20. Provisions and Contingent liabilities

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Company expects some or all a provision to be reimbursed, for example, under an insurance
contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is

virtually certain. The expense relating to a provision is presented in the Statement of profit and loss net
of any reimbursement.

Provision for onerous contracts is recognised when the expected benefits to be derived by the Company
from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The
provision is measured at the present value of the lower of the expected cost of terminating the contract
and the expected net cost of continuing with the contract. Before a provision is established, the
Company recognizes any impairment loss on the assets associated with that contract.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax
rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the
increase in the provision due to the passage of time is recognised as a finance cost.

Contingent Liabilities/Assets

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. A contingent liability also arises in
extremely rare cases where there is a liability that cannot be recognized because it cannot be measured
reliably. The Company does not recognize a Contingent liability but discloses its existence in the
financial statements.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by
the occurrence or non-occurrence of one or more uncertain future events not wholly within the control
of the company. The Company does not recognize a Contingent asset but discloses its existence in the
standalone financial statements where an inflow of economic benefits is probable.

21. Cash Flow Statement

Cash flow statement has been prepared in accordance with the indirect method prescribed in Ind AS 7
-Statement of Cash Flows.

22. Fair value measurement

The Company measures certain financial instruments, such as derivatives and other items in it's
standalone financial statements at fair value at each reporting date.

All assets and liabilities for which fair value is measured or disclosed in the standalone financial
statements are categorised within the fair value hierarchy based on the lowest level input that is
significant to the fair value measurement as a whole:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

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

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable
inputs).

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities
on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value
hierarchy

23. Non-derivative financial instrumentsA. Financial Assets

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 profit or loss)

• those to be measured at amortised cost.

The classification depends on the Company's business model for managing the financial assets and the
contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be
recorded in profit or loss or other comprehensive income.

(i) Initial Recognition and Measurement

The company recognizes financial assets when it enters into the contractual provisions of an
instrument. Upon initial recognition, all financial assets are recorded at fair value, with the exception
of trade receivables, which are initially measured at their transaction price.

(ii) Subsequent Measurement:

For the purpose of subsequent measurement, financial assets are classified into three categories:

• Amortized cost

• Fair value through other comprehensive income (FVTOCI)

• Fair value through profit or loss (FVTPL)

Financial assets at amortized cost

Financial assets are subsequently measured at amortized cost if the business model's objective is to
hold these assets to collect contractual cash flows, and the financial asset's contractual terms result in
cash flows on specified dates that are solely payments of principal and interest on the outstanding
principal. This amortized cost measurement is determined using an effective interest method, with any
impairment losses subtracted.

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

Financial assets are subsequently measured at fair value through other comprehensive income (FVOCI)
when they are held within a business model that aims to both collect contractual cash flows and sell
the financial assets. Additionally, the contractual terms of these assets must result in cash flows on
specified dates that are solely payments of principal and interest on the principal amount outstanding.

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

Any financial asset not subsequently measured at amortized cost or at fair value through other
comprehensive income, is subsequently measured at fair value through profit or loss. Financial assets
falling in this category are measured at fair value and all changes are recognized in the Statement of
Profit and Loss.

(iii) Derecognition of financial assets

The company derecognizes a financial asset when the contractual rights to the cash flows from the
financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition
under Ind AS 109.

A financial asset is derecognized only when.

• the Company has transferred the rights to receive cash flows from the financial asset or

• retains the contractual rights to receive the cash flows of the financial asset but assumes a contractual
obligation to pay the cash flows to one or more recipients.

Where the Company has transferred an asset, the Company evaluates whether it has transferred
substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset
is derecognized.

B. Financial Liabilities(i) Initial Recognition and Measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit
or loss, or as loans, borrowings, and payables, as appropriate. Loans, borrowings, and payables are
initially measured at fair value, net of transaction costs that are directly attributable to the issuance of
such financial liabilities.

(ii) Subsequent Measurement

The measurement of financial liabilities depends on their classification, as described below:

• Financial Liabilities at fair value through Profit or Loss:

Financial liabilities at fair value through profit or loss include financial liabilities designated upon initial
recognition as at fair value through profit or loss. This category also includes derivative financial
instruments entered into by the Company that are not designated as hedging instruments in hedge
relationships as defined in Ind AS 109. Separated embedded derivatives are also classified as held for
trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held
for trading are recognised in the statement of profit and loss.

(iii) Loans and Borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using the Effective Interest Rate method (EIR).The EIR amortisation is included as finance
cost in the statement of Profit and loss. A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires.

(iv) Trade and Other Payables

Liabilities are recognised for amounts to be paid in future for goods or services received, whether billed
by the supplier or not.

C. Reclassification of Financial Instruments

The Company determines classification of financial assets and liabilities on initial recognition. After
initial recognition, no reclassification is made for financial assets which are equity instruments and
financial liabilities. Reclassification of financial assets are made in exceptional circumstances in which
the company acquires, disposes of, or terminates a business line.

D. Offsetf ng of Financial Instruments

Financial assets and financial liabilities are offset, and the net amount is reported in the balance sheet
if there is a currently enforceable legal right to offset the recognised amounts and there is an intention
to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

24. Derivative financial instruments and hedge accounting

The Company uses derivative financial instruments such as forward currency contracts to hedge its
foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the
date on which a derivative contract is entered into and are subsequently re-measured at fair value.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when
the fair value is negative.

For the purpose of hedge accounting, hedges are classified as:

(i) Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or
liability or an unrecognised firm commitment.

(ii) Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable
to a particular risk associated with a recognised asset or liability or a highly probable forecast
transaction or the foreign currency risk in an unrecognised firm commitment.

Any gains or losses arising from changes in the fair value of forward currency contracts are taken directly
to statement of profit and loss, except for the effective portion of cash flow hedges, which is recognised
in OCI and later reclassified to profit or loss when the hedge item affects profit or loss.

The embedded derivative, if required, is separated from host contract and measured at fair value.

25. Impairment of Financial Assets

Receivables: The Company follows a 'simplified approach' for recognition of impairment loss on trade
receivables, whereby, it recognizes impairment loss allowances based on lifetime expected credit loss
at each reporting period from its initial recognition.

Other financial assets: For all other financial assets, expected credit losses (ECL) are measured at an
amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial
recognition in which case the same is measured at lifetime ECL. Impairment gain or loss recognized in
the Statement of Profit and Loss is the difference between loss allowance reassessed on the reporting
date and that determined on the immediately preceding reporting date.

26. Leases
Company as a Lessee: -

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 identified asset for a period of time in exchange for
consideration.

Contracts with third party, which gives the company the right to use of an asset, is accounted in line
with the provisions of "Ind AS 116 - Leases" if the recognition criteria as specified in the accounting
standard are met.

Lease payments associated with short terms leases and leases in respect of low value assets are charged
off as expenses on straight line basis over lease term or other systematic basis, as applicable.

At commencement date, the value of "right of use" is capitalised at the present value of outstanding
lease payments plus any initial direct cost and estimated cost, if any, of dismantling and removing the
underlying asset and presented as part of an item of Plant, property and equipment. Liability for lease
is created for an amount equivalent to the present value of outstanding lease payments and presented
as Borrowing. Subsequent measurement, if any, is made using cost model.

Each lease payment is allocated between the liability created and finance cost. The finance cost is
charged to the Statement of Profit and 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.

The right-of-use asset is depreciated over the lease term on a straight-line basis.

The lease payments are discounted using the interest rate implicit in the lease, if that rate can be
determined, or the company's incremental borrowing rate. Lease modifications, if any are accounted
as a separate lease if the recognition criteria specified in the standard are met.

Company as a lessor: -

Leases are classified as operating lease, or a finance lease based on the recognition criteria specified in
Ind AS 116.

a) Finance lease:

At commencement date, amount equivalent to the "net investment in the lease" is presented as a
Receivable.

The implicit interest rate is used to measure the value of the "net investment in Lease". Each lease
payment is allocated between the receivable created and finance income. The finance income is
recognised in the Statement of Profit and loss over the lease period so as to reflect a constant periodic
rate of return on the net investment in lease.

The asset is tested for de-recognifl'on and impairment requirements as per Ind AS 109 - Financial
Instruments.

Lease modifications, if any are accounted as a separate lease if the recognition criteria specified in the
standard are met.

b) Operating lease:

The company recognises lease payments from operating leases as income on either a straight-line basis
or another systematic basis, if required.

Lease modifications, if any are accounted as a separate lease if the recognition criteria specified in the
standard are met.

27. Earnings Per Share

The Company presents basic and diluted earnings per share data for its ordinary shares. Basic earnings
per share is calculated by dividing the profit or loss attributable to ordinary equity holders of the
Company by the weighted average number of ordinary shares outstanding during the period, adjusted
for own shares held.

Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary equity
holders and the weighted average number of ordinary shares outstanding, adjusted for own shares
held, for the effects of all dilutive potential ordinary shares.

28. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision maker. The company has identified the business as single operating segment
(i.e) Manufacturing of Engineering Components, having similar risks and returns for the purpose of Ind
AS 108 as "operating segments".