3. Material Accounting policies information

New standards, interpretations and amendments
adopted by the Company effective from April 01, 2024:

The Company applied for the first time the below
amendments, which are effective for annual periods
beginning on or after April 01, 2024. The Company
has not adopted any other standard, interpretation or
amendment that has been issued but is not yet effective.

Amendments to IND AS 116: Lease Liability in a
Sale and Leaseback

The MCA notified the Companies (Indian Accounting
Standards) Second Amendment Rules, 2024, which
amend Ind AS 116, Leases, with respect to Lease
Liability in a Sale and Leaseback.

The amendment specifies the requirements that a
seller-lessee uses in measuring the lease liability
arising in a sale and leaseback transaction, to ensure
the seller-lessee does not recognise any amount of
the gain or loss that relates to the right of use it retains.

The amendment is effective for annual reporting
periods beginning on or after April 01, 2024 and must
be applied retrospectively to sale and leaseback
transactions entered into after the date of initial
application of Ind AS 116.

This amendment had no impact on these standalone
financial statements.

3.1 A. Revenue:

The company derives revenue mainly from the supply
of electronics and electro-mechanical systems and
components including design, research & development
of systems which are used in missile programmes
(weapon systems electronics), underwater missile
programmes (weapon systems electronics), avionics
systems, ship borne systems, submarine systems, etc

Revenue is recognised when the transfer of control
of promised goods or services has been transferred
to customers, upon the satisfaction of performance
obligations under the contract in an amount that
reflects consideration to which the company expects
to be entitled in exchange of those goods and services.

To recognise revenues, the company apply the following
five step approach Viz., (1) Identify the Contract with
customer) (2) Identify the performance obligations in
the contract; (3) determine the transaction price; (4)
reallocate the transaction price to the performance
obligation in the contact; and (5) recognise the revenue
when a performance obligation is satisfied.

Revenue from the sale of goods is measured at the
transaction price which is the consideration received
or receivable, net of expected returns, taxes and
applicable trade discounts and allowances.

In arriving at the transaction price, the Company
considers the terms of the contract with the
customers and its customary business practices.
The transaction price is the amount of consideration
the Company is entitled to receive in exchange for
transferring promised goods or services, excluding
amounts collected on behalf of third parties. The
amount of consideration varies because of estimated
returns which are considered to be key estimates.

For performance obligation satisfied overtime,
revenue recognition is made using Input/output
method based on performance completion till
reporting date. The progress is measured in terms of
a proportion of actual costs incurred to-date, to the
total estimated cost attributable to the performance
obligation as it best depicts the transfer of control
that occurs as costs are incurred.

be presented as a contract asset, excluding any
amounts presented as receivable. A contract asset
is an entity's right to consideration in exchange for
goods and services that the entity has transferred
to the customer.

Contract Liability:

If a customer pays consideration, or an entity
has a right to an amount of consideration that is
unconditional (i.e. a receivable), before the entity
transfers a good or service to the customer, it shall
be presented as a contract liability when the payment
is made or the payment is due (whichever is earlier).
Contract liabilities are recognised as revenue when the
Company performs the contract i.e., (transfers control
of the related goods or services to the customer).

Trade Receivables:

A 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).

B. Other Income:

(i) Interest Income:

Interest income is earned on loans and other
deposits provided and on fixed deposits
maintained with banks that are accrued on
a time basis by reference to the principal
outstanding at stipulated interest rates and
at effective interest rate classified as FVTPL
or FVTOCI. Interest receivable on customer
dues, if any, receivable is recognised as
income in the statement of profit & loss
on accrual basis provided that there is no
uncertainty of realisation.

(ii) Govt Grants

(iii) Dividend income

(iv) Export Incentives

(v) Rental Income from Investment property:

Rental income is accounted as per
rental agreements executed for relevant
investment property

(vi) Other Income:

Other items of income are accounted as and
when right to receive such income arises, and
it is probable that the economic benefit flow
to the company and the amount of income
can be measured monetarily and reliably.

3.2 Leases:

As a lessee, the Company mainly has lease
arrangement for buildings. The Company assesses
whether a contract is or contains a lease at inception
of the contract. The assessment involves the exercise
of judgement about whether there is an identified
asset, whether the Company has the right to direct
the use of the asset and whether the Company
obtains substantially all the economic benefits from
use of that asset.

The Company recognise a right-of- use asset (ROU)
and a corresponding lease liability at the lease
commencement date. The lease liability is measured
at the present value of the lease payments that are
not paid at the commencement date, discounted
using the interest rate implicit in the lease or, if that
rate cannot be readily determined, the Company uses
the incremental borrowing rate.

The ROU assets are initially recognised at cost, which
comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to
the commencement date of the lease plus any initial
direct costs less any lease initiatives. ROU assets
are amortised from the commencement date on a
straight-line basis over the shorter of the lease term
and useful life of the underlying assets. ROU assets
are evaluated for recoverability whenever events or
changes in circumstances indicate that their carrying
amounts may not be recoverable.

The lease liability is initially measured at amortised
cost at the present value of future lease payments.
The lease payments are discounted using the interest
rate implicit in the lease or if nor readily determinable,
using the incremental borrowing rate. Lease liabilities
are remeasured with a corresponding adjustment to
the related ROU asset if the Company changes its
assessment of whether it will exercise an extension
or a termination option.

3.3 Foreign currency:

Functional and presentation currency

These standalone financial statements are presented
in Indian rupees, which is the functional currency of the
Company. All financial information presented, except
information related to share and per share data, in
Indian rupees has been rounded to the nearest lakhs.

Foreign currency transactions

Transactions in foreign currencies are recorded at
exchange rates prevailing on the date of the transactions.
Monetary assets and liabilities denominated in foreign
currencies at the reporting date are translated into
the functional currency at the exchange rate at that
date. Non-monetary items that are measured based on
historical cost in a foreign currency are translated at the
exchange rate at the date of the transaction.

Exchange differences arising on the settlement of
monetary items or on translating monetary items
at rates different from those at which they were
translated on initial recognition during the period
or in previous standalone financial statements are
recognised in the standalone statement of Profit and
Loss in the period in which they arise.

However, foreign currency differences arising from
the translation of the following items are recognised
in other comprehensive income ("OCI”):

• certain equity instruments where the Company
had made an irrevocable election to present in OCI
subsequent changes in the fair value in OCI and;

• qualifying cash flow hedges, to the extent that
the hedges are effective.

When several exchange rates are available, the
rate used is that at which the future cash flows
represented by the transaction or balance could have
been settled if those cash flows had occurred at the
measurement date.

3.4 Income taxes

Income tax expense consists of current and deferred
tax. Income tax expense is recognized in the statement
of Profit and loss except to the extent that it relates to
items recognized in the other comprehensive income

or directly in the equity, in which case the current
and deferred taxes are also recognised in other
comprehensive income or directly in equity.

Current tax

Current tax is the expected tax payable on the taxable
income for the year, using tax rates enacted or
substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years.

Deferred tax

Deferred tax is recognized using the balance sheet
approach, providing for temporary differences
between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used
for taxation purposes. Deferred tax assets and liabilities
are recognised for deductible temporary differences
arising between the tax base of the assets and
liabilities and their carrying amounts, except when the
deferred income tax arises from the initial recognition
of an asset or liability is a transaction that is not a
business combination and affects neither accounting
nor taxable profit or loss at the time of the transaction.

Deferred tax is recognised to the extent that it is probable
that taxable profit will be available, against which the
deductible temporary differences can be utilised.

Deferred tax assets and liabilities are measured using
substantively enacted tax rates expected to apply to
taxable income in the years in which the temporary
differences are expected to be resolved or settled.

Deferred tax assets and liabilities are offset when
they relate to income taxes levied by the same tax
authority and the relevant entity intends to settle its
current tax assets and liabilities on a net basis.

Deferred tax assets are reviewed at each reporting
date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realized.

3.5 Earnings per share:

The Company presents basic and diluted earnings
per share ("EPS”) data for its ordinary shares. The
basic earnings per share is computed by dividing the
net profit attributable to equity shareholders for the
period by the weighted average number of equity
shares outstanding during the year.

Diluted earnings per share is computed by dividing
the net profit attributable to equity shareholders
for the year relating to the dilutive potential equity
shares, by the weighted average number of equity
shares considered for deriving basic earnings
per share and the weighted average number of
equities shares which could have been issued on
the conversion of all dilutive potential equity shares.
Potential equity shares are deemed to be dilutive only
if their conversion to equity shares would decrease
the net profit per share.

3.6 Property, plant and equipment (PPE):

Recognition and measurement

Items of property, plant and equipment are
measured at cost less accumulated depreciation and
accumulated impairment losses, if any.

The initial cost of PPE comprises its purchase
price, including import duties and non-refundable
purchase taxes, and any directly attributable costs of
bringing an asset to working condition and location
for its intended use, including relevant borrowing
costs and any expected costs of decommissioning,
less accumulated depreciation and accumulated
impairment losses, if any. Free lands at is carried at
historical costs less any accumulated impairment
losses and is not depreciated. Expenditure incurred
after the PPE have been put into operation, such
as repairs and maintenance, are charged to the
Statement of Profit and Loss in the period in which
the costs are incurred.

If significant parts of an item of PPE have different
useful lives, then they are accounted for as separate
items (major components) of PPE.

Material items such as spare parts, stand-by
equipment and service equipment are classified as
PPE when they meet the definition of PPE as specified
in Ind AS 16 - Property, Plant and Equipment.

Expenditure during construction period (including
financing cost related to borrowed funds for
construction or acquisition of qualifying PPE) is
included under Capital Work-in-Progress, and the
same is allocated to the respective PPE on the
completion of their construction.

Advances given towards acquisition or construction
of PPE outstanding at each reporting date are
disclosed as Capital advances under "Other non¬
current Assets”.

Borrowing cost:

Borrowing costs are interest and other costs incurred
in connection with the borrowing of funds. Borrowing
costs directly attributable to acquisition, construction
or production of an asset which necessarily take
a substantial period of time to get ready for their
intended use or sale are capitalised as part of the cost
of that asset. Other borrowing costs are recognised
as an expense in the period in which they are incurred

Depreciation

Depreciation is the systematic allocation of the
depreciable amount of PPE over its useful life and
is provided on a straight-line basis over the useful
lives as prescribed in Schedule II to the Act or as per
technical assessment.

Depreciable amount for PPE is the cost of PPE less its
estimated residual value. The useful life of PPE is the
period over which PPE is expected to be available for
use by the Company, or the number of production or
similar units expected to be obtained from the asset
by the Company.

The Company has componentised its PPE and has
separately assessed the life of major components.
In case of certain classes of PPE, the Company uses
different useful lives than those prescribed in Schedule
II to the Act. The useful lives have been assessed based
on technical advice, taking into account the nature of
the PPE and the estimated usage of the asset on the
basis of management's best estimation of obtaining
economic benefits from those classes of assets.

Depreciation on additions is provided on a pro-rata
basis from the month of installation or acquisition and
in case of Projects from the date of commencement of
commercial production. Depreciation on deductions/
disposals is provided on a pro-rata basis up to the
date of deduction/disposal.

3.7 Research and development:

Expenditures on research activities undertaken with
the prospect of gaining new scientific or technical
knowledge and understanding are recognized in the
statement of profit and loss as and when incurred.

Development activities involve a plan or design for the
production of new or substantially improved products
and processes. Development expenditures are
capitalized only if development costs can be measured
reliably; the product or process is technically and
commercially feasible; future economic benefits
are probable; and the Company intends to and has
sufficient resources to complete development and to
use or sell the asset.

The expenditures to be capitalized include the cost
of materials and other costs directly attributable
to preparing the asset for its intended use. Other
development expenditures are recognized as expense
in the statement of profit and loss as incurred.

3.8 Intangible assets:

Intangible assets including software licenses of
enduring nature and contractual rights acquired
separately are measured on initial recognition at cost.

Cost comprises the purchase price and any directly
attributable cost of bringing the asset to its working
condition for its intended use.

Following initial recognition, intangible assets are
carried at cost less accumulated amortisation and
accumulated impairment losses, if any.

Intangible assets with finite lives are amortized over
the useful economic life and assessed for impairment
whenever there is an indication that the intangible
asset may be impaired.

The amortisation period and the amortisation method
for an intangible asset with a finite useful life are
reviewed at least at the end of each reporting period.

All intangible assets amortised over a period of five
years from the date of recognition.

Changes in the expected useful life or the expected
pattern of consumption of future economic benefits
embodied in the asset are considered to modify the
amortisation period or method, as appropriate, and
are treated as changes in accounting estimates.

The amortisation expense on intangible assets with
finite lives is recognised in the statement of profit and
loss unless such expenditure forms part of carrying
value of another asset.

Intangible assets are de-recognised either on their
disposal or where no future economic benefits are
expected from their use.

Gains or losses arising upon derecognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the carrying
amount of the asset and are recognized in the
statement of profit and loss when the asset is disposed.

3.9 Inventories:

Inventories are valued as follows:

• Raw materials, fuel, stores & spare parts and
packing materials:

Valued at lower of cost and net realisable value
(NRV). However, these items are considered to
be realisable at cost, if the finished products,
in which they will be used, are expected to be
sold at or above cost. Cost is determined on
weighted average basis.

• Work-in- progress (WIP), finished goods and
stock-in-trade:

Valued at lower of cost and NRV. Cost of finished
goods and WIP includes cost of raw materials,
cost of conversion and other costs incurred in
bringing the inventories to their present location
and condition. Cost of inventories is computed
on weighted average basis.

Inventories are recorded at the lower of cost and net
realisable value. Cost is ascertained on a weighted
average basis. Costs comprise direct materials and,
where applicable, direct labour costs and those
overheads that have been incurred in bringing the
inventories to their present location and condition. Net
realisable value is the price at which the inventories
can be realised in the normal course of business
after allowing for the cost of conversion from their
existing state to a finished condition and for the cost
of marketing, selling and distribution.

3.10 Impairment of non-financial assets

The carrying amounts of the Company's non-financial
assets, other than inventories and deferred tax assets
are reviewed at each reporting date to determine
whether there is any indication of impairment. If any
such indication exists, then the recoverable amount is
estimated for the asset or the cash generating unit to
which the asset belongs. For goodwill and intangible
assets that have indefinite lives or that are not yet
available for use, an impairment test is performed
each year at March 31, or when circumstances
indicate that carrying value may be impaired.

The recoverable amount of an asset or cash-generating
unit (as defined below) is the greater of its value in use
and its fair value less costs to sell. In assessing value
in use, 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 the
cash-generating unit. For the purpose of impairment
testing, assets are grouped together into the smallest
group of assets that generate cash inflows from
continuing use that are largely independent of the
cash inflows of other assets or groups of assets

(the "cash-generating unit”).An impairment loss is
recognised in the standalone statement of Profit and
Loss if estimated recoverable amount of an asset
or its cash-generating unit is lower than its carrying
amount. Impairment losses recognised in respect of
cash-generating units are allocated first to reduce the
carrying amount of any goodwill allocated to the units
and then to reduce the carrying amount of the other
assets in the unit on a pro-rata basis.

3.11 Employee benefits:

Short-term employee benefits

Short-term employee benefits are expensed as the
related service is provided. A liability is recognized for
the amount expected to be paid if the Company has
a present legal or constructive obligation to pay this
amount as a result of past service provided by the
employee and the obligation can be estimated reliably.

(i) Defined contribution plans

A defined contribution plan is a post-employment
benefit plan which an entity pays fixed
contribution into a Separate entity and will have
no legal or Constructive obligation to pay further
amounts. The Company makes specified monthly
contribution towards Government administered
provident Fund scheme and other funds
obligation for contribution plans recognized as
an employee benefit expense in statement of
profit and loss in the period during which the
related service is rendered by employees.

(ii) Defined benefit plans

For defined benefits plans, the cost of providing
benefits is actually valued used by the projected
unit credit method at the end of each annual
reporting period re- measurement comprising
actuarial gains and losses the effect of changes
to the asset ceiling (if applicable) and return
on plan Assets (excluding net interest ) is
reflected immediately in balance sheet with a
change or credit recognized in the compressive
income (or) in the period in which they occur.
Remeasurements recognized in OCI is reflected
immediately in retained earnings and will not be
reclassified to statement of profit and loss. Past
service cost is recognised in the statement of
profit and loss in the period of plan amendment.

Net interests is calculated by applying the
discount rate at the beginning of the period to
the net defined benefit liability or asset.

A defined benefit plan is a post-employment benefits
plan others than a defined contribution plan. The
liability or asset recognized in the balance sheet
is respect of defined benefit plan is the present
value of defined benefits obligation at the end of
reporting period less the fair value of plan asset.

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

Remeasurement gain and losses arising from
experience adjustment and changes in actuarial
assumptions or recognized in the period in which
they occur ,directly in the other comprehensive
income they are included in retained earnings
in the statement of changes in equity and in
the balance sheet.

A liability for a termination benefit is recognized
at the earlier of when the entity can no longer
withdraw the offer of the termination benefits
and when the entity recognizes any related
restructuring costs.

Change in the present value of the defined
benefit obligation resulting from plan amendment
or curtailments are recognized immediately in
profit or loss as past service costs.

(iii) compensated absence

The Company's current policies permit certain
categories of its employees to accumulate
and carry forward a portion of their unutilised
compensated absences and utilise them in
future periods or receive cash in lieu thereof
in accordance with the terms of such policies.
The Company measures the expected cost of
accumulating compensated absences as the
additional amount that the Company incurs
as a result of the unused entitlement that
has accumulated at the reporting date. Such
measurement is based on actuarial valuation as

at the reporting date carried out by a qualified
actuary. The resultant expenses are recognized
in the standalone statement of Profit and Loss.