2.15 PROVISIONS:

Provision is recognized when the company has a present obligation as a result of past events: it is probable
that the outflow of resources will be required to settle this obligation, in respect of which reliable estimate
can be made. The provision is not discounted at present value and are determined based on the best
estimate is required to settle the obligation at the balance sheet date. These are reviewed at each balance
sheet date and adjusted to reflect the current best estimate.

2.16 CONTINGENT LIABILITIES:

All known liabilities wherever material are provided for. Liabilities that are material, whose future outcome
cannot be ascertained with reasonable certainty are contingent and disclosed by way of notes to accounts.
Contingent liabilities is disclosed in case of a present obligation from past events

(a) When it is not probable that an outflow of resources will be required to settle the obligation;

(b) When no reliable estimate is possible;

(c) Unless the probability of outflow of resources is remote.

Contingent assets are neither accounted for nor disclosed by way of Notes on Accounts where the
inflow of economic benefits is probable

2.17 FINANCIAL INSTRUMENTS:

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

A. Financial Assets

(i) Initial Recognition and Measurement

The Company classifies its financial assets as those to be measured subsequently at fair value
(either through other comprehensive income, or through profit or loss) and those to be measured
at amortized cost.

(ii) Subsequent Measurement

For purposes of subsequent measurement, financial assets are classified in following
categories:

(a) Debt instruments measured at amortized cost using the effective interest rate method and
losses arising from impairment are recognized in Profit and Loss if both the following
conditions are met:

• The asset is held within a business model whose objective is to hold assets for collecting
contractual cash flows, and

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

(b) Equity instruments at fair value through other comprehensive income.

(c) Equity instruments at fair value through profit or loss (FVTPL)

(d) Equity Instruments in subsidiaries are carried at cost, in accordance with option available in
Ind AS 27 “Separate Financial Statements”.

(iii) De-Recognition

A financial asset is de-recognized only when the Company has transferred the rights to receive
cash flows from the financial asset, or when it has transferred substantially all the risks and
rewards of the asset, or when it has transferred the control of the asset.

(iv) Impairment of Financial Assets

In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for
measurement and recognition of impairment loss on the Trade receivables or any contractual
right to receive cash or another financial asset that result from transactions that are within the
scope of Ind AS 11 and Ind AS 18.

The Company follows ‘simplified approach’ for recognition of impairment loss allowance on
trade receivables.

The application of simplified approach does not require the Company to track changes in credit
risk. Rather, it recognises impairment loss allowance based on lifetime ECL at each reporting
date, right from its initial recognition.

As a practical expedient, the Company uses historically observed default rates over the
expected life of the trade receivables and is adjusted for forward-looking estimates to determine
impairment loss allowance on portfolio of its trade receivables.

B. Financial Liabilities:

i) Classification as debt or equity - Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the contractual arrangement.

ii) Equity instruments - An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are
recognised at the proceeds received, net of direct issue costs.

iii) Initial Recognition and Measurement:

All Financials Liabilities are recognized net of transaction costs incurred.

iv) Subsequent Measurement-

After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using the Effective Interest Rate (“EIR”) method. Gains and losses are recognised in
profit or loss when the liabilities are derecognised through the EIR amortisation process.

v) De-Recognition

All Financials Liabilities are removed from balance sheet when the obligation specified in the
contract is discharged, cancelled or expired.

When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the de-recognition of the original liability and the recognition of a new
liability. The difference in the respective carrying amounts is recognised in the statement of profit and
loss.

2.18 CURRENT AND NON- CURRENT CLASSIFICATION:

The Normal Operating Cycle for the Company has been assumed to be of twelve months for classification
of its various assets and liabilities into “Current” and “Non-Current”.

The Company presents assets and liabilities in the balance sheet based on current and non-current
classification.

An asset is current when it is

(a) Expected to be realised or intended to be sold or consumed in normal operating cycle

(b) Held primarily for the purpose of trading

(c) Expected to be realised within twelve months after the reporting period

(d) Cash and cash equivalent unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period.

(e) All other assets are classified as non-current.

A liability is current when

(a) It is expected to be settled in normal operating cycle

(b) It is held primarily for the purpose of trading

(c) It is due to be discharged within twelve months after the reporting period

(d) There is no unconditional right to defer the settlement of the liability for at least twelve months after
the reporting period.

(e) All other liabilities are classified as non-current.

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

2.19 EARNING PER SHARE:

Earnings per share are calculated by dividing the net profit or loss before OCI for the year attributable to
equity shareholders by the weighted average number of equity shares outstanding during the period. For
the purpose of calculating diluted earnings per share, the net profit or loss before OCI for the period
attributable to equity shareholders and the weighted average number of shares outstanding during the
period are adjusted for the effects of all dilutive potential equity shares.

2.20 MICRO SMALL MEDIUM ENTERPRISES:

The company recognizes MSME on the Basis of confirmation received from the creditors Those creditors
who do not respond and being kept as Non MSME creditors. Interest payable in respect of MSME are
Recorded on payment Basis.