the functional
currency using the exchange rates at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates are generally recognised
in profit or loss.

O) Earnings Per Share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the Company

• by the weighted average number of equity shares
outstanding during the financial year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account:

• the after income tax effect of interest and other
financing costs associated with dilutive potential
equity shares, wherever applicable, and

• the weighted average number of additional equity
shares that would have been outstanding assuming
the conversion of all dilutive potential equity shares.

---

Mar 31, 2018

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

A) Basis of Preparation

i) Compliance with Ind AS

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act)[Companies(Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

The financial statements up to year ended 31 March 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) (previous GAAP) and other relevant provisions of the Act.

These financial statements are the first financial statements of the Company under Ind AS. Refer note 41 for an explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows.

ii) Historical cost convention

The financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities that are measured at fair value.

B) Property plant and equipment

Freehold land is carried at cost. All other items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment, if any. The cost comprises of purchase price, taxes, duties, freight and other incidental expenses directly attributable and related to acquisition and installation of the concerned assets and are further adjusted by the amount of CENVAT /GST/VAT credit availed wherever applicable. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.

Subsequent 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 any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Transition to Ind AS

Under the previous GAAP (Indian GAAP), all assets were carried in the Balance Sheet at cost, less accumulated depreciation and accumulated impairment losses, if any. On the date of transition to IND AS, all property, plant and equipment have been measured at fair value and same has been considered as deemed cost as at April 01, 2016 (date of transition) in accordance with Ind AS 101 First Time adoption.

Depreciation methods, estimated useful lives and residual value

Depreciation on buildings, machinery and equipments has been provided on straight-line basis over the estimated useful lives of the respective assets. Intangibale assets are amortised over their estimated useful economic lives on straight line basis. Freehold land and work in progress are not depreciated. The estimated useful lives considered for providing depreciation on other substantial assets are as follows:

Building- 35-45 years Plant & Machinery-15-25 years Computers-3-5 years Furniture & Fixtures-10-15 years Office Equipments-5-10 years Vehicles-8-10 years

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

C) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at costless accumulated amortization and accumulated impairment losses, if any. Internally generated intangibles, excluding capitalized development cost, are not capitalized and the related expenditure is reflected in Statement of Profit and Loss in the period in which the expenditure is incurred. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

Research and development cost

Research expenditure and development expenditure that do not meet the criteria as given in Ind AS-38 “Intangible Assets” are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Amortisation methods and periods

The Company amortises intangible assets with a finite useful life using the straight-line method over their estimated useful life of 3-6 years.

The amortization period and the amortization method for an intangible asset with a finite useful life is 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 is accounted for by changing the amortization period or method, as appropriate and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognised in the Statement of Profit and Loss.

Gains or losses arising from disposal of the intangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the assets are disposed off.

Transition to Ind AS

On transition to Ind AS, the Company has elected to continue with the carrying value of all of intangible assets recognized as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.

D) Impairment of non-financial assets

The carrying amounts of the assets are reviewed at each Balance sheet date for any indication of impairment based on internal/external factors. If any such 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. Where 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.

In assessing value in use, the estimated future cash flows are 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 asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

I mpairment losses including impairment on inventories are recognised in the Statement of Profit and Loss.

E) Financial Instruments

i) Financial Assets

A) Initial recognition and measurement

All financial assets and liabilities are initially recognised at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition.

B) Subsequent measurement

a) Financial assets carried at amortised cost

A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

b) Financial assets carried at fair value through other comprehensive income (FVTOCI)

A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

c) Financial assets carried at fair value through profit or loss (FVTPL)

A financial asset which is not classified in any of the above categories are measured at FVTPL.

C) Investment in subsidiaries

The Company has accounted for its investments in subsidiary at cost.

D) Other Equity Investments

All other equity investments are measured at fair value with changes in fair value recognised in statement of profit and loss except for those equity investments for which the Company has elected to present the value changes in ‘Other Comprehensive Income’.

E) Impairment of financial assets

In accordance with Ind AS 109, the Company uses ‘Expected Credit Loss’ (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).

Expected credit losses are measured through a loss allowance at an amount equal to:

- The 12 months expected credit losses(expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date; or

- Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).

For trade receivables Company applies ‘simplified approach’ which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed.

For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.

ii) Financial Liabilities

A) Initial recognition and measurement

All financial liabilities are recognised at fair value and in case of loans net of directly attributable cost. Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.

B) Subsequent measurement

Financial liabilities are carried at amortised cost using the effective interest rate method (EIR). 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 as finance costs in the Statement of Profit and Loss. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

F) Income recognition Interest income

Interest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.

Dividends

Dividends are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.

F) Inventories

Raw materials and stores, work in progress, traded and finished goods are stated at the lower of cost and net realisable value. Cost of raw materials and traded goods 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 are assigned to individual items of inventory on the basis of weighted average cost basis. 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.

G) Revenue Recognition

Revenue from the sales of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, which is usually at the time of delivery of goods to the customer. Revenue from sale of goods is measured at fair value of consideration received /receivable, net of returns, trade allowances, rebates, value added taxes, Goods and Service Tax (GST) and amounts collected on behalf of third parties. Revenue is recognised when it is probable that economic benefits associated with the transaction will flow to the entity, amount of revenue can be measured reliably and entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.

H) Employee Benefits

(i) Short-term obligations

Liabilities for wages and salaries, including nonmonetary 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 at the amounts expected to be paid when the liabilities are settled.

(ii) Post-Employment Benefits

Defined Contribution Plan: A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions to a separately entity. The Company has defined contribution plans for the post-employment benefits namely provident fund scheme. The Company’s contribution in the above plans is recognised as an expense in the Statement of Profit and Loss during the year in which the employee renders the related service.

Defined Benefit Plans: The Company has defined benefit plan namely Gratuity for employees. The liability in respect of gratuity plans is calculated annually by independent actuary using the projected unit credit method. The Company recognises the following changes in the net defined benefit obligation under Employee benefits expense in statement of profit or loss:

- Service costs comprising current service costs, past service costs , gains and losses on curtailment and non-routine-settlements

- Net Interest expense

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. Remeasurements are not reclassified to profit or loss in subsequent periods.

Termination benefits are recognized as an expense immediately.

I) Borrowing Cost

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

Other borrowing costs are expensed in the period in which they are incurred.

J) Income Tax

The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

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

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

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

K) Lease

Leases of property, plant and equipment where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor’s expected inflationary cost increases.

L) Foreign Currency Transactions

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial statements are presented in Indian rupee (INR), which is the Company’s functional and presentation currency.

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss.

M) Earnings Per Share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

- the profit attributable to owners of the Company

- by the weighted average number of equity shares outstanding during the financial year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

- the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, wherever applicable, and

- the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

N) Provisions and Contingent liabilities

Provisions for legal claims, service warranties, volume discounts and returns are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

A contingent liability is possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases, where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but disclose its existence in the financial statements unless the probability of outflow of resource is remote.

O) Government Grant

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.

Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.

Government grants relating to the purchase of property, plant and equipment are included in noncurrent liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and presented within other income.

P) Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief operating decision maker (CODM). CODM monitors the operating results of all strategic business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit and loss and is measured consistently with profit and loss in the financial statements.

Q) Contributed equity

Equity shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

R) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

S) 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, 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. Bank overdrafts are shown within borrowings in current liabilities in the Balance Sheet.

T) Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

U) Rounding of amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.

V) Recent accounting pronouncements

Ind AS 115 - Revenue from Contracts with Customers

The Ministry of Corporate Affairs (MCA) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 on 28 March 2018 which includes Ind AS 115 ‘Revenue from Contracts with Customers’. This will replace IAS 18 which covers contracts for goods and services and IAS 11 which covers construction contracts.

Ind AS 115 - Revenue from contracts with Customers outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The standard replaces most current revenue recognition guidance. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the Group expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively including service revenues and contract modifications and improve guidance for multiple-element arrangements.

The new standard will come into effect for the annual reporting periods beginning on or after 1 April 2018. The standard permits either a full retrospective or a modified retrospective approach for the adoption.

The Company is in the process of evaluating the impact of the new standard on the Company’s financial statements.

W) Significant accounting judgements, estimates and assumptions

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the assets or liabilities affected in future periods.

Judgements, Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

a) Defined benefit plan-Gratuity

The cost of defined benefit plans (i.e. Gratuity benefit) is determined using actuarial valuations. An actuarial valuation involves making various assumptions which may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. In determining the appropriate discount rate, management considers the interest rates of long term government bonds with extrapolated maturity corresponding to the expected duration of the defined benefit obligation. The mortality rate is based on publicly available mortality tables for the specific countries. Future salary increases and pension increases are based on expected future inflation rates for the respective countries. Further details about the assumptions used, including a sensitivity analysis, are given in Note 38.

b) Impairment of Financial assets

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

c) Warranty provision

Warranty Provisions are measured at discounted present value using pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the liability. Warranty provisions is determined based on the historical percentage of warranty expense to sales for the same types of goods for which the warranty is currently being determined. The same percentage to the sales is applied for the current accounting period to derive the warranty expense to be accrued. It is adjusted to account for unusual factors related to the goods that were sold, such as defective inventory lying at the depots. It is very unlikely that actual warranty claims will exactly match the historical warranty percentage, so such estimates are reviewed annually for any material changes in assumptions and likelihood of occurrence.

d) Depreciation/amortisation and useful lives of property plant and equipment/intangible assets

Property, plant and equipment / Intangible assets are depreciated /amortised over their estimated useful lives, after taking into account estimated residual values. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation / amortisation to be recorded during any reporting period. The useful lives and residual values are based on the Company’s historical experience with similar assets and take into account anticipated technological changes. The depreciation/amortisation for future period is revised if there are significant changes from previous estimates.

e) Provisions

Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgment to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.

---

Mar 31, 2016

(Annexed to and forming part of the Financial Statements for the year ended

COMPANY OVERVTFW

HPL Electric & Power Limited (Formerly HPL Electric & Power Private Limited) (The Company) is a limited company domiciled in India and incorporated under

the provisions of the COMPANIES 1956 having its registered office at 1/21 Asaf All Road, New Delhi. The Company is one of the leading players and India''s fastest growing electrical and power distribution equipment manufacturer with products ranging from Industrial and Domestic Circuit Protection Switchgears Cables, Energy Saving Meters, CFL & LED Lamps and Luminaries for Domestic Commercial and Industrial applications, Modular Switches covering the entire range of household, commercial and industrial electrical needs. The Company''s manufacturing facilities are located at 6 locations, 2 units at Gurgaon, 1 unit at village Bastara, Tehsil Gharaunda, Karnal, 1 unit at village Bhigan, Ganauar

The Company has R&D facilities located at Gurgaon and Kundli in Haryana approved by Department of Scientific & Industrial Research (DSIR), Ministry of Science & Technology. ⁷

SIGNIFICANT ACCOUNTING POLICIES

A) Basis of Accounting

The financial statement have been prepared under historical cost convention on accrual basis of accounting in accordance with the applicable accounting principles in India including the applicable Accounting Standards notified under Section 133 of the Companies Act, 2013 (''Act'') read with rule 7 of the Companies (Accounts) Rules, 2014.

B) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the result of operations during the reporting period end. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Difference between actual results and estimates are recognized in the period in which the results are known/ materialized.

C) Fixed Assets

Tangible assets are stated at cost, less accumulated depreciation and ^impairment losses comprises the purchase price and other non-refundable taxes or levies, any directly attributable cost of bringing the asset to its working condition for its intended use.

Borrowing costs relating to acquisition of Tangible assets which takes substantial period of time to get ready for its intended use are also included, to the extent they relate to the period till such assets are ready to be put to use.

^Capital work in progress comprises of the cost of fixed assets that are not yet ready for their intended use at the reporting date.

Intangible Assets are stated at the consideration paid for acquisition of such assets I,e cost less accumulated amortization and impairment. Intangible Assets _are qualifies the recognition criteria set out in Act, 2013 read with rules 7 of the Company (Accounts) Rules, 2014.

^D) Method of Depreciation and Amortization

Depreciation on tangible assets is provided using straight line method (S.L.M.) over the useful lives of assets as prescribed under PART C of Schedule II of the Companies Act 2013. Depreciation for assets purchased / sold during a period is charged proportionately.

The deprecation on assets for a value not exceeding '' 5000/- which were written purchase as per erstwhile Companies Act, 1956, are being charged on the basis of their useful lives prescribed in the Schedule II of the Companies Act, 2013.

Intangible Assets are amortized over estimated useful life of assets on Straight Line basis. ³

Depreciation and amortization methods, useful lives and residual values are reviewed periodically, including at each financial year end.

E) Impairment

The carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on internal/external factors. If any such indication exists, the Company estimates the recoverable amount of the asset. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired.

F) Inventories

a) Items of inventories i.e. Raw Material, Work-in-Progress and Finished Goods are measured at lower of cost or net realizable value.

b) The cost is calculated on weighted average cost method. Cost comprises of expenditure incurred in normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overhead based on normal level of activity. Obsolete, slow moving and defective inventories are identified at the time of physical verification of inventories and where necessary, provision is made for such inventories.

c) Purchased Goods-in-transit are carried at cost.

d) Stores and Spares are valued at lower of cost or net realizable value.

e) Inventory of Finished Products which are excisable is valued inclusive of Excise Duty.

G) Revenue Recognition

The company recognizes sales of goods when the significant risks and rewards of ownership are transferred to the buyer, which is usually at the time of dispatch of goods to the customer. Sale comprises sale of goods, net of trade discount/ trade obligations and sales tax. Export sales are recognized on the date of shipping/Air Way Bill. Export benefits are recognized on accrual basis. All other revenue and expenditure are accounted for on accrual basis.

Interest income/expenses are recognized using the time proportion method based on the rate implicit in the transaction.

Dividend income is recognized when the right to receive dividend is established.

^H) Revenue from Fixed Price Contractual Projects

Revenue from fixed price contractual projects is recognized on proportionate completion method. Proportion of completion method is determined on the basis of physical proportion of the contract work when no significant uncertainty exists regarding the amount of consideration that will be derived from rendering the services.

I) Research & Development

All expenditure other than Capital Expenditure on Research & Development is charged to the statement of Profit and Loss in the year in which it is incurred. Capital expenditure on Research & Development is included under Fixed Assets.

J) Retirement Benefits

Short-term employee benefits are recognized as an expense and charged to the statement of profit and loss of the year in which related service is rendered The liability for leave encashment is in the nature of short term employee benefits which is provided for on the basis of estimation made by the management.

Defined Contribution Plans-The company has defined contribution plans for the post employment benefits namely provident fund scheme. The company''s contribution in the above plans is charged to revenue every year.

Defined Benefit Plans-The company has Defined Benefit Plan namely Gratuity for employees. Gratuity liability is a defined benefit obligation and is provided for on the basis of the actuarial valuation made at the end of each year.

Other Long Term Employee Benefits are recognized in the same manner as Defined Benefit Plans.

Termination benefits are recognized as an expense immediately.

Actuarial gains/losses are immediately taken to Statement of Profit and Loss.

Investments that are readily realizable and are intended to be held for not more than one year from the reporting date are classified as ''Current Investments''. All other Investments are classified as ''Non-Current Investments''. Current Investments are carried at cost or fair value of each investments individually Non-current Investments are carried at cost less provisions to recognize any decline, other than temporary, in the carrying value of the investments.

L) Borrowing Cost

Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of those assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. Other interest and borrowing costs are charged to revenue.

M) Cash Flow

Cash Flow are reported according to the indirect method as specified in the

Accounting Standard-3(Revised), Cash ''Flow Statement'', notified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. ''

N) Taxation

Income tax expense comprises current tax and deferred tax charge or credit. Current Taxes

Provision for current income tax is recognized in accordance with the provisions of Income Tax Act, 1961 and is made annually based on the tax liability after taking credit for tax allowances and exemptions. In case of matters under appeal, full provision is made in the financial statement when the Company accepts its liability.

Deferred Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantially enacted at the Balance Sheet date. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date. Deferred tax assets are recognized

only to the extent there is reasonable certainty that the assets can be realized in the future, however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognized only if there is virtual certainty of recognition of such assets. Deferred tax assets are reassessed for the appropriateness of their respective carrying values at each Balance Sheet date. "

The Company is eligible for tax holiday under section 80-IC (Notification No. SO 1269 (E) dated 04.11.2003) of the Income Tax Act, 1961. In this regard the Company recognized deferred taxes in respect of those originating timing differences, which reverse after tax holiday period, resulting in tax consequences. Timing differences which originate and reverse within the tax holiday period do not result in tax consequence and therefore, no deferred taxes is recognized in respect of the same.

O) Lease ,

Financial lease

Assets acquired on financial lease, including assets acquired on hire purchase have been recognized as an asset, and a liability at the inception of the lease has been recorded of an amount equal to the lower of the fair value of the eased asset or the present value of the future minimum lease payments. Such leased assets are depreciated over the lease term or its estimated useful life, whichever is shorter. Further, the payment of minimum lease payments have been apportioned between finance charge / (expenses) and principal repayment.

Assets given on financial lease are shown as amounts recoverable from the lessee. The rent received on such leases is apportioned between the financial charge / (income) and principal amount using the implicit rate of return. The finance charge / income is recognized as income and principal received is reduced from the amount receivable. All initial direct costs incurred are included in the cost of the assets.

Operating lease

Lease rent in respect of assets acquired under operating lease are charged to the Statement of Profit and Loss as and when incurred.

P) Foreign Currency Transactions, Derivative instruments And Hedqe Accounting ³

^a) Foreign Currency Transactions

Transactions in foreign currency are accounted for at the exchange rate prevailing at the end of month, which approximates the rate on the date of transaction. Gain/ loss arising out of fluctuations in foreign exchange rates between the transaction date and settlement date are recognized in the Statement of profit and loss. ^v

Monetary items denominated in foreign currency are restated at the exchange rate prevailing at the year end and the overall net gain/ loss are adjusted to the Statement of profit and loss.

^b) Derivative Instruments and Hedoe Accounting

The company uses foreign currency forward contracts and currency options to hedge its risks associated with foreign currency fluctuations relating to certain forecasted transactions. The company designates these as cash flow hedges applying the principles set out in the Accounting Standard 30 "Financial Instruments: Recognition Measurement" (AS-30).

Foreign currency derivative instruments are initially measured at fair value and reporting dates. Changes in the fair value of these derivatives that are designated and effective as hedges of future cash flows are recognized directly in shareholder''s funds and the ineffective portion is recognized immediately in the Statement of Profit and Loss.

Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognized in the Statement of Profit and Loss as they arise.

Hedge accounting is discounted when the hedging instrument expires or is sold terminated or exercised or no longer qualifies for hedge accounting. At the time of forecasted transactions, any cumulative gain or loss on the hedging instrument recognized in shareholder''s funds is retained there until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognized in shareholders'' funds is transferred to the Statement of Profit and Loss for the period.

Q) Earnings Per Share

The basic earnings per equity share are computed by dividing the net profit or loss attributable to the equity shareholders for the period by the weighted average number of equity shares outstanding during the reporting year. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which may be issued on the conversion of all dilutive potential equity shares, unless the results would be anti-dilutive.

R) Provisions and Contingencies

The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present probably will not, require an outflow of resources.

there i_S a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognized in the financial statements. However contingent assets are assessed continually and if it is virtually certain that an economic benefit will arise, the asset and related income are recognized in the period in which the change occurs.

Product warranty costs are accrued in the year of sale of products, based on past experience. The Company periodically reviews the adequacy of product warranties and adjusts warranty percentage and warranty provisions for actual experience, if necessary. The timing of outflow is expected to be within one to two years.

Government grant is considered for inclusion in accounts only when conditions attached to them are compiled and it is reasonably certain that the ultimate collection will be made. Grant received from government towards fixed assets acquired by the Company is deducted out of gross value of the assets acquired and depreciation is charged accordingly.

T) Segment Reporting

The segment reporting of the Company has been prepared in accordance with Accounting Standard-17, "Segment Reporting".