1.14 Provisions, Contingent Liabilities and Contingent Assets

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation. If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. Where discounting is used,
the increase in the provision due to the passage of time is recognized as a finance cost.

Contingent Liabilities

A contingent liability is a 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 recognized because it is not probable that an
outflow of resources will be required to settle the obligation.

Contingent Assets

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

1.15 Employee benefits

(i) Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as
short-term employee benefits. Benefits such as salaries, wages, short-term compensated absences, etc.,
and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the
related service.

(ii) Post-Employment Benefits

Defined Contribution Plans - State governed Provident Fund Scheme and Employees State Insurance
Scheme are defined contribution plans. The contribution paid / payable under the schemes is recognised
during the period in which the employees render the related services.

Defined Benefit Plans - The Company has Defined Benefit Plan for post-employment benefit in the form
of Gratuity for eligible Employees. Gratuity Liability based on actuarial valuation as per Ind AS 19
recognized in the balance sheet is the present value of the defined benefit obligation at the end of each
reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually
by actuary using the projected unit credit method. The present value of defined benefit is determined by
discounting the estimated future cash outflows by reference to market yield at the end of each reporting
period on government bonds. The interest cost is calculated by applying the discount rate to the net
balance of the defined benefit obligation and the fair value of plan assets. The cost is included in
employee benefit expense in the standalone statement of profit and loss. Actuarial gain / loss arising
from experience adjustments and changes in actuarial assumptions are credited / debited to “other
comprehensive Income” forming part of other equity.

1.16 Financial Instruments

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

Financial Assets

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

Financial assets and liabilities are recognised when the Company becomes a party to the contractual
provisions of the instrument.

Financial assets

Classification

The Company classifies its financial assets in the following measurement categories:

• Those to be measured subsequently at fair value (either through other comprehensive income,
or through the Statement of Profit and Loss), and

• Those are measured at amortized cost.

The classification depends on the entity's business model for managing the financial assets and the
contractual terms of the cash flows.

Initial recognition and measurement

Financial assets are recognized when the Company becomes a party to the contractual provisions of the
instrument. Financial assets are recognized initially at fair value plus or minus, in the case of financial
assets not recorded at fair value through Profit and Loss, transaction costs that are attributable to the
acquisition of the financial asset.

Transaction costs of financial assets carried at fair value through Profit and Loss are expensed in the
Statement of Profit and Loss.

Subsequent measurement

After initial recognition, financial assets are measured at:

• fair value (either through other comprehensive income or through Profit and Loss), or

• Amortized cost.

Debt instruments

Debt instruments are subsequently measured at amortized cost, fair value through other comprehensive
income ('FVOCI') or fair value through Profit and Loss ('FVTPL') till de-recognition on the basis of (i) the
entity's business model for managing the financial assets and (ii) the contractual cash flow
characteristics of the financial asset.

Amortised cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment
that is subsequently measured at amortized cost is recognized in the Statement of Profit and Loss when
the asset is derecognized or impaired. Interest income from these financial assets is included in other
income using the effective interest rate method.

Fair Value through Other Comprehensive Income (FVOCI)

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the
assets' cash flows represent solely payments of principal and interest, are measured at FVOCI.
Movements in the carrying amount are taken through OCI, except for the recognition of impairment
gains or losses, interest revenue and foreign exchange gains and losses which are recognized in the
Statement of Profit and Loss.

When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is
reclassified from equity to Statement of Profit and Loss and recognized in other gains/ (losses). Interest
income from these financial assets is included in other income using the effective interest rate method.

Fair Value through Profit and Loss (FVTPL)

Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVTPL.

A gain or loss on a debt investment that is subsequently measured at FVTPL is recognised in Statement
of Profit and Loss in the period in which it arises. Interest income from these financial assets is
recognised in the Statement of Profit and Loss.

Equity instruments

All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are
held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to
classify the same either as at FVTOCI or FVTPL.

The Company makes such election on an instrument-by-instrument basis. The classification is made on
initial recognition and is irrevocable.

If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the
instrument, excluding dividends, are recognized in Other Comprehensive Income (OCI). There is no
recycling of the amounts from OCI to Statement of Profit and Loss, even on sale of such investments.
Equity instruments included within the FVTPL category are measured at fair value with all changes
recognized in the Statement of Profit and Loss.

Financial liabilities

Initial recognition and measurement

Financial liabilities are initially measured at its fair value plus or minus, in the case of a financial liability
not at FVTPL, transaction costs that are directly attributable to the issue/origination of the financial
liability.

Subsequent measurement

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is
classified as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated as such
on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses,
including any interest expense, are recognized in statement of profit and loss. Other financial liabilities
are subsequently measured at amortized cost using the effective interest method. Interest expense and
foreign exchange gains and losses are recognized in Statement of profit and loss. Any gain or loss on de¬
recognition is also recognized in statement of Profit and Loss.

De-recognition

A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled
or expires.

1.17 Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term
deposits with an original maturity of three months or less, which are subject to an insignificant risk of
changes in value.

1.18 Cash Flow Statement

Cash flows statement are reported using the Indirect Method, as set out in Ind AS 7 'Statement of Cash
Flow', whereby profit for the year is adjusted for the effects of transaction of non-cash nature, any
deferrals or accruals of past or future operating cash receipts or payments and item of income or
expenses associated with investing or financing cash flows. The cash flows from operating, investing and
financing activities of the Company are segregated.

1.19 Trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary
course of business and reflects Company's unconditional right to consideration (that is, payment is due
only on the passage of time).

1.20 Trade and other payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of
financial year which are unpaid. The amounts which are unsecured are presented as current liabilities
unless payment is not due within 12 months after the reporting period.

1.21 Government Grants

Government grants are initially recognised as deferred income at fair value if there is reasonable
assurance that they will be received and the Company will comply with the conditions associated with
the grant;

• In case of capital grants, they are then recognised in Statement of Profit and Loss on a systematic
basis over the useful life of the asset.

• In case of grants that compensate the Company for expenses incurred are recognised in
Statement of Profit and Loss on a systematic basis in the periods in which the expenses are
recognised.

1.22 Share based payment

The Board of Directors of Raw Edge Industrial Solutions Limited (“the Company”) approved the Raw
Edge Industrial Solutions Limited - Employee Stock Option Plan 2023 (ESOP 2023) on August 18, 2023,
which was subsequently approved by the shareholders at the Annual General Meeting held on
September 22, 2023. The ESOP 2023 is formulated in compliance with the Securities and Exchange
Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and applicable
provisions of the Companies Act, 2013.

(a) Salient Features of ESOP 2023

• Maximum number of options: 10,00,000 (each option convertible into one equity share of ^10
each)

• Exercise Price: ^10 per share

• Vesting condition: Continuity of Employment

• Vesting period: Minimum of 1 year; options vest in tranches up to a maximum of 11 years

• Exercise period: 1 year from the date of vesting

• Eligible participants: Employees and directors of the Company and its group companies,
excluding promoters and independent directors

• Method of settlement: Equity-settled

• Date of grant of options - 20/05/2024

(b) Method of Accounting

The Company has adopted the fair value method to account for employee share-based payments in
accordance with Ind AS 102 - Share-based Payment. The fair value of options granted is calculated using
the Black-Scholes Option Pricing Model and is charged to the Statement of Profit and Loss over the
vesting period, with a corresponding credit to “Equity - Share Options Outstanding Account.”

(d) Fair Value Assumptions for Grants Made During the Year

• Stock Price: Rs. 38.93

• Risk-free interest rate: 7.10%

• Expected life: 12 years

• Time to Maturity: 11 years

• Annualized volatility: 68.13%

• Expected dividends: Nil

• Option value: Rs. 36.24

(e) Expense Recognized in the Statement of Profit and Loss

No expense has been recognized in the Statement of Profit and Loss for the year ended March 31, 2025,
in respect of options granted under ESOP 2023 as required under Ind AS 102. As per the terms of the
scheme, the vesting period is scheduled from end of 1 year upto the end of 11th year from the grant of
options. The vesting period shall be determined by the Board based on the achievement of certain
performance conditions. As of the reporting date, no performance conditions have been framed by the
board, leading to inconclusive vesting period; accordingly, the management of the company has
contended that it is not possible to record any expense due to uncertainty of vesting of ESOPs.

1.24 Figures for the previous period have been regrouped/ rearranged wherever necessary to make
them comparable with current figure.

1.25 Additional Regulatory Information

(i) The Company has not revalued any of its Property Plant & Equipment and Intangible assets.

(ii) The Company has not given any Loans or Advances in the nature of loans to promoters directors
KMP's & related parties.

(iii) The Company does not have any benami property held in its name. No proceedings have been
initiated on or are pending against the Company for holding benami property under the Benami
Transactions (Prohibition) Act 1988 (45 of 1988) and Rules made hereunder.

(iv) The provisional quarterly statements filed by the company with bank/financial institutions are in
agreement with the audited books of accounts of the company.

(v) The Company is not declared as a wilful defaulter by Banks or Financial Institutions or any other
lender.

(vi) The Company does not have any transactions with struck-off companies.

(vii) No charges or satisfaction are pending for registration with ROC beyond the statutory period.

(viii) The Company has complied with the number of layers prescribed under clause (87) of section 2 of
the Act read with the Companies (Restriction on Number of Layers) Rules 2017.

(ix) There is no transaction that is not recorded in the books of accounts that has been surrendered or
disclosed as Income during the year in the tax assessment under the Income Tax Act 1961.

(x) The Company has not traded or invested in Crypto-currency during the financial year.

(xi) Utilisation of borrowed funds and share premium

• The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies)
including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. Provide any guarantee security or the like to or on behalf of the ultimate beneficiaries.

b. Provide any guarantee security or the like to or on behalf of the ultimate beneficiaries.

• The Company has not received any fund from any person(s) or entity(ies) including foreign
entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that
the Company shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner
whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b. Provide any guarantee security or the like on behalf of the ultimate beneficiaries.

As per our report of even date

For PRADEEP K. SINGHI & ASSOCIATES For and on behalf of the Board of Directors

Chartered Accountants
Firm Reg. No.:0126027W

Sd/- Sd/-

Bimal Bansal Prashant Agarwal

Sd/- Director Director & CFO

Pradeepkumar Singhi DIN: 00029307 DIN: 10394966

Partner
M. No. 024612

Date: 27/05/2025 Sd/-

Place: Surat Shaharyar Saiyad

UDIN: 25024612BMONJD3376 Company Secretary